Strategy and Stupidity

Corporate strategy is often presented as being like a game of chess. (Better yet, "go" or "pente".) You make your plan, seek to outwit the competition, and emerge victorious through superior execution. The dumber your competitor, the more likely you are to win.

I first became aware that this view was incomplete during my startup days. Our product category represented a tiny but disruptive opportunity to a much larger market. Arguing with or belittling competitors wouldn't just be childish, it could shake confidence in the entire nascent industry.

I am taking a B2B marketing class at Harvard this semester and we just saw a video of an executive who stated this wisdom concisely (I paraphrase):

It's terrible to compete against someone stupid, especially if they don't understand their own cost structure. They'll send themselves into bankruptcy and may drag you with them.

It's easy to recall industries poisoned by unethical competitors; energy trading will live under the shadow of Enron for a generation. I can't think offhand of any industries or markets that were destroyed by a stupid competitor, but imagine that it wouldn't be too hard to find one after some research. Are there any on your mind?

1 comment:

  1. 1. I routinely miss your posts here.
    2. You do a way better job at posting interesting things concisely. Must learn from this.
    3. It's harder to find examples of this than I would have thought.

    Companies that agitated to bring down the AT&T monopoly years ago? I'm not sure of the details but gather that the breakup shook people's confidence in the whole industry. My parents still talk about it when they're looking at phone and internet provider plans.

    This one is a stretch, but.. the homeopathy market, or whatever you want to call it, trashed pharmacists and touted their unregulated wooga-wooga as the only safe solution. Just prior to the explosion in popularity of that market, pharmacists rated among the very top trusted professions. Since then, herbal remedies have been exposed publicly and repeatedly, but their negative advertising had already worked, so nobody trusts either one.