The Art of ‘Ware [version 2.0] by Bruce F. Webster
[Copyright (c) 1995, 2008 by Bruce F. Webster. All rights reserved. Last updated: 04/30/08]
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Every firm has weaknesses and strengths, including you and your competitors. The goal is to match your strengths against their weaknesses, while protecting your own weaknesses from their strengths. It sounds obvious, yet all too often we fail to honestly and correctly evaluate the strengths and weaknesses on both sides.
In his sixth chapter, Sun Tzu talks about how to harass the enemy, probe for his weak spots, avoid his strong spots, and generally adapt to the ever-changing battle conditions.
Attacking a weak position from a strong one is like throwing a brick through a TV set.
It can be that dramatic. Orders can drop to nothing in a matter of days or even hours when a weak market approach suddenly faces a strong one. Case in point, and one that haunts me over 20 years later: Borland vs. Chalcedony Software. The latter firm, a small one, marketed a Prolog implementation for MS-DOS. When Borland released Turbo Prolog, I wrote up a nice review of it in the column I had in BYTE at the time. The VP of Marketing at Chalcedony told me later that they knew something had happened even before they saw my review: the week that issue of BYTE came out, incoming calls to Chalcedony dropped off dramatically and never recovered to the levels they were before. It wasn’t that Turbo Prolog was better than the one put out by Chalcedony; it wasn’t. But Borland has a vastly stronger market position and there wasn’t much Chalcedony could do to counter it.
The first company to get a product into a given marketplace has time to rest and build momentum and market position; successive companies will have to release and compete while still exhausted from the development.
The first product into a given market, if successful, can entrench itself to the point of being difficult, if not impossible, to dislodge. Products that follow then compete for the #2 position.
Aspects of the first product — bus slots, menu structures, macro languages, data formats, key/switch layout, cable routes, application programming interfaces (APIs) — can themselves become de facto standards. Successive products must then either adhere to those standards or convince customers to accept differing implementations. Even “official” standards organizations must cope with market demands; a decade after the advent of the World Wide Web, tension still exists between the groups developing standards (such as for HTML, XML, CSS and so on) and the Web browser companies (Microsoft, Apple, Mozilla, Opera) that actually implement and interpret them.
There is a downside to being the first one in, though: if you are not significantly successful, you may end up acting as the test marketing arm for the competition, who will adopt your good points and learn from your mistakes. Many people have argued that Microsoft has built itself almost entirely upon this model.
Therefore, force others to enter your marketplace, instead of seeking to enter theirs.
The company that defines the marketplace has an advantage over all competitors who seek to enter that marketplace: customer inertia. If that first company has a decent solution, then it will be hard for competitors to convince customers to switch; this goes back to the whole discussion of “better” in Chapter 3. Once a product gets entrenched, it becomes hard to dislodge, especially if it remains competitive. Arrogance and complacency, however, remain the greatest dangers for such market leaders.
When the competitors are relaxed, harry them and wear them out.
Seek to make the competition devote resources to a constant stream of issues, so that they are constantly reacting to your efforts instead of devising and following a well thought-out strategy of their own. And if you can make it look as though they are imitating you, all the better.
When competitors are profitable, seek to undermine their sales.
Cash flow is the lifeblood of a company. When you take sales away from a competing firm, their options and opportunities become more limited, and they begin to doubt their ability to market products. Make sure this doesn’t backfire, however; if you simply become engaged in a price war, you may never recover your own profits.
When competitors are entrenched, lure them into new areas.
Entice them into developing (or acquiring) and introducing products for markets where they wont do well, or that will drain resources from their successful areas. An overextended company does poorly on all fronts, particularly where they expertise. You may get unexpected help from the competition’s investors and inside stockholders, who may be worried about the vulnerability of a “one-product company.”
Show up in new markets where they must rush to defend themselves; swiftly develop products for unexpected markets.
You can redefine the product needs and desires for a given market segment by offering a new product; likewise, you can create new markets by looking for customers unsatisfied by current solutions. In the past Sony has excelled at this, particularly in consumer electronics, with the competition always playing catch-up. On the other hand, Sony has stumbled badly with the Playstation 3, opening the door for Nintendo to expand its market share.
By going into untapped markets, you can do long-term development without exhausting your resources.
If nobody is currently in that market, then you don’t have to rush your product(s) out the door or spend large sums of money in marking yourself heard above the competition. On the other hand, there may not be a lot of money to be made, which may be precisely why the market is untapped.
It is easiest to succeed in an uncontested market; there is no one to attack, and none from which to defend.
The challenge is marking sure that a real market — defined as a set of customers who have money that they would rather spend on your product than on anything else — actually exists, or will exist in a reasonable time-frame.
A skillful CEO knows how to attack where a competitor is defenseless, and how to defend so that the competitor cannot attack.
Anyone can engage in a face-to-face slug out for market share, and many companies do just that. Skill comes in finding the competition’s weak areas while protecting your own. Subtlety and secrecy are the keys; through them, you can build momentum without leaving a trace or drawing attention to yourself, and thus better control the competition’s fate.
The more the competition knows or can guess about you, the better they can forestall your efforts or defend against them.
