Quick takes

Strategy & Leadership

ISSN: 1087-8572

Article publication date: 1 December 2002



(2002), "Quick takes", Strategy & Leadership, Vol. 30 No. 6. https://doi.org/10.1108/sl.2002.26130fae.003



Emerald Group Publishing Limited

Copyright © 2002, MCB UP Limited

Quick takes

Catherine Gorrell's "Quick takes" presents the key points and action steps contained in each of the feature articles.

Page 5Invented competitors: a new competitor analysis methodologyLiam Fahey

Does your company develop and test strategies to outmaneuver the competition? If so, do you fall into the trap of focusing on just traditional rivals, or worst, on just their historic strategies? To avoid this danger, use an innovative approach that several leading companies have adopted: create an "invented" competitor and then consider what type of strategy the invented competitor might employ.

Using "invented competitors" opens up a view into the future that is likely to challenge the preconceptions and obsessions of your current worldview. This approach can identify new business opportunities and surface limitations and vulnerabilities in your company's current strategies and operations. For a number of leading organizations, the invented competitor is proving to be a spur to bold and innovative thinking.

What is an invented competitor?

An invented competitor is a rival that could exist some time in the future and has two related features that current rivals do not have: unique marketplace strategy and organizational configuration (two examples: a different network of relationships or value chain structure).

Why invent a competitor?

A number of reasons are cited but central to each is the need for managers to reflect about the future in novel and insightful ways. This is the platform to kick-start radically different thinking.

When should a competitor be invented?

There are several "red flags" that will make this approach the one to select for competitor analysis, including ones occurring in the marketplace, such as:

  • new technologies;

  • rivals changing their offerings; or

  • the whole industry being in a strategy rut,

and within the organization, such as:

  • complacency due to marketplace performance;

  • the degeneration of the strategy planning process into a routine; and

  • an unwillingness to re-evaluate the assumptions of historic strategies.

What is invented?

Although the process of inventing a competitor varies, depending upon the context and purpose, it typically has five elements:

  1. 1.

    How the competitor might come to be.

  2. 2.

    What its strategy might be.

  3. 3.

    How it might execute its strategy.

  4. 4.

    Why it might win or fail.

  5. 5.

    The strategy implications for our firm.

For the several strategy purposes of invented competitor analysis cited in the article, the one critical attribute is the search for new business opportunities. The process opens up new options that would otherwise be missed. Do not wait until a new competitor steps into your marketplace and sends disruptive shock waves through it. Act now to show business segments the folly of accepting without question their historic strategies.

Page 13Coors Light in Puerto Rico: battling for local dominance in a global marketDavid J. Allio and Robert J. Allio

This informative business case study illustrates how to beat giant global competitors with smart local knowledge and actions. It centers on the strategies of the beer distributor V. Suarez and Company in San Juan, Puerto Rico. Can you leverage the principles presented here to your industry?

The case framework

Big beer brewers employ global marketing strategies powered by big budgets. But because their attention is focused on the world market, global competitors may overlook opportunities to please local customers. When this happens they fail to adapt their strategy to meet local preferences. This is when the savvy smaller competitor can take advantage of their strategic oversight. In this case study, Budweiser failed to recognize the needs of different consumer groups in its advertising and promotion. Its next move of price-cutting and imitation also failed, resulting in a dilution of brand equity. Today, Budweiser is now still pouring in millions of dollars each year to tap only a dismal market share.

Lessons learned – for the large company

Even in a global industry, firms need to creatively adapt to different needs and expectations of customers in local markets. The top-down standardization of strategy adopted by many multinational consumer products companies can fail badly if these differences are ignored. Consumer needs and desires are not necessarily consistent across different market segments. Competitors can often exploit these differences to great advantage, particularly if some core competencies, like distribution and market intelligence, can be brought to bear. The old adage, "Think global, act local" still applies in many industries.

The Suarez case clearly demonstrates the impact that local market knowledge and positioning can have on a product's success. Nimble local or regional players may dethrone even the largest multi-national competitor who fails to recognize and embrace cultural differences and unique market conditions.

Lessons for the challenger smaller business

The following are the keys to the V. Suarez success:

  • Careful identification of the market opportunity and required positioning.

