Untitled

Dimensions of Strategy
Patterns of Strategy makes a refreshing addition to the strategy literature. Aimed at

decision makers and senior people who are the custodians of their organisations’ strat-
egies, it offers specific guidance in a world where choice can be daunting. It begins
with a healthy de-bunking of some myths about strategy which have only served to
limit people’s thinking – purely on this basis, it merits a strong recommendation.
DrÂ€Simon Haslam, Head of Strategy Faculty, Institute of Directors
In helping us understand how we differentiate, Patterns of Strategy gives a different

lens to intuitive decision making and problem solving. It is beautiful in its simplicity.
David Atkinson, COO, Mind Gym
Patterns of Strategy is the first major new approach to strategy in a long time. Not
re-packaged versions of existing ideas, but a completely new, and radically different,
approach. The book offers descriptions of 80 common patterns of strategy in a “recipe
book” style, together with detailed advice on when, and how, to use them, and in what
situations. It will be a “must have” for strategists.
Paul Barnett, CEO, Strategic Management BureauÂ€& Strategic Management Forum
In a world of incessant change, unpredictability, and in a context where there are often
multiple existing and potential players, the fundamental problem for organisational
strategists is that it is unerringly complex. How then does Patterns of Strategy fare
against this background? The simple answer is very well. This is a novel and very
significant contribution to the strategy literature.
Prof. John Brocklesby, Head of School of Management,
Victoria University of Wellington
Here, at last, is the unified field theory of strategy. Patterns of Strategy takes the many
influencers of organisational performance and coheres them into a systemic model.
Ed Straw, Director PWC Global (Retd), author of Stand and Deliver
Every now and then, a book comes along which seems to encompass the whole of a
field, explain it, critique it, and surpass it. Patterns of Strategy does just that for the
practice of organisational strategy. Once you have read Patterns, you can never go
back. It combines a learned and enjoyable treatise with immensely practical usability
and should be on every leader’s desk, as a daily reference.
Benjamin P. Taylor, Chief Executive, Public Service Transformation Academy
Patterns of Strategy is practical in its approach, yet deep in wisdom. It is a must read .Â€.Â€.
a rare combination of depth in thinking and ease of use. Eighty patterns are presented
as recipes and as a way of further development of one’s own thinking. Although some
sound familiar – like First Mover, Fast Follower – some names are really original, like
Knight’s Move, Piggyback, Rumpelstiltskin, Mouse, Jigsaw. These descriptions are
thought provoking and act as a catalyst to ask different questions. The brief case
descriptions made me aware of the invisible drivers of strategy that dictate where one
will go unless one actually changes the nature and direction of the structural coupling.
Patrick Hoverstadt and Lucy Loh have written a manual to guide business leaders to
define their strategies in the twenty-first century. The book simplifies the subject, but
does not oversimplify. It offers a uniquely systematic and sophisticated approach to
the formulation of strategy for any business leader who wants to rethink their approach
to strategy, embracing the complexity of the world of disruption, and considering
both the opportunities in collaboration and in competition. There is much here that is
fresh, and at the same time it is a brilliant synthesis of everything that is ever written
about strategy. Anyone involved in the formation of strategy should read this book
and think though how applying the building blocks creates a wide(r) range of
possibilities.
Jan De Visch, Executive Professor Entrepreneurial MBA,
Flanders Business School, Catholic University of Leuven
Patterns of Strategy is a truly novel and powerful approach to working with strategy
and should be required reading for, and in the toolkit of, all executives and boards of
directors.
Consultants will love the Patterns of Strategy approach because it helps them to
develop better strategies with clients who will appreciate the rigour, novelty, and the
feeling of empowerment that comes with this approach.
Axel Kravatzky, Director, Syntegra Change Architects Ltd and
Founding Chairman, Caribbean Corporate Governance Institute Ltd
Patterns of Strategy is a remarkable book that draws upon the insights of the authors
from working with small to large multinational companies. They have succeeded in
understanding and articulating the dynamics of “strategy” as it plays out in the real
world and why few succeed and many fail. They have done an excellent job in detailing
how a business can better position itself within its market and how to use this posi-
tioning to better develop a strategic response that not just harnesses but exploits the
market forces for greater competitive advantage. Patterns of Strategy has changed my
thinking in how IÂ€can develop more effective strategies.
Stephen Brewis, Chief Scientist, BT
This is a tough book but is an essential one for strategy teachers and practitioners.
Tough because it doesn’t offer 2×2 box simplistic models or slick consulting earning
hooks. But it will be worth it.
David Weir, Emeritus Professor, Northumbria University,
Professor of Intercultural Management, York StÂ€John University
This book creates a framework for strategy, planning and execution by considering the
fundamental dimensions of strategy: power, fit and time.
The book sets out an approach to create and implement a strategy that is appro-
priate for your situation – there is no one-size-fits-all approach to this. The 80 worked
examples are like handed-down family recipes that can be adopted and adapted to
overcome specific challenges that are often repeated as “patterns of strategy.”
Jonathan Higginbottom, Principal Consultant, Capita
Patterns of Strategy examines a fundamental issue affecting all organisations: “Why do
most strategies fail?” Patrick Hoverstadt and Lucy Loh shine a light on the gaps in
conventional strategic thinking, and offer an explanation – and a solution.
Hoverstadt and Loh provide a framework and language to more accurately
describe the reality of an organisation’s circumstances, and to try to anticipate how
these circumstances will change as the future unfolds.
The final section is dedicated to implementation – both of the process to define
strategy, and then pulling off the organisational manoeuvres required to execute
successfully.
Patterns of Strategy is a genuinely fresh perspective which draws on its authors’
expertise applying systems thinking to organisations. It’s an approach which delivers
a significant shift in mindset – and one which could make an impact on the 90% of
current strategies which fail to deliver.
Gareth Marlow, COO, Redgate
PATTERNS OF
STRATEGY
Patterns of Strategy is a revolutionary approach to developing business strategy

