My last blog covered the “Grow with Success” model and the importance of revisiting your strategic planning process. The Uspire Network approach is to first fully UNDERSTAND (U) your business environment and then CREATE (C) the strategic imperatives. This blog, as part of the process, helps you to fully consider your competitive position and how to create targeted initiatives.
“The Art of War” by Sun Tzu was one of Sir Terry Leahy’s favourite books and when you look back at the success of Tesco during Lord MacLaurin’s period, then the handover to Terry Leahy, you have to admire the devastating impact they made on the retail competition. He often stated that it is the competitors that create internal paranoia and they were the only reason for losing any sleep at night. He quoted that nobody likes the idea of a competitor getting up every morning intending to steal your customers. However, they are actually good for you. They get the best out of you. The real skill is to learn from them faster than they can learn from you.
Here at Uspire we believe like Terry Leahy that your competitors are a source of education and inspiration that come free of charge. They are often also a ‘soft target’ if you are better equipped to react to disruptive market factors.
In this previous blog about the four seasons of Covid recovery we discussed the importance of preparing a Competitor Impact Assessment using the guidelines below. Plot on the schedule below where you believe your competition are positioned and your own business. At the same time consider whether the economy or your business will have a ‘V’ shape, ‘W’ shape or ‘U’ shape recovery.
The Covid-19 crisis has resulted in a winners and losers battlefield and the challenges companies are facing can be debated in the graph.
Those companies that have achieved a Covid gain are exploring tactics and strategies to hold onto these increases and should be deploying their actions with the essential organisational agility to establish a sustainable benefit. If your business is facing a Covid performance gap then the challenge of recovery will largely depend again on speed of reaction but also on the financial reserves on your balance sheet.
However, all of these initiatives, gain or gap, will be influenced by “The Art of War”, your ability to optimise your resources and competitive positioning.
Sun Tzu lived in North Eastern China 2,500 years ago about the same time as the great philosopher Confucius. He was considered the finest military expert and his strategies had delivered countless victories on the battlefield. Sun Tzu modelled his armies on what could be called a ‘natural organisation’ model. They exist around a principle of three characteristics:-
- They exist to serve a defined purpose and the term of their existence corresponds to the time required to accomplish their purpose
- They are information centred and seek to use data as a basis for action. Avoiding unwanted opinion and conjecture and using uncertainty by estimating reasonable probabilities.
- They are completely adaptable and flexible in their approach with the ability to respond quickly and effectively to any changes in their environment that could have an impact on the army’s ability to achieve its defined purpose.
Perhaps Tesco would have translated the following Wisdom of Sun Tzu as part of their strategic plan when looking at the strengths and weaknesses of the competition. When you have completed your Covid-19 Competitive Impact Assessments they might also provide some context to your thinking.
“Cross the Mountains by following the valleys. Stay on high ground where you have clear view of the surrounding landscape. Do not face up hill in a fight. When the enemy is crossing water it is advantageous to attack when half of the troops have crossed over. When crossing a swamp move quickly. Keep away from gorges, hollows and crevices that form natural traps and snares. If the enemy troops must lean on their weapons to stand upright then they are hungry. If the enemy’s water carriers drink first the entire enemy troop is thirsty. If the enemy troops clamour during the night the enemy is fearful. When the enemy feeds its war horses grain and kills its pack horses for meat they are starving. When the soldiers do not hang up their cooking pots or return to their shelters then the enemy is desperate and at their most vulnerable.”
Translate these thoughts into the symbols of your market positioning versus the competition.
In the last blog which covered “Grow with Success” we expanded on competitive theory and the simplified principle of passive and disruptive competitive forces. Many of you will have used “Porter’s 5 forces” to establish an opinion on the market attractiveness but in today’s world the concept is slightly dated and also relies on high quality facilitation to draw out all of the market influences that can have an impact on your investment or business start up decisions.
At Uspire Network we have adapted this thinking to explore the more disruptive influences of a fast-paced commercial world and the unprecedented conditions caused by the pandemic.
Here are the 10 dimensions of competitive positioning:-
PASSIVE
Evolutionary day-to-day movement in your market dynamics. Predictable and easy to anticipate and you are often well prepared. Combated by tactics and collaboration. This unfortunately is often the only competitive thought process in the company.
DISRUPTIVE
Deliberate often unforeseen caused by a revolutionary event or crisis. The best way of understanding this is to use what’s called the Rumsfeld Matrix.
NEW ENTRY
This is the threat of a competitor entering your category or market. How easy can they arrive, who are they likely to be? Why will they find it attractive. What factors can protect your position in the market.
CUSTOMER POWER
How easily can customers drive down price and damage your competitive position? Can they dictate terms and leverage you against the competition. How can you overcome this situation and differentiate yourself so that price is not the only point of negotiation.
