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Friday, August 20, 2010

No. 17: Take a Different Strategy and Keep It In Strict Confidence

A company should not take the same strategy taken by the competitor in business. Sun Tzu wrote "The Arts of War" about 500 B.C. in China and insisted the importance of the strategy to defeat the weak while avoiding a battle against the strong. In most cases, however, a company plays safe and follows its bigger competitor using the same strategy. It intentionally or unintentionally ignores the factors that make the strategy of the competitor successful and presumes that the strategy taken by the competitor will also be effective to it without careful consideration. As a result, it unknowingly attempts to attack on the strength of the competitor.

It is important to know that specific products of each company make its strategy work well. Not only visible products, such as equipment and apparatus, but also invisible products, such as technological strength, sales forces, developmental power, and service capability, vary with the company. In the subprime lending disaster, you can say that every company involved took the same strategy seeking big profits and fell into an abyss together. It is an honor for a company to have its strategy imitated by another company, but the competitor’s strategy is the worse strategy for a company that imitates it. Any strategy does not work as soon as it is known to your competitor.

Japan provoked a reckless war against the U.S. without notice in 1941, and it was knocked into smithereens in 1945. Putting aside the fact that Japan had no chance of winning in terms of military strength, it is important to know that the U.S. mostly knew Japanese strategies beforehand because they were too much faithful to the textbook. During the age of provincial wars in Japan (1467-1615), warlords worked out their own strategies and fought against their enemies with the strategy full of originality. The greatest warlord is Nobunaga Oda (1534-1582), and both Hideyoshi Toyotomi (1536-1598) and Ieyasu Tokugawa (1542-1616) are his students. It is striking to know that none of the three warlords shared the same strategy.

During World War II, headquarters of the Imperial Japanese Army was staffed only with the bright graduates from the military academy. They all were too faithful to the textbook to construct a strategy full of originality. In addition, they were too proud and gentlemanly. A high-raking official in the headquarters reportedly told “It is not gentlemanly to sneak a look at strategies that the U.S. keeps in strict confidence.”

2 comments:

  1. The company that enters a market first enjoys the fruits of their position. A competitor following them into the market has the opportunity to adopt the strengths of the strategy and to avoid the missteps. The result being a sharper aim at the target market with the intent of having higher volume on a lower margin generating good profit. Anytime you can go to school on someone (a golf putt for example) else you can develop a stronger strategy.

    The Japanese war story observation is new to me. An interesting parallel is the battle between General George Patton and General Rommel's army in North Africa. Rommel had a better trained and battle hardened army and superior tanks and associated firepower. However, (in the film at least) General Patton read Rommel's book on tank warfare and defeated the stronger force with an inexperienced army with inferior fire power.

    Thanks for the article Shigeo.

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  2. Thank your for your comment, Mike. I learned a lot from your comment.

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