Going ‘Off-Strategy’

Mark Jenkins, Cranfield University professor of business strategy, has posted a piece on “Off-Strategy” on HBR’s blog. Mark studies strategy in Formula 1, a highly competitive business where very small margins make the difference between winning and losing. In his post, he points out that Mark Webber won the Hungarian Grand Prix by adopting a very different strategy from those drivers he was competing with.

The difficult truth we have to face is that if we have the same facts and similar skills and resources as our competitors, we are likely to come up with the same strategies. Those strategies will pitch us directly against our competition and leave our customers unable to differentiate. How often have you seen two or three small companies killing each other competing for domination of a niche? Too often, I bet.

What I’ve seen happen next is even more unpleasant. Those two competitors start to watch each other more than the market, or their customers. Then single biggest reason for making any sort of move is either ‘because our competitors did it’ or ‘because our competitors might do it’. Their marketing focuses on knocking the competitors rather than explaining their product’s benefits. Their recruitment either ignores people who have worked for the competition (because they must be evil) or concentrates on them (because they must know secret stuff). All of this leads to just one thing: disappearing profits.

When I have worked with companies in this situation, it has been incredibly difficult to prise them out of it. It is as though their entire corporate DNA is configured to do only one thing. Yet break out of it they must, if they are going to get back to profitability.

This is where the Mark Webber analogy becomes helpful. When the safety car came out, all the other competitors took the optimal strategic decision: to come into the pits and change their tyres. The Red Bull team spotted that to do so would give him no advantage and he would be destined to end in third place. He stayed out, took first place and then once the safety car had come in, built up a 20 second lead that allowed him to take his pit stop and maintain the lead.

The lesson here is that the optimal strategic decision fails to be optimal if all your close competitors are going to take it too. So how do we find an alternative strategy?

  • When considering your strategic options, think of what would be the best strategy if your competitors took each option. Hint, the right answer is unlikely to be the same
  • Use alternative views of the future to generate different strategic options (scenario planning)
  • Be contrary and consider doing the opposite of what others think would be optimal
  • Consider competing on a different basis or axis, actively look for disruption
  • Get some external help in generating “outside the box” scenarios and strategic options

Remember, picking the unobvious, counter-intuitive, less appealing strategy may well put you on the podium holding the champagne.

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