What strategy is not

Companies should meet customer needs, not demolish rivals

Have you read the dictionary definition of strategy? It goes: “The science or art  of combining and employing the means of war in planning and directing large operations.” This meaning brings up exotic ideas about strategy in the world of business. There’s a rush of adrenaline just by imagining business as a killing field where the most powerful and the ruthless win. The thinking is based on the basic premise of destruction. Enterprises thus become too focused on competing to be the best rather than competing to be unique. This thinking is fundamentally skewed as businesses are about growing together, exploring uncharted markets and fulfilling demands for which effective solutions do not exist. 

What competing to be the best does is to take you to price competition, destruction of value and performance that is not sustainable. It eventually ends up being a game that is too focused on imitation and copying. True competition is about meeting customer needs rather than demolishing rivals. Two industries that clearly reflect this thinking are food and entertainment. Within one of the segments in the food business — pizza delivery — there are two important players. Interestingly, neither is in the race to be the best; rather, both are about providing experience that is unique for consumers. Pizza Hut is focused on the sit-down restaurant experience whereas Domino’s is about quick delivery that enhances the eating experience at home. 

In the entertainment business, especially the multiplex business in the National Capital Region, there were three distinct players: PVR, DT and Cinepolis. Until DT's recent acquisition by PVR, all three were working on the idea of enhancing the experience of customers across locations. PVR is about impeccable theatres presenting a great consumer experience, whereas the focus at Cinepolis is on more screens, so the consumer has greater choice when he enters the cinema complex. 

Similarly, it is a little hard to argue that Starbucks has made life uncomfortable for Café Coffee Day since it entered the Indian market. Rather, the coffee chain’s strategy is centered on a different experience and price point that could further grow the market.  

Across industries, different brands cater to different customers with different needs. And what is ‘best’ for one customer need not be good for another. This was reflected in what Kingfisher Airlines wished to achieve by acquiring Air Deccan. The principle for such an acquisition was building economies in operations. 

But managerial obsession with growth led Kingfisher to overlook the huge differences in the DNA of the two organisations, i.e., the way the value chains were configured. Sure, airlines need to look at asset utilisation and passenger load factors when making critical decisions, but don’t forget that the competitive advantage of an enterprise is derived from the sum of all the activities it performs. Kingfisher overlooked the merit of low-cost with disastrous results. Now, it is on the verge of bankruptcy. 

So, what is strategy? It’s not about being the best, but being unique and relevant. Strategy is about expanding market size, but by providing solutions that are unique rather than fighting market share battles. Strategy is about competing to be different.