Note : This post is the first of a series about winning in Business when you are a challenger willing to become The Leader. It is based on my experience as Business Development Manager and Product Whatever Manager at Agilent Technologies, from 1999 to 2003. Any startup or any small player serious about its business should be able to apply the following strategy to become market leader. Simply because it worked quite well during the hard times of the Telecoms Industry downturn. Why the heck would it fail during the Web 2.0 gold era ?!!!
In late 1999, Ned Barnhold, CEO of the HP' spin-off Agilent Technologies, announced his decision to penetrate the telecoms networks' installation & maintenance testing marketplace, for the company to become market leader within the next two years. Born as a pure " R&D and Manufacturing " oriented vendor, Agilent was the undisputed Test & Measurement worldwide leader on those segments, by far. The company was serving all the big players of the Bubble : the Lucents, the Alcatels, the Nortels, etc. Every single network equipment manufacturer was buying Agilent' s lab. and/or production tests solutions.
On the outside plant side, no one relevant actor was using Agilent branded testers : Agilent was a challenger on the Installation & Maintenance (I&M) markets.
So, Barnhold' s decision to focus on I&M was... a challenge ! An exciting one, for those of us who were directly involved with it. Enter the Musketeers and all that stuff which did our life for the next three years or so (and still does, for some of us ;-).
To achieve this goal : become #1 on the I&M market place by 2002, starting from (almost) scratch, we called on Sun Tzu and his proven methods for winning a war - ooops, sorry : for winning in Business.
We picked the one quote which replace MBAs diplomas in the Real World : “Know the enemy better than you know yourself, and the outcome has already been decided.”, and we built the whole strategy from it. We looked at ourselves (Agilent per se, the structure, the people, the use and habits, the way of doing business, etc.) and our competitors, selecting one of them as our * enemy #1 * (that was before 9/11; today, I rather use another terminology, e.g. " rival number one "...). We came up with the conclusion that to become the market leader in less than three years time frame, we had to concentrate our energy on our sales channels. Hence the name of this strategy as a whole : Winning Sales Channels Attributes - I will come back to that one in the final post of this series (well, teasing is an operational marketing tool, right ?).
In order to reach this ultimate objective, we decided to put together three sub-strategies (note : only three) :
• The Right Fights : to win a customer
• Bid2Win : to win tenders and deals
• Be Friend of Technicians : to win speed in new product generation
I have mentioned the Bid2Win in a previous post (see here), however I will come back to it in a couple of weeks. Next week, we will discuss the last one " Be Friend of Technicians ", which is about talking directly to the end-users of your products in order to get their feedback...
Today, I am going to describe you the Right Fights strategy : how to grab market share by winning customers. Here is it :
• A Right Fight is NOT about winning a deal.
• Find weakness in leader’s strength.
• Attack where the leader is unprepared, appear where you are not expected.
• Choose when and where to fight.
• Limit the time and the place of the attack.
• Need at least 75% more strength at the time and place of the attack.
• Fight to win the leader’s position, not only the order – acquire the benefits of leadership.
Then, we looked at the respective behaviors of an industry leader and its challengers :
What is the Leader doing ?
a. Appropriate Strategy : Defend against all threats. The challengers will determine where and when to pose a threat.
b. Appropriate Tactics : Focus attention on existing customers. Listen for potential, developing threats. Counter all threats early.
c. Resource Deployment : Bias resources toward the biggest accounts and the biggest product lines. Deploy more than enough resources against each threat to insure the win.
d. Competitor Knowledge : Broad and accurate intelligence to identify potential threats early.
e. Expected Outcomes : Maintain very high market share, and the economies of scale that creates.
f. Failed Outcomes : Loss of market share. Loss of leadership position.
What is the Challenger doing ?
a. Appropriate Strategy : Choose when and where to compete. Win virtually all of the contests you enter. Do not compete if a win is not certain.
b. Appropriate Tactics : Focus attention on new target customers. Operate just beyond the edge of control. Enter chosen contests with fanatic will to win.
c. Resource Deployment : Bias resources toward the most important contests that can be won with certainty. Put more than enough resources on the few most important contests to insure the win.
d. Competitor Knowledge : “Know the enemy better than you know yourself, and the outcome has already been decided.” Sun Tzu
e. Expected Outcomes : Take market share from larger competitors. Attain high market share and the economies of scale that creates.
f. Failed Outcomes : Loss of market share. Very disappointing financial performance. Disaster, loss of the business.
Last, provided that we had only a couple of years ahead of us to achieve our CEO' s objective, the sense of urgency was a key element in our decisions process. Here are the four points which lead us to the final decision :
•We had to accelerate our learning.
•We didn’t get the chance and the time to learn by doing every mistakes by our own again.
•We had to learn form the successful and the unsuccessful fights the organization was going to fight.
•We had to learn from the mistakes of our competition.
So we have setup the “ Right Fight Process ”, consisting of the three steps in use by all armies in the World since General Sun Tzu (circa 500 B.C., by the way): Brief - Execute - Debrief.
