Strategic Defense: Alternatives to Attack Strength
Recall our assumption: you want to defend against a strategic competitive threat. This means the competitor must have or potentially have a product or service that may prevent you from reaching your big-picture objectives with a five year horizon.
Let’s look at the best alternatives to the Attack Strength strategy.
Buy Them
There is no more certain way to remove a competitive threat than to buy the threatening company. As a bonus, you may harvest a revenue stream, customers, segment access and expertise, technology and/or key employees. This is commonly called "taking out a competitor." IBM’s recent acquisition of Filenet is a classic example of this strategy.
Buy Them is recommended for companies that are unlikely to have the perseverance to use Attack Strength. Corporate boards in particular usually understand this strategy.
Raise the Bar
This is the standard barriers-to-entry strategy employed against a specific competitor. Ask this question: What can you do that will expand the customer’s definition of your offering in such a way that it will discourage or distract the threatening company from taking the course of action you fear?
Improvements you make to your offering, like breadth-and-depth of features and functions, can be part of this strategy, as can other traditional barriers-to-entry moves, when they are targeted at a specific strategic competitive threat.
The Microsoft Office suite was a 1989 raise-the-bar action by Microsoft to defend its strategic plan for Excel and Word against threats from Lotus 1-2-3 and WordPerfect. Customers began expecting a suite of productivity applications ("1-2-3" was never really much more that "1" but it did give Microsoft the idea). Lotus and WordPerfect responded with all sorts of distracting, resource consuming activities that led to the death of the threats Microsoft feared.
When you Raise the Bar, you attack the competitor's current weakness or create a new one. However, the risk of attacking weakness alone is that you will encourage the competitor to shore up its weakness and thus become a stronger competitor. This is why this strategy is often used along with Attack Strength, which is intended to distract the competitor and divert its resources.
Spread FUD
Sowing fear, uncertainty and doubt has been a part of the high-tech business landscape since IBM perfected it during the 1960s and 70s. It involves sending a consistent message that bad things may happen if you buy from the competitor but you are safe buying from us. While FUD as a tactic is often broadly targeted, as epitomized in the then popular aphorism, "No one ever got fired for buying from IBM," the FUD defensive strategy is aimed at a specific strategic threat. For example, Microsoft spreads FUD about Linux, such as concerns about legal risks to customers and total-cost-of ownership, to protect Windows.
Freeze-the-market is a FUD technique. It involves pre-announcing a product or service. The offering may be quite real or may never actually become available (vaporware}. It works when you are credible and the pre-announced offering raises concerns in the minds of decision makers that not waiting for it might be a serious mistake. It is used so often now that examples abound. The most skilled practitioners of FUD actually do ultimately release the product or service, but without some of its most FUD inspiring features. Does the word Vista come to mind?
Using FUD is cheap, as in "talk is cheap." However, trying FUD and failing can be a bad sign when it has previously worked for you, as when IBM's failed "A Better DOS than DOS, a better Windows than Windows" FUD campaign for OS/2 signaled the passing of the baton from IBM to Microsoft and IBM’s ultimate exit from the PC business entirely.
Turn The Lawyers Loose
Sue the competitor for something, like IP infringement, or get the government to take action against them. Even when successful legally, this rarely produces the desired strategic results and usually signals the start of a death spiral in those who employ it. Examples include SCO's suit against IBM, and the 1998 federal antitrust action against Microsoft instigated by Netscape.
Copyright © 2006 Philip Bookman
Let’s look at the best alternatives to the Attack Strength strategy.
Buy Them
There is no more certain way to remove a competitive threat than to buy the threatening company. As a bonus, you may harvest a revenue stream, customers, segment access and expertise, technology and/or key employees. This is commonly called "taking out a competitor." IBM’s recent acquisition of Filenet is a classic example of this strategy.
Buy Them is recommended for companies that are unlikely to have the perseverance to use Attack Strength. Corporate boards in particular usually understand this strategy.
Raise the Bar
This is the standard barriers-to-entry strategy employed against a specific competitor. Ask this question: What can you do that will expand the customer’s definition of your offering in such a way that it will discourage or distract the threatening company from taking the course of action you fear?
Improvements you make to your offering, like breadth-and-depth of features and functions, can be part of this strategy, as can other traditional barriers-to-entry moves, when they are targeted at a specific strategic competitive threat.
The Microsoft Office suite was a 1989 raise-the-bar action by Microsoft to defend its strategic plan for Excel and Word against threats from Lotus 1-2-3 and WordPerfect. Customers began expecting a suite of productivity applications ("1-2-3" was never really much more that "1" but it did give Microsoft the idea). Lotus and WordPerfect responded with all sorts of distracting, resource consuming activities that led to the death of the threats Microsoft feared.
When you Raise the Bar, you attack the competitor's current weakness or create a new one. However, the risk of attacking weakness alone is that you will encourage the competitor to shore up its weakness and thus become a stronger competitor. This is why this strategy is often used along with Attack Strength, which is intended to distract the competitor and divert its resources.
Spread FUD
Sowing fear, uncertainty and doubt has been a part of the high-tech business landscape since IBM perfected it during the 1960s and 70s. It involves sending a consistent message that bad things may happen if you buy from the competitor but you are safe buying from us. While FUD as a tactic is often broadly targeted, as epitomized in the then popular aphorism, "No one ever got fired for buying from IBM," the FUD defensive strategy is aimed at a specific strategic threat. For example, Microsoft spreads FUD about Linux, such as concerns about legal risks to customers and total-cost-of ownership, to protect Windows.
Freeze-the-market is a FUD technique. It involves pre-announcing a product or service. The offering may be quite real or may never actually become available (vaporware}. It works when you are credible and the pre-announced offering raises concerns in the minds of decision makers that not waiting for it might be a serious mistake. It is used so often now that examples abound. The most skilled practitioners of FUD actually do ultimately release the product or service, but without some of its most FUD inspiring features. Does the word Vista come to mind?
Using FUD is cheap, as in "talk is cheap." However, trying FUD and failing can be a bad sign when it has previously worked for you, as when IBM's failed "A Better DOS than DOS, a better Windows than Windows" FUD campaign for OS/2 signaled the passing of the baton from IBM to Microsoft and IBM’s ultimate exit from the PC business entirely.
Turn The Lawyers Loose
Sue the competitor for something, like IP infringement, or get the government to take action against them. Even when successful legally, this rarely produces the desired strategic results and usually signals the start of a death spiral in those who employ it. Examples include SCO's suit against IBM, and the 1998 federal antitrust action against Microsoft instigated by Netscape.
Copyright © 2006 Philip Bookman
Labels: software strategy
posted by Phil Bookman at 10:57 AM
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