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Radhika Chadha

For every market tactic, role-play how your competitor will react. And how you will counter-react. And yet, don't think of it as a chess game in which there are just two players with infinite time to think. Instead, be prepared for a martial arts whirligig, where you are taking on a number of players. <109>

THERE is this great scene in a kung fu movie - Bruce Lee is being shown a display of martial arts prowess by a hulk who effortlessly smashes a wall of bricks. His response: "Very good but bricks, they don't kick back"! Sometimes I think this movie should be made mandatory watching for strategy formulation exercises!

We see it time and again. A new product launch by a company, backed by reams of market research and concept tests. Launch backed by a blitzkrieg of advertising. Product placement impeccable. And a year later, one more failed product, laid quietly to rest.

Everything seemed so well planned, so within control. What goes wrong in such cases? Of late, it has become expedient to blame the dwindling market conditions for all market failures, but even in these difficult times there are winners out there who have wrested growth despite the difficult times.

Competition is the bugbear of the market today. In the heady era of post-liberalisation freedom, everybody and his brother marched into the market with a spate of new offerings. Everybody is vying for the same pie - and then is foxed when the shares become slivers.

And yet, ironically, competition is not factored in while making crucial strategic decisions. Instead of worrying about competition in a vague, nebulous sort of way, managers need to exercise greater control over the competitive struggle.

Anticipate the challenge

One of our research reports revealed that the air-conditioner market has at least five big players, each ambitiously targeting 30 per cent of the market, and each taking only one competitor into account. Someone has to break the bad news to them that all five can't win! Stop the ivory-tower planning, in which obliging spread-sheets give you targeted market shares and volume growth. If your planning is static, and assumes that your competition will sit docilely while you carry out your moves - well, then, that could be your biggest strategic mistake. In your spreadsheet, your plan works beautifully, not surprisingly. Remember, bricks don't kick back! In the real world, unfortunately, there are determined rivals who want to win just as much as you do.

Accept the uncertainty

For some reason, most strategy development ignores competition - or worse, when it does factor it in, makes the fatal error of assuming that competition will mirror the past. Remember, uncertain markets offer the greatest growth; how well you can anticipate and manage the complexity will determine how much of the growth you will grab. Advances in telecommunications, infrastructure and communications have blunted the edge of many traditional competitive advantages such as distribution and networking.

Expect the unusual

You have a neat, orderly view of how things are going to shape your industry. Your competitor, especially if he is a small, aggressive ankle-nipper, is planning an innovative attack on your "impenetrable" market position. The bigger you are, and the smaller he is, the more you have to lose. The biggest competition in most consumer goods companies today comes from nimble new entrants who refuse to `play by the rules'. Most soap marketers at the beginning of the decade assumed that the category was without any surprises, and that competition had been accounted for, with everyone in their places. Which is why they missed a massive shift in the soap market to sub-popular soaps. Why do you think HLL is now waking up and giving Lifebuoy a new avatar?

Walk in his shoes

They say you shouldn't judge a man till you've walked a mile in his shoes. Understanding your competitor's imperatives and recognising his flexibility will enable you to predict his moves with a greater degree of clarity. There are signals everywhere: don't box yourself according to the business you are in. Instead, analyse his entire business to understand his strategic vision, and determine his blind spots. For every market tactic, role-play how your competitor will react. And how you will counter-react. A small entrepreneur has objectives, financial targets and business success criteria different from an MNC or a listed company.

And yet, don't think of it as a chess game in which there are just two players with infinite time to think. Instead, be prepared for a martial arts whirligig, where you are taking on a number of players, all at the same time. In an increasingly ruthless terrain, you will need to react with aggression and speed to just retain your territory. Convert some of that market paranoia to decisive competitor anticipation, and you can shape the industry to your advantage instead.

(Radhika Chadha is a Chennai-based consultant. Karategy is a proprietorial technique evolved by her consultancy to signify both strategy and karate techniques of identifying competitor weaknesses. Feedback on this article can be sent to bleditor@thehindu.co.in.)

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Bricks don't kick back

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