The Innovators - Planters Development Bank

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SME Focus Strategy Entrepreneurial Judo: Use your competitors’ strengths against them The entrepreneurial battlefield is getting tough. Management guru Peter Drucker guides you how to be at the top of the game. By Portia Silva When Nintendo released a home video game console called the Wii in 2006, the gaming industry was never the same again. Nintendo had in mind a broader demographic than those catered by its competitors Xbox 360 by Microsoft and PlayStation 3 by Sony. It intended to attract casual gamers who normally share the console with family and friends, as well as penetrate into the older (oftentimes forgotten) generations of gamers. Nearly after six years of consistent and aggressive marketing, the Wii finally bested both competitors in worldwide sales. For most companies, Nintendo’s story is just another success story. But in the words of management guru and prominent writer Peter Drucker, it has not only dominated the modern gaming industry; Nintendo has “judo’d” its competitors out of the battle field. Mastering the art of entrepreneurial judo Judo is a Japanese martial and combat that was later turned into an Olympic sport, where participants aim to pin their opponents to the ground. Variations of the sport involve grappling, tackling and striking through the calculated use of the hands and the feet. Judo masters have long claimed that the secret to judo success is to look for the opponent’s strength in every fight. Once the opponent has shown reliance in using this identified strength, the judo master attacks unexpectedly and leaves the other vulnerable. This is when the judo master can claim the victory by simply manipulating his opponent’s strength towards his own downfall. Drucker makes the same athletic references when he coined the term, “entrepreneurial judo.” In his most revered classic, “Entrepreneurial Strategies,” the management guru likens businessmen to judo fighters when “entrepreneurs tend to become set in their behaviors.” The concept implies that a newcomer SME | 14
SME enters an economical field established by those considered as the market leaders. With enough knowledge and offering, the newcomer applies his entrepreneurial judo skills by targeting areas that the market leaders are too busy to cater to. Why? Because most of the time, these market leaders are too arrogant and engaged serving the high-profit end consumers. Entrepreneurial judo instructs entrepreneurs to attack slowly but surely, to never challenge the position of the market leader but instead, to occupy niches that were initially limited by the market’s pioneers. Once the newcomer secures these niche territories, he should inch his way to dominate the rest (especially those occupied by the market leader), therefore catching the market leader off-guard and about. Formula for entrepreneurial judo success To be able to dominate, Drucker carefully specifies three situations where entrepreneurial judo impresses and deems to be effective. 1. Overthrowing unresponsive market leaders When market leaders overlook the feedback given by its consumers, the people seek alternatives that will listen and act on their concerns. Sometimes market leaders are just too concentrated on making money that they forget to interact with their patrons who, in turn, feel neglected and or are poorly-serviced. For example, when mobile users raise concerns about the signal scope of the network they’re subscribed to, they expect to be accommodated immediately. Newcomer network provider sees this as an opportunity to introduce a product that can likely offer stronger signal coverage, therefore attracting higher mobile users to switch to the newcomer. 2. Patronizing new technologies that understand the needs of the market Sometimes market leaders forget to consider the spending power of the whole consumer population that it tends to what Drucker describes as, “using their leader position to cream the market.” The author says that when this happens, newcomers grab the chance to introduce a similarfunctioning item that concentrates on what the consumer really needs and or wants. An example widely-used through Drucker’s book is how the Japanesemanufactured Xerox machines kept their patrons satisfied with their reasonably-priced yet highly-efficient technologies. Compared to the then American-produced equipment which sell at almost twice the price of Xerox products, the latter truly did judo’d their competition early on. 3. Going through sudden, rapid changes in the market structure Since the principle of entrepreneurial judo revolves highly around marketdriven strategies, companies have to be able to adjust to the changing economical times. For entrepreneurial judo to effectively work, products and services have to be able to offer lower costs to consumers when the economy takes a plunge. In like manner, companies will be able to take earning opportunities when the economy rises. Five bad entrepreneurial habits If there is a solution to judo your competition, there is also a formula for failure (where you can be potentially judo’d by your entrepreneurial opponents). Drucker outlines five business habits to avoid so you can remain at the top of your game: 1. The “NIH” mindset In his book, Drucker explains the “NIH” mindset by emphasizing, “[It is] the arrogance that leads a company or an industry to believe that something new cannot be any good unless they themselves thought of it.” The “not invented here” perspective can be widely seen in regional markets which refuse to accept items and technologies that have been developed and manufactured elsewhere. Some call it patronizing, but Drucker labels it as being stubborn. 2. The “creaming” of the market When companies have developed the habit of running after the big customers only, they tend to lose any market they have captured altogether. Some market leaders have this notion that when they have dominated into a high-earning niche, they think that’s enough to sustain their income generations. In truth, such companies only “cream” their market and neglect the bigger chunk of consumers waiting to be served. 3. The belief in “quality” Consumers pay for what they find is value for their money. It is not up to companies and industries to dictate that a product or service was difficult to come up with and therefore should be priced this high. When selling a product, companies should put on the thinking cap of a client --- how much is my target market willing to shell out for this particular good? As Drucker puts it, quality is “NOT what the suppliers put in;” rather, it is the evaluation of the customers about the product or service availed of. 4. The illusion of the “premium price” Closely related to the bad habit of believing in a product or service’s “quality,” entrepreneurs should watch out for placing what is believed as the “premium price” for their offering. “What looks like higher profit for the established leader is in effect, a subsidy to the newcomer,” explains Drucker. This also goes to show that the prospect of gaining multiple earnings is always to the disadvantage of a company. 5. The habit of maximizing rather than optimizing Companies have the habit of “satisfying the whole market” with just one item. They forget to segment and identify the particular needs of a very diverse consumer market, which can therefore lead to their downfall. Successful entrepreneurs should learn to optimize their resources to come up with different offerings rather than investing on one technology across all markets. SME | 15
Page 1: FEATURE Tilah Seed Center reaps suc
Page 4 and 5: SME Staff Box | Contents PUBLISHER
Page 6 and 7: SME Newsline Plantersbank seal Spec
Page 8 and 9: Bizbeat News and trends of interest
Page 10 and 11: SME Focus Management Ride the Techn
Page 12 and 13: SME Focus Marketing Check your bran
Page 14 and 15: SME Focus Operations Don’t forget
Page 18 and 19: SME Focus Sales Back in the (Prover
Page 20 and 21: SME Entrepreneurship Cash or Crown
Page 22 and 23: SME Cover Story The father and daug
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Page 26 and 27: SME Feature The Game Changers By Ru
Page 28 and 29: SME Feature When rice biyaheros fro
Page 30 and 31: SME Save Mother Earth In other word
Page 32 and 33: SME Worth Reading Technology Matter
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The Innovators - Planters Development Bank

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