There are two types of strategy. You can have strategies of attrition. You can have strategies of guile. There really aren’t any other approaches. This really simple distinction helps to bring clarity to many business decisions – especially when you think about your marketing strategy and competitive positioning.
Attrition as Strategy
The first type of strategy is Attrition. This goes under a large number of names. It can be brute force, frontal attack, advantage in numbers, overwhelming strength. The core idea is that you have more X than your opponent and you can use it to overwhelm him.
This could be money, time, manpower, market position or reputation. Let’s have a look at each of those in turn.
Examples of Attritional Strategies
Google has a strategy of attrition to its competitors, or rather the small startups who could be its competitors. It buys them. If may do something with them or it may not. It’s wall of money means that it is easier to take an offer and give up than fight against a company that can deploy billions to outcompete you.
In 1812 the Russian empire used time against Napoleon. With nowhere to helter from the Russian winter and no supplies Napoleon needed to reach a place of safety to survive. The whole strategy devised by Kutusov was designed to use time against Napoleon so that General Winter could cause massive human and morale damage.
Market position can also be used as a strategy of attrition. As a market leader you can trade market share to protect your revenues, force a competitor to over expand or overpay for customers. Many FMCG companies, such as Procter and Gamble, use this strategy with cash cows as part of their portfolio management technique.
The use of manpower as an attritional strategy is often associated with the Great War and particularly with the Battle of the Somme. It’s also a facet of many political campaigns. Both Barack Obama and Tony Blair used an attritional strategy with millions of supporters in the campaigns outpacing the opposition at a grassroots level.
Reputation is also a source of strategic power. The Pope used his reputation to generate money from the sale of indulgences to pay for St Peters. In more modern times we see people in authorities positions using their reputation to achieve their own goals. Elon Musk has used his reputation to finance Tesla motors. With car production low (in June 2018) that reputation is at risk if he does not deliver and needs to raise more capital at disadvantageous terms.
Guile as Strategy
The second of the two types of strategy is guile. This is looking at your enemy and thinking.
I am going to get too badly hurt if I go mano a mano with him. I need to do something different.
So a strategy based on guile, or cleverness avoids the direct approach and looks to find a way of achieving the same objectives without overwhelming the enemy. Make no bones about it though – the enemy, or competitor, is intended to end up face down on the ground.
Odysseus is the poster boy for this approach to strategy with the big wooden horse in the Trojan War. Sun Tzu in the Art of War put it another way –
Be Like water
When the enemy advances retreat. When the enemy retreats advance,
Examples of Guile as Strategy
Some good examples to using guile include word of mouth, viral marketing and straight out disruption
Word of mouth is the classic guile tactic. Here you focus on showing customers that you care. Tony Hsieh did this at Zappos with a total focus on delivering an amazing customer experience. He did not go head to head with the existing shoe brands but instead built an experience that made people want to buy shoes from him. Delivering Happiness is a great read.
Both Dropbox and Gmail used Viral marketing to avoid having to spend billions of dollars acquiring customers. In each case they offered something that was essentially free – a free product subsidised by advertising for gmail – and – a freemium service with a few paying users supporting a basic free service for dropbox. Users were encouraged to give the ‘free gift’ to their friends and because it was so good the CAC (cost of customer acquisition) was incredibly low compared to paid acquisition.
Disruption is another form of guile. Marc Benioff realised that he could not go head to head with Oracle or SAP in CRM. They both had a huge installed base of users and could throw a wall of money at any direct attack that Salesforce made. Instead he changed the game and said
No more Software
With that reframing of the enterprise CRM market into Dinosaurs and Salesforce he disrupted the market and made many of Oracle and SAPs competitive advantages liabilities instead.
What Type of Strategy to Use
Guile as strategy is normally the only type a startup should EVER consider using.
Startups are constrained by limited resources. If not they should often be as the story of Samuel Langley and the Wright brothers shows. The startup is faced with a world where it is challenging large incumbents who have far more of every conceivable resource than they do.
Going head to head is like me fighting a gorilla. It may make an awesome three second gif but it doesn’t have a happy ending. Entrepreneurs have to look for smart ways to achieve their strategic goals. The more known those ways are, the more often that they will be attritional. An example is Facebook advertising. Five years ago it was a cheap way to buy an audience. Now with so much advertising money switching to digital when you buy attention you are competing with the world’s largest brands. Can you win? This is the whole premise of growth hacking
However there are exceptions. If you are in a new category, you have traction, funding and are in land grab mode you go full out. A good example of this is the ride sharing war between 2012 and 2016 with Uber, Lyft, Grab and Didi Chuxing all spending billions to build market share and establish a strong position before they got swamped by new entrants.
How are the Two Types of Strategy Useful to Entrepreneurs
For entrepreneurs a guile based strategy is almost always the best of the two types of strategy. The quick test that you have to ask is
Who else is doing this?
Do they have more money than me?
(Swap money in the above for any other relevant resource)
If an incumbent is using a similar approach, content or marketing channels then the conclusion is that you should really be looking at doing something else.
Use an attritional strategy when your competition is weak.
Use a guile based strategy when you have limited resources and cannot afford to lose.
If you’d like help discovering the best strategy to use do reach out and book a free call – alternatively do signup to my newsletter so that you never miss my strategic insights.