“It is easier to hold ground than to take it.”

Posted: July 16, 2010 in Uncategorized
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If defense is the stronger form of war, yet has a negative object, it follows that it should be used only so long as weakness compels, and be abandoned as soon as we are strong enough to pursue a positive object.

Clausewitz

Clausewitz pointed out almost 200 years ago what every soldier in history has known full well, that the defense is inherently stronger than the offense. As a general rule of thumb, attacking forces have to be at least three times stronger than defending forces. In many cases they should be even stronger, especially at the decisive point.

However, the defense is rarely, if ever, decisive. It is only a temporary measure before resuming the offensive. In war and in business, there are three main reasons to go on the defensive:

  • To buy time or delay an attack until you can go back on the offensive. Major broadcasters and cable companies in North America have invested in at least some level of Internet accessibility for their programming. This is a purely defensive move, protecting their right to control programming while they buy time until they can determine which way the market and industry will evolve.

  • To rest, reconstitute, and recover after offensive success. When companies try to establish a presence in a new country, they will usually establish a “beachhead” and then reconstitute while they build their infrastructure there. The same often applies after a major takeover, which can be seen as a major offensive move. The buyer will take months, and sometimes even years, to integrate the takeover target. Consequently, the focus will become internal rather than external.
  • To consolidate a new position that has been gained in an offensive. The iPhone was introduced in 2007, and it immediately disrupted mobile communications and computing. Other cell phone makers were thrown off balance. Apple has kept one step ahead of the competition since then by introducing annual upgrades, but what really allowed Apple to keep the competition off balance was the creation of the App Store in 2008. The App Store gave a marked advantage to Apple, because it allowed the company to consolidate its position by solidifying the loyalty of early adopters.

Principles of business defense

  • All around defense. Defensive positions should always be sited and laid out with the assumption that the attack could come from anywhere. Businesses should therefore be on the lookout for new products or services that completely undermine their existing market position. They should also be on the lookout for new entrants and competition from unexpected quarters.

Google is an online search engine, but its business model is based on selling advertising, which is similar to traditional media companies. While all media have struggled against Internet ads, newspapers have had the greatest difficulty and are a disappearing feature in many cities, especially where search engines provide the equivalent to local and classified ads. Although many traditional media saw advertising as the key to Internet business, they certainly didn’t see it coming from such an unexpected direction as online search and companies like Google.

  • Vital ground. Defenses should be sited to deny vital ground to the attacker and to cover key approaches and terrain. In business, vital ground can be equated with a business’s core customers, those who buy on a repeat basis and who evangelize on behalf of its products and services. Companies must be prepared to treat core customers with respect and to avoid antagonizing them.
  • Mutual support. Defenses should be sited with mutually reinforcing strong points. That way, if one or more of them comes under direct attack, then the others can bring fire to bear, either to quell the attack or to provide cover fire for a counterattack from another position. In business, this can be equated to products and services that are mutually supporting in the minds of customers and that provide synergistic value for them. That way, if a customer wishes to try a competitor’s products, they know they may have to change ecosystem.
  • Defense in depth. Defenses should be sited in successive lines of fortifications and with obstacles to slow down and canalize the attacker. This is so an attacker doesn’t have an easy time of it after getting through the first line of defense. The business equivalent is to develop forms of exclusivity that make competition difficult, such as patents and other forms of proprietary information. However, like defensive obstacles, these can only delay an advance but not stop it. To have true commercial defense in depth, businesses should ensure that their competitive position is cemented by multiple advantages for the customer. Products and services that only compete on price or on one or two distinctive features are often the easiest to displace.
  • Forces in reserve. A savvy commander knows he must always keep forces in reserve to counter unexpected attacks or vulnerabilities. These should remain uncommitted as long as possible and reconstituted immediately after their use. Businesses should do the same by maintaining cash reserves to counter threats by competitors. They should also be prepared to reallocate resources from non-performing products and services to those that deserve protection and consolidation.
  • Active defense. Defenders should be prepared to counterattack to conquer lost ground, especially if it is vital to the defense. The best time to counter-attack is when the enemy has just finished his own attack and is trying to reconstitute or consolidate his position. This is the time of maximum vulnerability for an attacker. In business, companies should always counterattack thrusts by competitors. If a competitor introduces a similar product, then they should be prepared to stay ahead of them by introducing an improved version of theirs immediately after the competitor has introduced his copycat product. The competitor either must innovate faster than the incumbent or lower his prices. In both cases, margins are much lower for the newcomer and he will therefore remain more vulnerable to continued aggressive moves by the incumbent.

© 2010 Richard Martin. Quotes and reproduction permitted with proper attribution.

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