
Eight ways for an outsider to successfully get on board
Søren Toft, CEO of MSC Mediterranean Shipping Company, makes the case for respecting the legacy of a family-owned business when taking the helm....
by Mark Chussil Published 4 July 2022 in Audio articles • 7 min read • Audio available
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Should your company adopt a competitive strategy proposed by a passionate, unconventional, lonely genius? The lonely genius might blaze a trail to brilliant triumph. On the other hand, there might be a good reason why the genius is lonely.Â
Or should your company trust the wisdom of crowds? Surely a strategy must be good if it attracts a whole crowd? It’s not groupthink, it’s consensus. Then again, the very fact that there’s a whole crowd suggests that your company won’t gain unique competitive advantage.Â
I run an ongoing experiment that sheds light on the lonely genius versus the wise crowd. More than 2,000 people — executives, managers, professors, students and consultants — around the world have designed pricing strategies for three generic industries in the Top Pricer Tournament. Each strategy gets tested against all two-competitor combinations of strategies chosen so far; that’s more than two million futures per strategy, per industry.Â
The Tournament makes it easy to spot loner strategies and crowd strategies. Loner strategies are those chosen by only one person, and crowd strategies are those chosen by many.Â
It might seem odd that crowd strategies exist at all in the Tournament. There are 14,738 possible strategy choices, and (as I write) 2,130 Tournament entrants. The odds are tiny, and yet in the Fast Growth industry 33 competitors chose the same strategy, in the Ailing industry 55 did so, and 58 in the Mature industry category. That’s not by chance. Those are crowds. Â
How do people create strategy crowds? They don’t. No one says, “Let’s look for a crowd strategy.” Rather, people set out to choose good strategies, and those they consider good are strategies that others consider good too.Â
Smart people have good reasons to choose crowd strategies. Keeping up with competitors, for example, is simple and low risk. It’s also the single most-popular strategy chosen in the Tournament, which makes it a crowd strategy.Â
At the other extreme, many Tournament entrants chose loner strategies; ones that no one else thought worthy. In the Ailing industry category, 42% of entrants picked loner strategies; in Mature, 45%; in Fast Growth, 48%. People pick strategies they think will perform well, and the loners saw value where crowds didn’t. To the loners, the unusual strategies are good.Â
Smart people have good reasons for choosing loner strategies: to keep a competitor off-balance, to import a strategy idea from another region or industry or to establish themselves as an innovator. Â
Just as the crowds didn’t know they were crowds, the loners didn’t know they were loners. They simply chose strategies that they believed would work.
When I began pondering whether loner or crowd strategies performed the best, I thought the answer would be hard to find. But the answer turned out to be rather simple and we’ll come to it shortly.Â
Can you find the answer? Notice how you approached that question. Did you look for stories of other companies that were strategy loners or crowds? Did you look for counterfactuals, such as the companies that silently vanished into that cold, dark night? Did you consider the role that competitors played in your strategy’s success or failure? Did you wonder how people in various functions — finance, marketing, R&D, the C suite, and so on — would look at loner and crowd strategies?Â
When those 2,130 people designed their strategies for the three industries, they largely obeyed conventional wisdom: go for share in fast-growing markets and harvest whatever profits remain in fading markets. Â
In workshops, business war games, and simulations, I ask participants why they think their strategies will succeed. I hear stories saying, “We will do X, and that will cause Y, so all will turn out well for us.” No great surprise. Nobody picks a strategy, in the Tournament or real life, for which they have no success story.Â
Then I ask participants what they think their competitors will do. I see a room full of blank stares. No great surprise there either, since business tools focus on ourselves: our financials, our customers’ needs, our trends. Yet everyone knows that their competitors are smart, dedicated, determined, and motivated too. If you can choose a great strategy, so can your competitors.Â
I said Top Pricer Tournament entrants “largely” obeyed conventional wisdom by seeking market share in the growing market and profits in the fading market. Many entrants chose strategies not endorsed by conventional wisdom. That means your competitors might surprise you. That means they might pick lonely geniuses.Â
If you are lucky, the surprises are pleasant. If you choose to go for profits and they choose to go for share, it might work out well for everyone (including customers). If you are unlucky, the surprises are unpleasant or even life-threatening. For example, you intend to offer a discount, but instead provoke a price war. Â
I’ve seen those unpleasant surprises unfold when real-life businesses in multiple industries war-game their futures. Mutually assured destruction, or at least mutually assured disappointment.Â
5 ways to think strategicallyÂ
The lonely genius or the wise crowd? I told you the answer was simple. Here it is:Â Â
“If you want to outperform your competitors, you must do something your competitors aren’t doing. “Â
How could it be any other way? If you are exactly like them, what basis do you have to expect, let alone demand, results better than theirs?Â
But there is a twist. “Outperforming” competitors does not necessarily mean achieving the best possible results. It means the biggest possible difference between your results and the next-best competitor. Is your goal to beat your competitors or to make the most money for your company?Â
Pay attention to the incentives inherent in goals. Market share is a zero-sum game. Every market has exactly 100% market share at all times of day and night, and the only way you can gain market share is for someone else to lose it (NB: People don’t like to lose market share).Â
Profit, ESG, and job security are not zero-sum games. Every business can make (or lose) money, every business can do good (or evil), and every business can protect (or endanger) jobs.
There is a further twist: most loner strategies perform worse than crowd strategies (The crowd might not be all-knowing but neither is it an idiot). All loner strategists are different, by definition, but most are not good, at least in the Tournament. Â
If all you know about two strategies is that one was chosen by a loner and the other by a crowd, bet on the latter.Â
The trick is not merely to pick a loner strategy instead of a crowd strategy. The trick is to pick a good loner strategy. It’s a difficult problem, as we plainly see when we wrestle with strategy decisions. I’d go as far as to say that if you’re not wrestling then you’re probably not strategizing.Â
Do you want to play the game? Listen to the wise crowd, and don’t expect to outperform it. Do you want to change the game? Then listen (carefully) to the lonely genius.
Founder of Advanced Competitive Strategies, Inc
Mark Chussil is the Founder of Advanced Competitive Strategies, Inc. He has worked in competitive strategy for 45 years with experience in research, business war gaming, and strategy simulation, and has been published widely. He has an MBA from Harvard and a BA from Yale. Contact Mark at [email protected] and via LinkedIn.
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