Many times I have seen analogies being drawn between business and war. Even the terminology used by businesspeople when discussing market objectives and roadmaps is tightly associated with warfare: strategy, tactics, defensive, offensive, capture, destroy, etc. People often talk of “aggressive campaigns” and “hostile takeovers”, as it is part of our collective symbolism to regard market acquisition as conquest and revenues as spoils of war.
Sure enough, when considering the marketplace in your venture, the analyst in you has to step in and take charge. As part of the group of personalities that the renaissance entrepreneur possesses, this one is in charge of knowing the marketplace and planning ahead; and as the analogy suggests, when stepping into the shoes of your analyst, you wake up the general in you.
I often look for inspiration in the ideas and thoughts of people who have achieved great things. Many have written about war, about business, about war and business, from Carl von Clausewitz to Norman Schwarzkopf, Jr. But they all stand on the shoulders of one great man and one great book – Sun Tzu and The Art of War. Written over 2,000 years ago in China, Sun Tzu’s insights and methodology are still relevant in today’s valid battlefield – the marketplace.
There are two passages that are ever more relevant in strategic business-market thinking, that provide perspective into the two major aspects of the analyst’s job – planning a marketing strategy, and approaching the issue of competition.
"Generally in war the best policy is to take the state intact; to ruin it is inferior to this." (III.1)
Naturally, to make this relevant, the “state” can be simply replaced by the “marketplace.” Undoubtedly, a company’s battlefield is the marketplace, with a goal of acquiring its share of the market to generate revenues. It is important to define this market segment, to identify the category that the company is playing in, and to point out the value that the product is offering this market segment. However, when starting to think like a general, one must keep in mind that the market has value to the company as long as it’s intact. Ruining it to win it will only result in failing.
I have seen many times how companies try to capture market share aggressively, and destroying it in the process. Most often this is done by cannibalization – either of value or of cost. A company could provide an inferior product for a lower price to conquer its market share, but ultimately end up with a wasteland. The market was won, no doubt, but now the product’s price and value are at such a low point that it is often hard to rebuild and restructure. This strategy is characterized by short term thinking, usually by trying to show a significant rise in sales to please management/board/press; it can’t be helped though – once the market has been destroyed, it is hard to rebuild both by your company and your competitors.
Therefore, when planning your strategy, try to focus on two things:
- Positioning. The better you define your place in the market, your category, segment, and demographics, the higher your chance of planning your strategy. This should be combined with focus – the narrower your market segment is, the better your chances are to acquire it.
- The value rolodex. Try to offer good value for your product, and always keep it coming. Don’t offer it all at once – try to give just about enough so that your customers are happy, and keep the next punch – killer feature, sales campaign, new product – for the right time. It will keep your customers intrigued, your market pulsing with new value, and your competitors puzzled and trying to keep up.
“Know the enemy and know yourself; in a hundred battles you will never be in peril. When you are ignorant of the enemy but know yourself, your chances of winning or losing are equal. If ignorant both of your enemy and of yourself, you are certain in every battle to be in peril.” (III.30-33)
Competition; even though this is peacetime, and we are all doing our best to conduct business in good faith, your competitive strategy should heed Sun Tzu’s advice by thinking of competitors as enemies.
The more you know of them, the better you can plan ahead. This is especially important in the first foundation stages, when the entrepreneur is fully excited with an idea and is sometimes driven to distraction, failing to see how the marketplace is built and what other players are out there. Here are three common mistakes that the general in you should know to avoid:
- Identify your competition. Do your homework; explore, research, delve deep. Find out exactly who your competitors are, what they do, and how their position affects your position. Dig deeper – who are the founders? How were they funded? By whom? Where are they located? What’s their market share? And most importantly – how are they compared to you?
- It’s not the product – it’s the strategy. This mistake is very common, mostly made by highly technical entrepreneurs. They usually think that if their product, or worse - their technology, is superior (more advanced, has more cool features, shines like the sun), it is inevitable that the market will follow them. To this there is but one response: I’m pretty sure there are better hamburgers out there than McDonald’s. At the end of the day, your market success is only as good as your marketing strategy. The product only serves that strategy, not vice versa.
- Avoid mistaking competitors for boulders. Many times I heard people utter sentences like “oh – they can’t do that, and they never will.” The fact that you know what your competition has to offer today, does not mean you know how they will change it tomorrow. Try to put yourself in the competitor’s marketing analyst - your counterpart’s – chair, and do your best to think like they do. No company has ever succeeded for too long by stagnating. In this fast-paced, ever-changing market, even your competitors have to move forward to survive.
Do yourself a favor – read the book. It is essential for the general in you. It’s not too long, and – believe me – will blow your mind away. If anything, it will give you a few cool anecdotes to throw into the air when trying to impress colleagues, boss, dates, or people you’ve met in a conference.
On second thought – bad idea for dates.