that shows how the strategic fit between organisations drives their strategic
direction. It is essential reading for those who wish to understand how to
manoeuvre their organisation to change its strategic fit and play it to their
advantage.
Although traditional approaches to strategy have required organisa-
tions to assess the environment around them, they have ignored the dynamic
nature of this relationship. Patrick Hoverstadt and Lucy Loh describe strategy
as an emergent process that influences and is influenced by the wider system
to which an organisation belongs. It is a systemic approach to strategy that
focuses on the relationship between organisations, rather than just the organ-
isation in its own right.
As well as a new language of strategy and an explanation of what drives
emergent strategy, the authors offer 80 ‘patterns’ of strategy which organisa-
tions can use to understand the relationship that their business and their
strategy have to the actors around it. These patterns provide a toolkit for
designing different ways to collaborate, and also offer alternative types and
approaches of competition. AÂ€practical and authoritative guide, this book can
be used to plan and navigate your way to the future.
Lucy Loh and Patrick Hoverstadt have over 50Â€years’ combined experience
consulting with private and public sector clients internationally and in organ-
isations of all sizes from small to global. Both have designed and delivered
postgraduate courses at several European business schools.
They specialise in using systems thinking and management science
approaches to tackle complex, intractable management issues where tradi-
tional approaches consistently fail. This includes the development of Patterns
of Strategy to provide a fresh and systemic approach to this key organisa-
tional challenge.
PATTERNS OF
STRATEGY
Patrick Hoverstadt and Lucy Loh