TECHNOLOGY
Consider the impact of artificial intelligence and digital transformation, will new entrants or existing competitors out manoeuvre you? Remember the impact of businesses like Bookings.com on the hotel direct customer trade?
CONSCIOUSNESS
Consumer habits and expectation are changing? How are you adapting the business to this more socially responsible and environmental approach to the future? Will you be out thought by the competition?
SELF DESTRUCTION
This can be complacency or financial capability like a “Zombie” company that is restricted by its cash supply or its ability to raise cash. It can be failure to embrace change Iike a “floppy disk” factory. A lack of imagination leading to inevitable distinction. This requires the leader to face the “brutal facts” and deal with the “elephants in the room”. What can you do to prevent this internal and external threat?
ALTERNATIVES
Like a business that only sells apples is impacted when another company promotes pears. How can you promote and secure your business concept in a way that increases utilisation. What can you do to make your produce and feature more desirable to out manoeuvre the substitutions?
SUPPLIER STRENGTH
Can a competitor acquire your supply chain and then attack your business? Can your suppliers just increase prices because you have no alternative? How can you protect the company from risks in the supply chain?
WELLBEING
Attitudes to health and personal safety are changing. Are your business and products equipped to deal with this? Will competitors emerge that offer a healthier and safer way of servicing your customers needs?
Reflect on these ten dimensions and consider them both from your strategic position and the competition.
I cannot emphasise enough that in the current climate where the competitive dynamics have been disrupted how important it is to think about your plans to combat the challenges ahead.
At Uspire Network we would suggest you consider the scale of your business and its relative business plan objectives.
Sun Tzu would recommend that if the army is larger than you then avoid conflict but consider guerrilla warfare to protect your position.
If you are the same size then wait for weaknesses and opportunities that make your attacks more impactful. When the enemy army is small but is gathering support then stalk them until you can attack decisively seizing a permanent and controlling advantage.
Use the 10 dimensions and write down your observations as a team and relate to your scale in the market place. Whatever your competitive position it is the leaders role to find a place in this eco-system where the company can defend itself against these impacts or take advantage of weaker players.
Whilst working with the telecommunications sector I had the experience of how transformational large corporates can use competitive analysis to grow profitability and shareholder value in the long term. This business followed a strategic process that extracted every piece of knowledge possible about its competitors then every year they reviewed and anticipated what they would do next. The board of directors, led by the strategists would assimilate the wide-ranging competitive data and then adopt the role of running the board of each competitor analysing the information and assessing all the options as if they were running British Telecom. For example they were able to predict every likely scenario for each competitor whilst reviewing the dynamics of the market and changing consumer trends. This led to them defending the UK market on a ‘yes but’ strategy which was “not at all costs” because it was highly margin corrosive, deciding to instead divert investment into global high growth opportunities which delivered greater shareholder value in the long term. The detail they had about each competitor was extraordinary and we will discuss this on our next ‘Think Tank’.
The template below can be developed to suit your market and business concept by changing some of the features and statements on the left hand side. It forces you to review each of your competitors and their relative strength using key metrics and when you combine this with the Covid competitor impact assessment it should generate some interesting scenarios.
Finally, lets just place some of the Sun Tzu wisdom into context.
Sun Tzu states, “If you know your enemy and you know yourself you need not fear the results of a hundred battles”. So study and fully assess your market position and reflect on the 10 dimensions. Find out how your competition has coped. Look for what they are now not doing well and focus on filling the gap this creates.
Sun Tzu states, “The general who wins a battle makes many calculations in his temple before the battle is fought”. Make a detailed plan don’t just wait for things to happen. Set goals and targets that are both offensive and defensive.
Sun Tzu states, “Supreme excellence consists of breaking the enemy with no fighting”. This can be achieved by customer migration to your business based on great quality and service during the pandemic because you have exceeded your customer expectations. It might represent competitors going into administration because of starvation (lack of cash) during the crisis.
Sun Tzu states, “If you are distant from the enemy make them think you are near”. Promote and advertise your capability and punch above your weight with impactful and professional marketing.
Sun Tzu states, “ regard your army as your children and they will follow you info the deepest valleys treat them with respect and they will stand by you even into death”. Remember to be a “world class” recogniser, support your people and recruit individuals that have the right values and a passion for the business. These people will deliver greater success in the competitive market place and achieve more sustainable results.
Finally, when preparing your plans for sustaining gains or recovering losses reflect on the following four box matrix and the importance of your defensive and offensive tactics.
Remember every business will hold strategic positions that it must defend at all costs. Do you fully understand yours?
“The Art of War” works well when combined with the additional tools that are available from the Uspire business. It treats every potential conflict as important to the overall success and increases awareness of the requirement for high level strategic thinking which is vital in a recovery situation.
