"Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win."― Sun Tzu, The Art of War
Whether you are launching a startup or expanding a corporate enterprise, success depends on strategic planning. In today's competitive business landscape, can you guarantee victory before entering the market?
Strategy is about winning. Anything else does not matter. What you define as a win depends on what your business has set out to achieve. Strategy is emergent in nature. Cast it in stone, and soon you may find yourself buried under it, as the ground you tread is continuously shifting—and so is your competition.
Start with the Battlefield
The battlefield (industry) you are entering plays a critical role in your future success or failure. The state of the industry and its structure can either place you on high ground or have you surrounded by competitors. Entering a highly competitive industry can leave you encircled and demand significant investments to gain market share and build a sustainable business. On the other hand, entering a niche or less competitive market may require fewer resources to acquire profitable customers.
Assess the Terrain
Next, you must identify the terrain and existing structures that may support or resist your forward march. If your customers have more options, you will need to amplify your power—better products, more features, higher quality, competitive pricing—a superior value proposition. Suppliers with monopoly positions, limited capacities, or specific supply chain capabilities will impact your cost structure and negotiating power. Competitors with high market share and entrenched positions may retaliate with price cuts, strong promotions, or supplier agreements. Each of these external factors in the battlefield must be assessed and planned for individually.
Choose Your Theatre of War: Niche Markets or Broad Assault
Will you fight across the board, inviting the wrath of industry giants? Or will you use a flanking strategy to win smaller markets first, or even create a niche? Offering a unique, distinctive advantage to a smaller set of customers may be the wiser choice. The decision you make will directly influence the resources you need and the business structures you must create to achieve a win.
An all-out assault requires a well-developed business structure and access to massive resources. While top-line revenue may be attractive, profitability can come under great pressure. In such scenarios, covering more ground quickly becomes the immediate ‘win,’ even if losses are high. The e-commerce industry is a classic example, with major players pouring in huge amounts of resources to buy growth while incurring significant losses. If you're a startup in this brutal battlefield, would you aspire to take on Amazon? Or would you prefer offering a unique solution for a specific customer need within the same industry?
Move First and Win – Really?
Often, the statement “we have a huge advantage because we’re moving first” is heard in business circles. Unfortunately, this isn’t always true. The bar code was patented in 1952 but was first used in retail in 1974—on a pack of Wrigley’s chewing gum! Does being the first to attack a market guarantee success? Corporate history is filled with examples where first movers were sidelined by later entrants. Think of Kodak, the inventor of digital photography.
Being first doesn’t inherently create an advantage; it’s what you do with the opportunity that matters. The opportunity presented to a first mover is to set standards, create benchmarks, and define customer expectations for others to follow. If done effectively, others will be forced to follow your lead, establishing a long-term advantage. Remember, pioneers often get the arrows in their backs. Leverage first-mover opportunities to create shields—those competitive advantages that will sustain you.
Choose Your Position: Cost Leadership or Differentiation?
Where will you position yourself in this battle for market dominance? There are only two clear paths to profitability: cost leadership or differentiation. You cannot attempt both and expect to win. Companies that try to balance between cost leadership and differentiation often end up with low market share and low profitability.
Cost leadership and differentiation are two sides of the same coin—you can only pursue one effectively. Your entire business system must be designed to deliver on that positioning. Organizations that consciously arrange their business systems to either lead on cost or differentiate through unique products often deliver high returns and capture significant market share. Walmart is a classic example of cost leadership, while Harley Davidson, Zara, and Ducati showcase successful differentiation strategies.
Create Business-wide Systems to Support Your Position
Your strategic positioning must guide the creation of internal structures, systems, and processes. When implemented effectively, these systems will work in harmony to deliver a clear value proposition, resulting in a competitive advantage that is difficult to replicate. Discount retailers existed before Walmart, and they exist today, but Walmart’s business-wide activities—spanning merchandising, supply chain, operations, and marketing—helped it secure cost leadership and deliver everyday low prices to customers. Replicating Walmart’s discount model is possible, but replicating the complex network of activities behind it is nearly impossible.
War is Inevitable—Strategy is Your Roadmap to Victory
In the competitive world of business, a well-crafted strategy is your roadmap to success. Evaluate the battlefield, choose your theatre of war, position your business wisely, secure resources, and build internal structures that support your strategy. By doing so, you, like a clever and successful general, may just win before even going to war.
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