HBR in Brief
HBR in Brief
The Idea in Brief
You've executed a brilliant new strategy--but your competitors are catching on. How to get them off your scent?
Stalk recommends throwing curveball strategies: clever moves that get competitors looking the other way while you capture customers' hearts, minds, and wallets. Curveball strategies outfox rivals into doing something dumb they otherwise wouldn't have, or not doing something smart they should have.
Consider this curveball strategy: Let rivals misinterpret your success, as Australian discount airline JetStar did. Competitors didn't recognize that it was aggressive asset utilization, not just cost control, that put JetStar in the lead. Alternately, borrow tactics from an industry other than yours. Andy Hornby, CEO of Halifax Bank of Scotland (HBOS), imported hard-sell techniques from his years in retailing to knock stodgy rivals off balance. Another clever move: Lure competitors into disadvantageous areas; for example, by competing for, but intentionally losing, the business of less profitable customers.
Opportunities abound to throw your competitors a curve. And each time you throw one, you earn time to plan your next curveball.
The Idea in Practice
Stalk recommends these curveball strategies:
Let rivals misinterpret your success. A successful company's competitors may think they know the secrets to its success. But they're often wrong. By letting rivals misjudge the key source of your performance, you maintain your edge even longer.
Jetstar, an Australian no-frills airline, flourished by letting rivals think it was competing just by squeezing costs. The real secret to Jetstar's success? Aggressively increasing its asset utilization. Fast turnaround times at the gate kept its planes, pilots, and crew in the air for more hours each month than traditional rivals. And smart scheduling brought most of its planes and crew back to home base at the end of the day. Extreme asset efficiency enabled Jetstar to improve profitability through volume gains--and keep competitors at bay.
Disguise your success. If rivals can't even see your success, they won't move to attack you. One way to disguise your success is to drive sales through your service organization--making service technicians de facto sales representatives.
DiaDevice, a medical diagnostic equipment maker, used this technique to outfox rival MedicTec. It installed full-time service technicians in second-tier hospitals that MedicTec had deemed not profitable enough for on-site service. DiaDevice's on-site technicians boosted new equipment sales by influencing hospitals' request-for-proposal process. They knew the strengths and weaknesses of all the equipment installed at the hospital--regardless of the supplier. Thanks to this curveball, DiaDevice gained share in service-contract renewals and new equipment sales--virtually unopposed by MedicTec.
Stick rivals with unprofitable customers. By using clever pricing to get competitors to pursue unprofitable customers, you lock up the most profitable ones.
U.S. cleaning-chemical company Ecolab knew that small, independent customers--though willing to pay higher prices than chain retailers--were also costlier to serve, and thus not profitable in the long run. But rival Diversey was smitten by the healthy gross sales revenue promised by such customers. To help Diversey "win" these customers, Ecolab priced its bids to small independents high enough to lose to Diversey but low enough to keep downward pressure on Diversey's net margins. Meanwhile, Ecolab priced aggressively to win big chain accounts--the cheapest to serve and thus most profitable. While Diversey's revenues increased, its bottom line eroded and it lost 15% on U.S. sales. Meanwhile, Ecolab enjoyed a steady 20% return on sales.
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