Over the last two decades we have watched Indian companies get involved in a number of management techniques that were entered into to make the company more competitive. These techniques included total quality management, kaizen, kan-ban, reengineering, benchmarking, ISO 9000, and the like. All these techniques are operational in nature and not strategic. They are techniques designed to make the organization more efficient at how it currently does things, but they do nothing to help the entity to address what it wants to become in the future.
Most of the time, these techniques have led to programmes to downsize the organization. Any company that has to downsize is one which has a “failed” strategy. A successful strategy, on the other hand, is one that creates growth in revenues, profits, and usually, employment. Benchmarks for successful strategy are HDFC, TCS, Sundram Fasteners and Reliance. In my opinion, the best competitive position to be in is to have no competition. That position can be achieved by not playing the game the way your competitors play the game, but rather by formulating and deploying a “distinctive strategy” that changes the rules in your favour.
Many theories have emerged over the years as to how a company goes about growing at a competitor’s expense. The obvious method is to duplicate the competitor’s strategy and then attempt to outmarket, outsell, outmanufacture, and outservice these competitors. Our hotel industry is plagued with such an approach. Particularly, the five-star segment. They adopt “imitation strategy”. Although imitation may be the finest form of flattery, it is the worst form of strategy. All the company is doing with this approach is entering a race with no finish line. One competitor surges ahead of the other for a short period of time, only to be overtaken by another competitor for another period, to regain the lead for another period, and so on.
A company does not gain at the expense of a competitor by imitating, or cloning, that competitors strategy, but rather by crafting and deploying a distinctive strategy that changes the rules of the game in its favour. What wins in business in not trying to outmuscle competitors with brawn, but rather to outthink those competitors with some brain power.
When you create a strategy with the intent to change the rules of play on the leader, you paralyze the leader, sometimes for long periods of time. The reason is simple. The leader’s organization is structured to do business according to the rules it has set. Changing the structure is not easy and can sometimes take years. While the leader is immobilized, you can make significant and important gains. Jet Airways has achieved exactly that against the leader, Indian Airlines, through world-class service on ground, and in the air.
When everyone in an industry plays the game according to the same rules, no one wins! In other words, there are only marginal changes in market position. Those who make significant gains at a competitor’s expense are those who have found a way to tilt the playing field to their advantage and change the rules of play. After all, the object of competition is not to have an even playing field, but to design a playing field that is tilted to your advantage, a playing field that paralyzes the competition.
Even Michael Porter, the guru of competitive tactics, has stated in a Harvard Business Review article (December 1996):
“In many industries, what some call hyper-competition, is a self-inflicted wound. The root of the problem is failure to distinguish between operational effectiveness and strategy. Operational effectiveness is necessary but not sufficient. A company can outperform rivals only if it can establish a difference that it can preserve”.
Every company has a product or a market that is its cash cow. Never worship at the alter of the cash cow. You will inevitably perish. The reason is simple. For every employee that you train in techniques to protect your cash cow, there are one thousand people in competitive organizations thinking of ways to destroy your cash cow. And the odds are that they will eventually succeed. Maruti 800 is a case in point.
Criterion 3 of the IMC Ramkrishna Bajaj National Quality Award addresses Strategic Planning. The detailed areas to address are comprehensive and underline “chase your customer, not your competition”. The former assures a distinctive strategy; the latter, an imitation strategy.
CREDITS: Suresh Lulla, Founder & Mentor, Qimpro Consultants Pvt. Ltd.