It is good to keep your plans and efforts secret; it is even better to have the competition mistakenly think they your secrets. Loyalty among your managers and developers is a must; see Chapter 13, “Gathering Intelligence.” When that secretly built-up momentum is released into competitors’ weak spots, they can’t defend against you; if it’s used to outmaneuver competitors, they can’t keep up with you.
Have a fast-moving, well-coordinated plan for rolling out the product in such a way that the competition is caught off guard and cannot respond in a prompt, effective manner.
When you wish to compete, the competition — however well entrenched — must engage you if you attack that which they must defend.
Determine what they have to defend, as opposed to that which they can afford not to defend. By forcing the competition to engage you, you gain credibility and publicity while exerting a degree of control over the competition’s planning and resources.
When you wish to avoid competition, the competition — however strong — cannot engage if you lead them off in the wrong direction.
If you can get the competition to focus on areas where you aren’t going to be, they won’t engage you directly, though they may think they’re going to. Some major software firms — including WordPerfect and Lotus — claim that Microsoft continued to urge them to develop for OS/2 after Microsoft had made a secret internal decision to drop OS/2 and push Windows 3.0 instead.
If you can make the competition commit themselves while you obscure your own plans, they you can focus your efforts more precisely, while the competition must set up a broad approach.
Make them deal with as many contingencies as possible, while you concentrate on one specific plan. Only a fraction of their efforts can then directly address your actual approach.
This way you can then pit your entire marketing effort against a small portion of the competition’s. You’ll have a strong advantage in that area and the competition will be hard pressed to defend against you.
This approach lets you take away niche markets and market segments from the competition. If you do this with several niches or segments from the competition, you can start to bridge gaps between them and establish a more general market presence.
Each area where the competition has to focus product development and positioning comes at the cost of weakness elsewhere. And if they try to cover all their bases, they’ll be weak everywhere.
There are many such divisions and dichotomies. Seek to identify those which define the competition’s approach, so that you can focus yourself where they are weakest — always keeping in mind that a viable market must exist wherever you go.
A CEO who knows exactly when and how a product will be marketed can sustain a long development effort. But if the timing and approach are uncertain, then marketing and engineering can’t help each other, even with a short development cycle.
The ability to predict exactly when a product will ship — with a given set of features and acceptable levels of reliability and performance — is a tremendous advantage, and one that few companies have or can maintain.
Money and size do not always guarantee success.
Often money robs a company of cleverness and intensity, while size breeds hubris, ossification, and stagnation. Here are some products you may have never heard of, all from companies that were large and profitable at the time: CalcStar and InfoStar (MicroPro), Access (Microsoft — and, no, this isn’t the current database product), Jazz and Modern Jazz (Lotus) the IBM PCjr, the Apple III, PlanPerfect (WordPerfect), Sprint (Borland), the Xerox Star, the DEC Rainbow, and Friday (Ashton-Tate).
On the other hand, money and size and be a tremendous advantage when used with wisdom and focus.
Success can be created; even if the competition is bigger and stronger, you can keep them from taking you on directly.
It’s not easy, but it is done. Size can be used against a large company, for all the reasons listed above.
Study the competition carefully; weigh the successes and failures of their plans.
Look at their history. What have they done well? What have they done poorly? Why have they succeeded? Why have they failed? Through these factors, you can get a sense of what will work and what won’t. Look for those weak areas and blind spots. Pay special attention to their decision-makers (CEOs and other influential executives); a small rudder can steer a very large ship.
Cause the competition to respond, and note their actions. Seek to get them to reveal their approach, so that you can understand what their intended market is. Challenge them in several areas, seeing where they are weak and where they strong.
Through marketing trial balloons and flexible product configurations, you can see how the competition responds to different approaches. If you can get a competitor to react, you not only gain information; you can also gain a degree of control over that company.
You may also get attention from the company that you don’t want, so consider your actions carefully.
As for your own plans, keep them appearing vague and without direction; the competition cannot then anticipate you or form a counter-strategy.
Make sure your plans are clear, sharp, and flexible, but keep them to yourself.
It is by careful planning that you succeed, but the public doesn’t see those plans. They see what actions you’ve taken, but don’t understand the strategy behind them.
Of course, this again raises the issue of public perception and the impact that can have on your market. Somehow you need to instill confidence in your customers (usually done via advertising and the press) without prematurely revealing your plans to the competition.
The methods and actions by which you succeed may vary widely from product to product.
This could be true for several reasons: adapting to the market; aiming at the competition’s weak sport; avoiding predictability.
Marketing strategy is like water, which adapts automatically to ground it flows over, having no fixed shape. In the same way, marketing seeks to find weak points to penetrate; it adjusts to the marketplace, the customers, and the competition; it changes and conditions change.
Marketing should be in a tight feedback loop with customers, and the ultimate feedback in marketing is the money coming in. no matter how brilliant, inventive, or logical a given market strategy might be, if it’s not bringing in money, it’s not working. In that case, you need to adapt or die. It’s as simple as that.
The CEO who can adapt to competitors’ tactics brings success to the company.
The formula for success changes constantly. Many successful companies falter because they think they can repeat their success by doing more of the same, ignoring this simple fact: the technology marketplace changed completely every 12 to 24 months.
Guy Kawasaki said many years back that competing against Microsoft felt like putting your head in a vice and tightening it, then tightening it some more. Having been in that position myself, however briefly, I concur. Your goal should be to make your competition, real and potential, feel that way about you.
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