First published 2017
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
711 Third Avenue, New York, NY 10017
Routledge is an imprint of the TaylorÂ€& Francis Group, an informa business
© 2017 Patrick Hoverstadt and Lucy Loh
The right of Patrick Hoverstadt and Lucy Loh to be identified as authors of this
work has been asserted by them in accordance with sectionsÂ€77 and 78 of the
Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or
utilised in any form or by any electronic, mechanical, or other means, now known
or hereafter invented, including photocopying and recording, or in any
information storage or retrieval system, without permission in writing from the
publishers.
Trademark notice: Product or corporate names may be trademarks or registered
trademarks, and are used only for identification and explanation without intent to
infringe.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Hoverstadt, Patrick, author. | Loh, Lucy (Management consultant),
author.
Title: Patterns of strategy / Patrick Hoverstadt and Lucy Loh.
Description: Abingdon, Oxon ; New York, NY : Routledge, 2017. | Includes
bibliographical references and index.
Identifiers: LCCN 2016032221 | ISBN 9781138242661 (hardback) |
ISBN 9781138242678 (pbk.) | ISBN 9781315277776 (ebook)
Subjects: LCSH: Strategic planning. | Business networks. | Organizational
behavior.
Classification: LCC HD30.28 .H6928 2017 | DDC 658.4/012—dc23
LC record available at https://lccn.loc.gov/2016032221
ISBN: 978-1-138-24266-1 (hbk)
ISBN: 978-1-138-24267-8 (pbk)
ISBN: 978-1-315-27777-6 (ebk)
Typeset in Palatino
by Apex CoVantage, LLC
To EB
CONTENTS
List of figures xiii

Forewordxv
PART ONE
A different approach 1
â•‡1 Why Patterns of Strategy?3
â•‡ 2 How this is different .Â€.Â€. 9
â•‡ 3 The dark matter of strategy 18
â•‡ 4 From concept to strategy 28
â•‡ 5 What is strategic fit? 36
PART TWO
Dimensions of strategy 45
â•‡ 6 Designing fit 50
â•‡ 7 Using time 69
â•‡ 8 Using power 90
PART THREE
80 Patterns of Strategy103
â•‡ 9 Competitive strategies 111
10 Collaborative strategies 135
11 Strategies for small organisations 159
12 Supplier strategies 175
13 Defensive strategies 201

xi
Contents
14 Growth strategies 229
15 Market-changing strategies 251
16 Herd management strategies 277
17 Cunning plans 299
18 Rock, paper, scissors 320
PART FOUR
Developing and executing strategy 337
19 Patterns of Strategy – the development process from

strategy to plan 339
20 Putting strategy into action 356
Afterword366
Catalogue of strategies 369
Bibliography374
Index378
xii
FIGURES
1.1 Conventional strategy approaches 4

2.1 Strategies in collision 10
3.1 Structural coupling: organisation and its environment 19
3.2 Structural coupling: multiple organisations and their
environment20
3.3 Structural coupling in the nuclear industry 22
3.4 Knight’s Move attack by segment 24
3.5 Working out direction 25
P2.1 Dimensions of strategy 44
6.1 Elements of fit 51
7.1 Elements of time 70
7.2 Boyd’s OODA loop 86
8.1 Elements of power 90
P3.1 Key to strategy landscapes 106
9.1 Competitive strategies landscape 110
9.2 Knight’s Move 117
9.3 Falcon 122
9.4 Fast Follower 126
10.1 Collaborative strategies landscape 134
10.2 Jigsaw 139
10.3 Go-Between 144
10.4 Cluster 149
10.5 Alliance 154
11.1 Small players strategy landscape 158
11.2 Autolycus 163
11.3 First Mover 167
12.1 Supplier strategies landscape 174
12.2 Remora 180
12.3 Strategic Partner 184
12.4 Jeeves 190
12.5 Expert 194
xiii
Figures
13.1 Defensive strategies landscape 200