  • Advertising and promotion customized to the target market.

  • Penetration of distribution to assure rapid brand diffusion.

  • Relentless implementation.

  • Adherence to the company's core value – customer service.

  • Redefining marketing goals in terms of life choices not product attributes.

Page 18Rubicon Technology: a high tech start-up successfully practices strategic focusJohn Sterling

Whether your business is embarking on a new venture or you are a start-up, there is always a point where positive enthusiasm is expressed as an ego satisfying assessment that "we can do it all". This perspective is grounded in the dangerous belief that technological advantage alone is enough to out distance competitive challengers. Look out! Failure to get over this initial arrogance will hinder your start-up's ability to transition from the "high burn rate" stage to breakeven and initial profitability. Read this case study to learn the logic, the questions, the testing and the actions that moved Rubicon through the challenging first years of operation.

Several points can be learned from its experience:

  • Collecting a modicum of market intelligence and performing an honest self-assessment and logical analysis can provide the basis for developing focused and sustainable market position. This is in contrast to those businesses that give in to the temptation to chase the market with the seemingly greatest upside potential (versus markets that were more accessible and aligned to the experience and capabilities of the company's technical and operational staffs).

  • While Rubicon focused early efforts to perfect capabilities, it made a conscious decision to adopt a "strategic" perspective: keep future options open to additional vertical integration.

  • Experience with strategic alliances confirmed that they play a crucial role in closing capability gaps but also underscored the need to vigilantly monitor those alliances to ensure they are fulfilling their intended purpose. Exit those alliances when they cease to fulfill their stated purpose.

  • Perhaps the most difficult lesson to put into practice is the ability to retain strategic focus. Rubicon has succeeded because, after selecting products and markets that offered the greatest potential returns, it focused relentlessly on improving and aligning its technology and its operations to meet expressed customer and market needs.

  • The crucial lesson: having technological advantages is not enough to be successful. Concerted efforts are required to translate those advantages into product performance that makes a difference in the operations of the customers in their targeted market segment.

Page 23Results-based leadership: an interview with Dave UlrichWilliam Finnie and Stewart Early

Business leaders will add to their bottom line by being more attentive to "soft" organization factors, such as the commitment level of employees, the quality of leaders, and the linkage of both to obtaining results. Such "intangible" factors account for 50 percent of a company's market value. Results-based leadership is the key source of increasing this intangible value.

Question: how to begin to improve results-based leadership?

Answer: the selection and development of leaders in the organization should begin with the question, "What is it we need to deliver for the company?" Next determine the behaviors the leaders need to deliver those results. Too many companies do the reverse. For example, a firm wants leaders who have a vision "so that" the company will be able to innovate products faster than competitors. Or, the business wants leaders who can build teams quickly "so that" the time from concept to commercialization of a product is 20 percent faster in two years.

Four attributes of leadership are suggested:

  1. 1.

    Setting direction for where the organization is headed.

  2. 2.

    Demonstrating personal character.

  3. 3.

    Mobilizing individual employee commitment.

  4. 4.

    Engendering the organization's capability (building systems).

Linking these attributes to results, there are four steps offered that will help build results-based leaders:

  1. 1.

    Believe that leadership matters.

  2. 2.

    Develop a leadership brand.

  3. 3.

    Assess leaders and find their gaps.

  4. 4.

    Invest in leadership.

Question: how to achieve results by building the capability and commitment of employees?

Answer: human capital is defined as employee capability multiplied by employee commitment. Six ways are offered to build employee capability and seven ways are suggested as aids to build commitment at the individual level.

Question: how to develop essential organizational capabilities to utilize the resulting human capital?

Answer: a four-by-four matrix tool is offered as an aid to promote the linkage between capabilities and results. Empowerment becomes easy when the four levers (information, competence, authority, and rewards) are taken across the four boundaries of every company (vertical, horizontal, external and global). A succinct example: most firms move authority vertically from top to bottom but fail when they keep information, competence and rewards at the top.

Question: how to use tools effectively to address problems? Adapt them – do not adopt them. Tailor tools to your company's present situation, keeping the principles but with the 'fingerprints' of your work environment.

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