Here we go :
#1. The Think-Tank Team identify fight (i.e. competitor' s installed base, or green field)
#2. Define the opportunity for the company (i.e. the potential)
#3. Set operating model to “not business as usual” (i.e. set business as unusual as the rule)
#4. Understand customer’s business and competitive situation (i.e. do your homework ;-)
#5. Define Team, owner and roles (team, team, team)
#6. Find THE potential customer champion (i.e. find the guy who will make you win)
#7. Make sure the customer problem is understood (i.e. ask questions, again and again)
#8. Build business case for the customer (with the customer)
#9. Build the battle plan (without the customer ;-)
#10. Visit the customer w/ proper Team (do not forget to apologize for not being here earlier)
#11. Anticipate and plan contingencies (i.e. Plan B, Exit Plan, No Way Plan)
#12. Deliver the plan to the customer (i.e. execute)
#13. Offer demo (i.e. demonstrate how your product can solve the customer problem)
#14. Deliver the perfect budgetary quote (i.e.
#15. Follow-up w/ customer.
#16. Do not forget to take the order!
As we were based in Germany, the Right Fights Process was summarized on two short/easy-to-use/user-friendly tools : a Q&A form - the " Right Fight Spec Sheet " - to be filled by the " Fight " owner, and an MS Excel spreadsheet - the " Right Fight Score Card ". Those tools were created to allow the management to quickly get the whole picture of the " fight " (by the way : we didn't say " deal ", see the difference ?).
The Right Fight Spec Sheet consisted of a crisp & clear list of items grouped by topic (simple, huh ?), with " Yes / No " tickle boxes. Filling in the form was way faster than a survey on the web (well, as long as Windows didn't crash - ooops, sorry, bad joke ;-). Here is an example of the questions / topics / items - comments in italic :
About the Competition :
Target rival #1 in the considered region. Yes / No. " Beat the best and you will beat the rest " was our motto.
Hurt competition. Yes / No. Our aim was to become #1 within the next two years. It couldn't happen without hurting our competitors.
Disrupt/confuse competition. Yes / No. Thanks to General Sun Tzu, this is a strategy the challenger can use with great effects.
Fight that will drive you to the position of leader. Yes / No. The question was : is the fight bringing us one step further to reach our goal to become #1 in less than two years.
About the Customer Relation :
Increase the sense of loyalty. Yes / No. Was there a need to increase loyalty at the specific fight location.
Fight that enhance the image. Yes / No. Was it a fight that would enhance the image where it was desperately needed e.g. become friend of technician.
Fight that lets us become friend of the technicians. Yes / No. Would the fight help us * Musketeers * to achieve our goal to become friends of the technicians.
Long lasting effect. Yes / No. Could we estimate how much revenues the fight would bring us in the long run.
The score card was even simpler to use (please don't think that we were all damned bozzos : we were in a hurry, so we had to create and use fast tools ;-). Put in some rough numbers and names, press the "enter" key, and boom, you got this nice palette of colors : green, yellow, red. Sounds familiar, huh ? Green for " Let's go fighting ", Yellow for " Let's wait for more information ", and Red for " Let's stay at home for the time being " (or something like that meaning that this fight is definitely not a fight to fight, right ?). Here is a real example, dated 2001- there is no more confidential data in there : all the service providers listed have either disappeared or merged with another one, the internal organization has been completely modified, and the people are either gone or working elsewhere in the company.
Oh, there is one more thing (okay, this post is not about Steve Jobs; however I strongly believe that he is using such of strategies quite well ;-)
Before going outside to knock at your target customer' s door, you still have to plan your mission. Putting together the strategy is one thing, implementing it is a different story - although a good plan means easy implementation. Hence the mandatory mission planning, that we the famous Agilent Musketeers called : " Combat Mission Planning ", according to the Top Gun terminology. You can use the following plan as a template for your next mission - ooops, sorry : your next customer call ! :
a. Define the mission objective : A mission objective is a clear, measurable, tactical statement of a goal that can be achieved by those people responsible for its execution.
b. Identify the Threat : Once you have a clear mission objective, you have to analyze thoroughly the competitive threats to your outcome
c. Identify your support assets : Once you have your mission statement and knows the competitive threats, scour your internal assets for the one thing that might make or break the sale.
d. Emphasize your strength and their weaknesses. Never engage in a costly frontal attack when you can outflank the competition and still win.
e. Set your timing : Once the plan is in place, the only thing left is to find the optimal moment to strike: Identify your optimal mission timing.
f. Plan for contingencies : It’s far easier to work out your options in the quietness of your office than in the hectic battlefield.
As a conclusion, just this : the Right Fights strategy, together with the other two "Bid2Win" and "Be Friend of The Technicians", helped Agilent Technologies to be ranked #1 Test & Measurement vendor by Frost & Sullivan in 2002. Right in the middle of the Telecoms downturn and the turmoils it caused in the entire industry. It demonstrates the effectiveness of our decisions, the first one being to rely on proven methods based on Sun Tzu' s principles. In my humble opinion, applying this strategy during * good days * is even more productive.
Of course, I will give you a real case example of a successful fight soon : back in 2001, Agilent took over one of the World' largest optical network carrier out of the hands of its rival number one. A quick, smart, successful strike. Unfortunately, it didn't last long : the downturn hit this carrier hard ! Anyway, that was fun. Stay tuned, and Carpe Diem.