13.2 Musk Ox 205
13.3 Scorched Earth 211
13.4 Dragonfly 215
13.5 Long Tail 220
14.1 Growth strategies landscape 228
14.2 Bowling Alley 234
14.3 MergersÂ€& Acquisitions for Synergy 239
14.4 Diversification 243
15.1 Market strategies landscape 250
15.2 Market Maker 257
15.3 Marketect 262
15.4 Niche 266
15.5 Augmentation 270
16.1 Herd management strategies landscape 276
16.2.1 Puppeteer to puppet 282
16.2.2 Puppet to market 282
16.3 Islands of Sanity 288
17.1 Cunning plans landscape 298
17.2 Pied Piper 307
17.3 Guerrilla 312
18.1 Business ecosystem example 330
19.1 Strategy development process 340
20.1 The action loop 357
xiv
FOREWORD
It’s tough to identify any big new strategy ideas since 1995.
Walter Kiechel
We believe the approach to strategy this book sets down is radically different
to conventional approaches. It’s radical on how to go about developing
strategy, but also on what strategy actually is, or needs to be. But perhaps
most importantly it’s radical in its view that there are underlying strategic
forces at work which drive the strategic direction of organisations – usually
irrespective of the plans of strategists. Which means that if we want to develop
strategies that actually work, we have to understand what these forces are
and where they are taking us. As Buckminster Fuller put it: “Don’t fight forces,
use them.” So to Walter Kiechel, previously editor of Harvard Business Review –
we believe this is a new idea.
We’ve used the approach with consulting clients for a few years now
and we have three reasons for writing the book. Most obviously, we think the
Patterns of Strategy approach has proved itself with a wide range of organ-
isations and strategic situations and deserves a wider audience. Secondly and
less obviously, our experience is that too many organisations reach for a stra-
tegic response once they’ve got themselves into a mess. We believe it’s smarter
to avoid strategic crises rather than react to them once they’ve happened and
we hope a book may help organisations avoid pitfalls rather than having to
claw their way out of them. Our third reason is our experience, supported by
survey and market data, that conventional approaches to strategy don’t work
most of the time and that as a result the failure rate of even the most ‘successful’
organisations is shockingly high. So, we believe that not only is a new
approach long overdue, but that the failure rates indicate that the conven-
tional approaches are not just flawed, but fundamentally flawed and that
something totally different is needed. We have written this book primarily for
anyone engaged in the practice of strategy and secondarily for people inter-
ested in the theory. By practitioners, we mean not only those strategy special-
ists and consultants engaged in developing corporate strategy, but also
managers of departments, services or even teams that need a way to change
xv
Foreword
the position of their organisation, as well as specialists in strategic or enter-

