19: Phase 2 - Create Playbook Asymmetry
A strategy is not a plan, but guidance for behavior. Those behaviors are often organized into plans and process - but there is a danger in planning in that it becomes rigid. People stick to a plan, even when it is not working - whether the plan was missing something or an unexpected event occurred. And this is why plans fail to achieve strategic objectives.
Consider the Mongol army: it did not win because it planned each battle more carefully than their opponents. In fact, they probably planned less - but they had established a number of tactics and behaviors that could be followed that did not depend on a precise sequence of events, so that a strategy could be accomplished even when situations changed.
The Roman army, meanwhile, made meticulous plans - but it is generally suspected that, while it was often claimed that a plan wax executed perfectly, that these plans were adjusted as conditions on the battlefield changed. Had they not done so, they would likely not have achieved military success. Battle is chaotic, and plans must adapt by the minute to account for changing conditions.
In today's world, markets are complex and there is is constant change, and sticking to a rigid plan without having the ability to adapt for changing conditions or overcome the unexpected is a recipe for failure. To win, you need a plan, but you also need a playbook that can be consulted so that you can succeed where this occurs.
(EN: A more direct example than ancient armies is contemporary salesmanship. It's often been expressed that good salesmen follow their training, but great ones know when to ignore procedure and do what is necessary to win the sale. This is likely true of any position in any firm, and companies are beginning to understand that they are better positioned to success if they have informed and empowered employees rather than ignorant and obedient ones.)
You are Not Alone
A significant disadvantage to traditional planning process is that they use the scientific method. In a laboratory, a scientist can control conditions and change only certain factors to effect a change. In the field, conditions are changing and there is not ability to control factors, and planning ignores this.
A plan assumes nothing else will change in the environment, so your behavior is the only thing that will cause a change in conditions. It also assumes that nothing else is attempting to change the environment, such that the only thing anyone else can do is react to your behavior.
But you are not alone in the world, and others are not merely going to react to your actions. Every stakeholder, and others you have failed to consider, is out there doing their own thing, following their own plan, and is not merely waiting to react to what you do.
In the US, companies have become aware of the importance of their customers' behavior, using focus groups, interviews, surveys, and other methods of research to predict how customers will react to their plans. The author doesn't see the need to go into this much, as it's very well covered in other sources.
However, the focus on customer behavior has drawn attention away from competitors' behavior, which matters just as much. The customer does not respond to your actions in isolation, but compares your to the other firms that meet the same need. So you have to understand the choice they will make, not in isolation, but in consideration of all firms that are available to them.
(EN: Here, the Internet should be mentioned, as in previous years customers would not be aware of their choices. The fact that they can research multiple options, and often do for any significant purchase, makes it all the more important for firms to understand the full scope of the competitors' offers.)
The Competitors' Playbook
He mentions a client, whose can only be described in brief detail for confidentiality reasons, which undertook an extensive research effort, spending huge sums of money to gather detailed information about customer behavior. The process took years, and when it ended they found that the data they had gathered was no longer applicable: it described the way the markets were when they began their study, and the market had changed in the meantime.
Competitor data has a longer shelf life. While customers' tastes and preferences may change with the seasons, your competitors tend to lay long-term plans and stick to them. This is not to say the market should be ignored, but that market research needs to be less elaborate and reflecting the present rather than the past, but knowing how your competitors are acting should not be ignored either.
Some examples from a client in the fashion industry:
- The industry trend was to divide out men's and women's brands to pursue the needs of each gender. The client saw that if it could establish a unisex brand, the competition would be slow to respond because they had abandoned that tactic.
- The industry trend was to focus on economies of scale, developing products that have mass appeal and can be mass produced as identical garments. The client recognize that many consumers prefer to be distinctive and dress in a way that appeals to people in their own community, not worldwide, so the competition would be slow to copy a strategy of using local products and tailoring to the individual's desires.
- The industry is risk-averse and leading players generally wait to see what fashions will catch on before going into mass-production. The client decided to be first, accepting the risk of following a fashion that might not catch on to gain the business of fashion-forward customers, abandoning the fashion-followers.
- The industry tends to divide its brands among product managers and prevent them from conflicting with one another. The client recognized that these constraints often left them unable to work in the gray areas, where a successful product would be avoided by two or more product managers who wished to respect one another's boundaries, hence the product would fall through the cracks.
There are many more examples, but these should be sufficient to make the point: companies will make decisions to do certain things, which implicitly means that they will refuse to do other things - and if the things they are not doing are those that customers will value, then this is a significant opportunity for someone to step in and do what they won't.
Exercise: Understanding the Playbooks
Krippendorff proposes a seven-step process to understand your competitor's playbooks.
1. Pick Your Top Competitors
The first question about your competitors is this: who are they? It's a very important consideration to make because you will define your strategy by considering them, and if you choose the wrong ones, it will cause your strategy to be misguided.
Experienced businessmen think they know who their competitors are, but they tend to be short-sighted, thinking only of the top brands of which they are aware. Consider the mistake of health-food stores, which only considered other health-food stores as their competition, and totally ignored traditional grocery stores - so when grocery stores created a health food aisle, they were blindsided.
It is also a mistake to choose competitors who have entirely different business strategies. Walmart is a common competitor for many firms, as they sell many things, but unless it is your intention to compete to be the lowest-priced, then it is not a competitor - and pursuing a low-price strategy may be harmful to your business if you alienate the customer who is willing to pay more for a quality product.
