How smaller companies use agility,skills and movement to defeat bulky,slow and inefficient companies
Dr David Yoffie taught us at the AMP 172 at Harvard Business School. I was fascinated by the concept of using the principles of Judo in business competition.He said he had developed the idea from Judo economics which is described below.I recommend the book to you.The url of the website of Dr Yoffie which provides more details is :http://www.people.hbs.edu/dyoffie/html/toc.html
JUDO ECONOMICS—A SIMPLE EXAMPLE
The basic model makes a few important assumptions: the incumbent faces a single challenger, the challenger has no cost advantage, and the incumbent must charge all customers the same price (i.e., price discrimination is impossible). Based on these assumptions, the logic works like this: Assume that the incumbent supplies ten customers with widgets for $50. If you offer to supply the entire market at $40, the incumbent will be forced to match your price or lose all of its sales. By contrast, if you only have enough capacity to sell to one customer, the incumbent will find it more profitable to accommodate your entry by sticking to his original price and selling to the remaining nine.
The idea behind judo economics—turning your opponent’s size into a disadvantage—has a lot of intuitive appeal. But judo economics has important limitations as well. First, it is very difficult to implement. It’s one thing to say that you won’t threaten bigger competitors. It’s quite another to convince them that you mean what you say. Moreover, judo economics looks far less promising once the assumptions behind the original model are relaxed. If, for example, the incumbent faces not just one entrant, but a long line of potential challengers, he’s much more likely to fight anyone who steps into the ring. In this way, he can establish a reputation for toughness and deter other players from taking him on. But the greatest weakness of judo economics is that it sets its sights too low. Judo economics may allow you to survive, but only at the cost of staying small. For most managers and companies, this is not enough. You don’t want to skulk around the sidelines; you want to get out there and win.
Winning, of course, can take different forms, depending on the competitive dynamics of your business. If you’re in a winner-take-all industry, winning means ending up on top. If your sector can support several strong players, it means becoming one of the Big Three. In tougher environments, winning may take a more limited form: building a profitable business in a market where the vast majority of challengers fail. In this last case, judo economics may be of some help, but should your ambitions range higher, it has little to say.
Judo strategy picks up where judo economics leaves off by providing a set of tools that allow you to do more than just survive--they show you how to thrive and grow. The goal of judo strategy is not just to gain a toehold in a market. It is to establish a growing and ultimately profitable position. Management sage Peter Drucker describes a concept he calls "entrepreneurial judo" in similar terms. "Entrepreneurial judo aims first at securing a beachhead, and one which the established leaders either do not defend at all or defend only halfheartedly," he writes. "Once that beachhead has been secured, that is, once the newcomers have an adequate market and an adequate revenue stream, they then move on to the rest of the ‘beach’ and finally to the whole ‘island.’"
Drucker identifies the critical problem: How can you move beyond your beachhead once competitors have been alerted to your attack? Judo strategy provides the mind-set and the techniques that make it possible to defeat larger and stronger opponents. Moving beyond judo economics, judo strategy goes back to the original source for inspiration--back to principles that judo masters have been teaching for more than a hundred years.