prise risk. The approach has been used at all levels from team to multina-
tionals, because the essence of strategy is the same. For academics and
theorists, we trust that this will provide an alternative perspective and in our
experience with teaching this on postgraduate courses, a perspective that
students can understand and use as readily as practitioners.
The approach we’ve developed has had a long gestation, starting with
some work we did ten years ago on strategic risk and the questions which that
begged: “What makes a risk strategic and how would you know one if you saw it?”
That led naturally on to the development of this approach. In many ways, this
has felt more like an act of discovery than an act of invention – as if the insights
were there waiting to be found. In the development, we have explored five
key areas of thinking each of which was developed by a giant in their respec-
tive fields.
The terms ‘genius’ and ‘guru’ are heavily overused and misused, espe-
cially in business. The approach outlined in this book has been built on the
work of five people all of whom we’d class as genius because each brought
new thinking that has depth, rigour and has radically challenged the conven-
tional thinking in their respective fields. The five are, in no particular order:
Stafford Beer, John Boyd, Nigel Howard, Humberto Maturana and Gregory
Bateson.
Stafford Beer was a seminal thinker in systems theory, the founder of
managerial cybernetics and he developed the models we primarily use for
diagnosing and designing organisations – most significantly the Viable
System Model (VSM). Beer’s work has been used at all levels from single
organisations up to whole socioeconomic systems and remains the most
rigorous piece of thinking on how organisations work as complex adaptive
systems – although it predates the development of that phrase by many years.
John Boyd was probably the best and most influential military theorist
of the post-World War II era. As far as we know, Boyd was unaware of the
work of Beer, although he did know about Beer’s antecedent Ross Ashby, but
reading Boyd, the resonance with VSM is uncanny. Boyd made several
major breakthroughs: the OODA (Observe-Orientate-Decide-Act) loop, the
emphasis on speed in strategic action, the Energy–Manoeuvrability or EM
theory of measuring agility (in military aircraft, looking at performance in
terms of both kinetic and potential energy – what manoeuvres are possible
from here?) and a theory of innovative thinking – which again is spookily
resonant with another piece of Beer’s work – in this case the Yo-Yo model. As
well as the theory embodied in OODA and EM, another of his contributions
that we built on here, is his cataloguing strategic and tactical manoeuvres.
Boyd quite literally wrote the book cataloguing and classifying dogfight
xvi
Foreword
manoeuvres for fighter planes and his textbook on this is used by fighter
pilots to this day. In his seminal work, Patterns of Conflict (1976), he aimed to
“discern a pattern for successful operations” and “help generalise tactics and
strategy.” He did this by exploring the principles behind successful military
figures through history, from 400 BC to the present: a hunt for patterns if ever
there was one.
Nigel Howard’s work gave a key introduction to game theory and
particularly to his development of game theory in which the nature and rules
of the game are changed by the players, turning it from a rigid and formular-
ised exercise into something more like an unfolding drama. Like Boyd,
Howard’s work has been used extensively in national strategy in conflict situ-
ations and in some of the most significant turning points in post–World War
II geopolitics.
Humberto Maturana is a ground breaking thinker in biology and
systems thinking. He has made several major contributions in his field, some
of which have had considerable influence beyond their original field of appli-
cation including: autopoeisis, the process of self re-creation by which biolog-
ical systems maintain themselves, the biology of cognition, and the model we
use here – structural coupling – the process driving biological evolution.
Gregory Bateson challenged us to rethink or to stand back, and try to
perceive in a different way, to see how reality is actually operating. How does
even our own thinking get determined by larger ideas? He was interested in
larger patterns, in how things connect and was one of the founders of systems
thinking. He often used the phrase “the difference that makes the difference,” and
it’s a way in which to define something in terms of its relationships, using
contrast and context, instead of pigeonholing it with a name. It leads us to
look for and at things differently, and in the similarities and differences which
come from contrast and context, we develop a patterning process.
In addition to these five, special mention and thanks are due to Henry
Mintzberg. The approach we outline here isn’t built directly from his work,
but Mintzberg above anyone made credible and discussable the idea that the
strategic direction actually taken by an organisation might not be the same as
the strategic plan.
His view of strategy as emergent has three important implications for
us. First is separating the reality of what happens from the thought process of
planning what we want to happen. Second is that the mental process of ‘doing
strategy’ is at the very least influenced by what happens on the ground and
therefore may actually be driven by events rather than driving them. It follows
that if we want to understand what has happened and what is likely to
happen, we need to move beyond planning, beyond treating strategy as a
learning process and see the underlying forces at work in the strategic
xvii
Foreword
situation we are in. Third is that if strategy is emergent, then looked at system-
ically, emergence comes from the working of the system – in this case the