Selecting your competitors is a matter of looking at your customers: find the firms that are serving, or would be willing to serve, the customers that you wish to serve. That is, what brands might a customer buy to solve the same problem as your brand solves?
This question should broaden your perspective to consider competitors you might otherwise have ignored (if the customer's goal is to stay dry in the rain, a raincoat manufacturer must consider umbrella manufacturers to be competitors) and to set aside those who you might have mistaken for threats (if the customer wants a cheap disposable raincoat, you do not need to compete with those that sell expensive fashion garments).
In addition to finding firms who are similar, be sure to include a few that are dissimilar - because they have the potential to blindside you. Also, considering dissimilar firms will help you broaden your thinking to consider things your competitors, who are all looking at one another, will not even consider.
Remember that your ultimate goal is to create unique and sustainable competitive advantage: doing the same thing as everyone else does not create distinction, but commoditization. You will be looking at what firms do as a means to discover what they are not doing - these are the gaps in their armor.
2. Pick Your Lenses
The author tells of meeting a man who had been hired into a firm of which he had been a buyer for a major client. Because he had been a client for ten years, he thought he knew the business - but when he became an insider, he learned many things and realized that much of what he thought as a client had been wrong.
The concept of "lenses" involves looking at an idea from multiple perspectives. Very often, a firm will do what is best for its operations without considering what the customers or shareholders will think of the decision, and this ends in disaster.
And so, consider the perspectives of stakeholders - because you can't please everyone, you must choose whom to please. However, this should not cause you to ignore the perspectives of everyone else who will be impacted, and particularly those whose support you will need to accomplish a goal.
He provides a list of departments to consider (human resources, marketing, operations, pricing strategy, sales, etc.) but this seems general. If you do a stakeholder analysis you will know whose participation is critical for success, and then be able to derive who might be affected by it, thus arriving at a list of all the perspectives you will need to consider.
3. Organize Your Team
Once you know who will be impacted, assemble a team that is capable of gathering information to understand what they must do to support your plan, the tools they will use to do so, and the reasons they might be reluctant to give support.
(EN: That's it - the topic is given only one paragraph, and a rather short one.)
4. Gather Data
Data gathering is also done in a very haphazard and dysfunctional manner. Very often, a decision-maker gathers only enough data to prove that his decision (or one he foresees) is supported. But to be effective, research must be comprehensive to gather as much data as possible, and does not ignore anything or dismiss it as irrelevant before fully analyzing it.
He provides a list of sources, many of which are typical (industry and trade association reports, stock analyst opinions, annual reports, etc.) and some of which seem novel (employees recently hired from a competitor, competitors' advertising materials, customer testimonials) (EN: Ultimately, there can be no comprehensive list.)
5. Consolidate the Data into Key Insights
Analysis happens after research is completed. A good way to go about it is to start with a perspective (from the second step) and gather all information related to that perspective. This can be made efficient if you assign perspectives to different team members.
He provides no guidance for doing this, just suggests the beginning (a heap of disorganized information) and the ending (organized bullet points about current activities and future desires).
5. Create Their Playbook
In your own planning, you will begin with knowing the goal you want to accomplish, choosing the strategy you will use to accomplish it, and then determining what your actions ought to be. To discover an opponent's playbook, you must work this process backward.
Begin by looking at the actions that they are doing (or show evidence that they are planning to do), figure out what they are trying to accomplish and how they are planning to go about it.
For example, you might notice that a competitor is advertising for bilingual sales representatives. What might they be doing? Are they going to expand their operations overseas, or attempt to capture the immigrant market on domestic shores? Are they attempting to capture a niche market that you are ignoring?
The results will be imprecise: you do not know what they are doing, and have to guess, and your guesses may be wrong. For that reason it's important to think in an open fashion and don't rule out any ideas. If you attempt to arrive at a definite answer about what they are doing, you will be wrong about it, and may be ignoring what they are really doing.
Then, consider which of these options will be most harmful to your firm's interest. Those are likely the ones that your opponent will be giving greatest consideration.
(EN: Actually, given that most firms are myopic, you might also identify those that are most beneficial to themselves and easiest for them to do - because most often firms seek the quick and easy path and ignore the competition.)
7. Refine Your Own Playbook
Once you have developed your competitor's playbooks, you can then begin to define your defensive maneuvers: what are they doing that will be a threat to your operations? What are they doing that could foil your plans?
It must be stressed that these are defensive plays - and that no-one wins by solely playing defense. You own plans and initiatives are your major strategy, and these defensive plays are tactical maneuvers you can use when necessary.
However, you should also review your own playbook with your competitors' activities in mind: you may find that they can easily counter your maneuvers. Or you may find they are trying to achieve exactly the same things as you are (which means that even if you succeed you will still be a commodity).
7. Play War Games
It helps to do "war game" exercises to further refine your strategy.
First, define a hypothetical opportunity such as launching a new product targeted at a specific segment or attempting to expand into an unexploited market.
Second, divide your team into three parts. One will play you, another will play the enemy, and the third will be judges who play the market and competitors.
Then, have the two teams indicate what they will do, and pass this decision to the judges who will assess whether their plans work out.
This can be done in an afternoon, or as a turn-based game over a longer period of time.
Keep a record of the "battle" and, once it is over, gather everyone to discuss how it went, analyzing the outcome and determining how the strategy needs to be refined.
Conclusion
Your playbook is not evergreen - whatever advantage you have today has a shelf life. So to sustain your lead, you have to periodically reevaluate your playbook as well as your competitors so that you can stay ahead of others who will imitate your successful behaviors.