Common sense, as well as academic research argue that attacking bigger competitors will most likely lead to failure. Take for example, a series of studies undertaken at London Business School in the early 1990s which examined how new market entrants in several UK industries fared against much bigger established competitors. Not surprisingly, the failure rate of “newbies” was quite high. More than 85% of them failed within 5 years of entry. The No.1 ranked firm in a particular industry had a probability of about 96% of surviving as No.1 – an almost certainty.
Yet, without disputing the statistics, we all know of examples of companies that attacked much bigger competitors with great success. In several instances, not only did the smaller firm survive but often managed to emerge as one of the leaders in the industry. In other words, the small fish ate the big fish! IKEA did it in the furniture retail business, Canon in copiers, Bright Horizons in child care and early education, Starbucks in coffee, Amazon in bookselling, and the list goes on; K-Mart, Southwest, Red Bull, Lulu, Netflix, Skype.
So, what explains the success of these outliers and what can we all learn from their experience? After studying more than seventy such firms, Dr. Costas Markides, Professor of Strategic and International Management at London Business School, and author of the book ‘Game Changing Strategies’, has a found a simple answer which he explains in his book; Successful attackers do not try and be better than their rivals. Rather, they actively adopt a different strategy and aim to compete by changing the rules of the game of the industry.
Dr. Costas Markides explains in ‘Game Changing Strategies’, that significant shifts in market share and company fortunes took place not by trying to play the game better than the competition but by trying to be different; in a sense, by avoiding head-on competition. The strategy that seems to improve the probability of success is the strategy of breaking the rules, of discovering and exploiting a different business model from the one that established and bigger competitors deploy in a given industry.
Dr. Costas Markides, himself, gave a detailed training module based on his book ‘Game-Changing Strategies’ in Madinah Institute for Leadership & Entrepreneurship’s executive education program; PALM2 (Program for Advanced Leadership & Management).
If you are interested in learning more about upcoming executive education programs please visit www.mile.org or view videos of professors in action on http://www.youtube.com/user/milemadinah.
The Madinah Institute for Leadership & Entrepreneurship (MILE) is the first of its kind non-profit world-class executive education institute that works with top academic institutions, consulting organizations and professional groups from around the world and is under the patronage of His Royal Highness Prince Abdulaziz bin Majed bin Abdulaziz Al Saud, Governor of Madinah.