So in war, the way is to avoid what is strong and to strike at what is weak.
Sun Tzu
A frontal assault can be a very costly undertaking. Over and above the fact that attacking requires more resources than defending, it is obvious that doing so frontally is even more costly. This is because the enemy sees you coming and has arrayed most of his firepower and fortifications to take the brunt of your assault.
When attacking, it is much better to avoid the enemy’s strengths and to push toward his weaknesses. This is the origin of the classic flanking attack. It is taught in all the tactics courses in just about all armies. Using fire and movement, the aim is to pin down the defender with covering fire (using a fire base) while the attacker’s main body maneuvers to assault the enemy’s weaker flank.
This is the prevalent means of maneuvering on the battlefield, and it is taught all the way from corporals to captains to colonels. In fact, it is the main reason defensive positions are arrayed in depth with mutually supporting strong points facing in all directions, so as to counter the flanking maneuver.
Another maneuver, but one that is considerably harder to implement, is to outflank the enemy’s position completely, with a view to attacking a vulnerable point in his rear area. By doing so, the attacker hopes to force the defender out into the open where the odds are more favorable to the attacker.
In both cases, the attacker recognizes the heavy cost of the frontal assault. The same logic applies to business. The essence of business strategy is to offer products and services to customers that they can’t get from the competition, either because of their novelty, or because of the particular needs they fulfill through their features mix.
The business equivalent to the flanking maneuver is innovation. The more disruptive the innovation, the more it resembles a complete outflanking of the enemy. Attacking an established company or industry is costly because it typically requires massive investment just to be competitive.
On the other hand, hitting a competitor in the flank with an innovative product forces him to expend resources in costly defensive moves. He has to invest in upgrades and product differentiation to stay competitive. Even better from the standpoint of the attacker is to introduce a disruptive product. This is one that redefines the market or customer needs, often ones they hadn’t even thought of.
As demonstrated by Clayton Christensen in his influential book The Innovator’s Dilemma, disruptive products and services are usually cobbled together from existing technologies and processes. They require little in the way of capital outlays, but fail to attract established firms because the margins are much lower than in established markets. Only new entrants tend to find these markets attractive, because they don’t need major investments to get into the business and the applications are typically less stringent than the higher margin applications that the incumbents cater to.
The ideas behind the indirect approach are very simple, but their application is difficult. It is easy in hindsight to analyze an existing product and see how it allowed a company to “outflank” the competition. It is a lot harder to do so in real time, with all the competitive pressures that companies must contend with. Christensen argued convincingly that most established firms are quite competent to defend their positions through sustaining innovation. But he also showed that they tended to avoid disruptive products and services because of the lower margins and diminutive markets from their perspective. There is also a tendency for all firms to want to migrate “up market,” simply because there is more profit there (though more investment also).
© 2010 Richard Martin. Reproduction and quotes permitted with attribution.