system consisting of an organisation interacting with its environment. That
means that if we can understand and model the system there is at least a
chance that we can get a better grip on those underlying forces driving stra-
tegic direction.
This book is divided into four parts. Part One provides a set of argu-
ments as to why conventional strategy fails and fails so often and how the
Patterns of Strategy approach addresses those shortcomings. It goes on to
outline the underlying approach and introduces the basic concepts we’ll use
and on the way, we discuss what we believe strategy is and isn’t. Part Two
introduces the dimensions of strategy, the building blocks which we use to
assess the current strategic situation, and then to design strategic manoeuvres
to improve our strategic position: the strategy itself. Part Three is the longest
section and is a catalogue of 80 strategies that we have seen repeatedly used
by organisations. We have described these as a series of ‘strategy recipes’ that
you can follow, or at least start to recognise. Once you get your eye in, you
start to see these patterns repeatedly, and for practitioners, they quickly
become a shorthand language for describing how organisations manoeuvre
for advantage, or to run through options for a strategic move. We believe this
is the first such taxonomy of strategies. It is not comprehensive, we have a
longer list with examples, but this would have been a much bigger book if
we’d put them all in. Part Three concludes with looking at what happens
when organisations play off different strategies against one another in busi-
ness ecosystems. The 80 strategies are also cited in Part Two, where a partic-
ular Patterns of Strategy element is relevant to a strategy, and the strategy
name and the page of its full description are both given.
Part Four takes you through how to build a strategy using this approach,
starting with the modelling of a strategic situation, through converting that
into an action plan, to how to implement it – Mintzberg’s shift from thought
to action. These two chapters cover the approach in practice: how to use the
elements to explore the structural couplings you have, to consider the pros
and cons of new couplings or altering the couplings you have, and then
building and executing a strategy to make those changes happen, and moni-
toring its execution.
Finally, the book finishes with a table listing these strategies. It’s a sort of
ready reckoner for the strategy recipes. It gives a short definition of the
purpose of the strategy. There’s an indication of the level of management
challenge in executing the strategy, which of the three Patterns of Strategy
dimensions are core to the strategy, and the chapter where the strategy can
be found.
xviii
Foreword
Some readers may be tempted to ‘dip into’ the book, to select chapters
from the index that appeal more than others. This is a reading style that you
can use successfully with many management books – because they are built
on ideas (or usually just one idea) that you are already familiar with. Because
the approach to strategy we present here is built around a different paradigm,
if you do skip ahead, the result is more likely to be confusion than insight. In
terms of numbers of pages, the bulk of the book is in the 80 strategies, but
without reading the earlier part of the book, most readers will struggle with
them. So, we suggest reading at least Parts One and Two and the introduction
to Part Three in chapter order, but after that feel free to dip and skip as much
as you like. The chapters group together strategies for different situations, so
you can easily shortlist those of interest to you.
Before we start, two words of caution. First is that this approach does
consider more factors than your standard 2×2 matrix, which assumes that a
complex strategic situation can somehow be reduced to just 2 variables.
Following Miller’s Law that most people can handle 7Â€±Â€2 elements, we have
gone for 6 basic variables, but to cushion the blow, in practical situations we
rely on taking people through a structured approach, which means they deal
with them one at a time. It’s more complex than your standard 2×2, but hope-
fully bearably so and fewer elements than, say, Osterwalder’s Business Model
Canvas (2010) which has nine.
Second, a common reaction when taking people through some of the
thinking in this book about the forces that drive organisational direction is for
them to see these forces as an aberration. As if the world really ought to work
according to human plans, as if when those plans are swept away by forces
we can’t always see and rarely understand, as if that is something, not just
extraordinary but unnatural. But of course what we are talking about here is
precisely the opposite. The ‘strategy’ is what is unnatural, the forces at work
are as natural as the wind and tide are to a sailor. It’s as if our organisations
and corporations are being steered on their course by captains who under-
stand little of the storms that can drive them to their desired destination, or
onto reefs and rocks, or in a direction completely different from that which
was planned. The delusion of ‘mastery’ is a hard one to forego.
For the reader, worrying about loss of control, be assured, the forces
driving strategic direction are not only understandable, they can be modelled
and you can learn to use them to your advantage. Bon voyage!
xix
PART ONE
A DIFFERENT
APPROACH
1 WHY PATTERNS
OF STRATEGY?
Patterns of Strategy uses a completely different approach to business strategy

compared to more conventional models. The strategy ideas described here
run contrary to conventional wisdom. They assume a completely different
model of strategy formulation and, further, a different set of principles about
when strategy is important and where it plays a role. So it’s worth asking why
bother with something new and different?
The consultancy experience

“So, how do we sort this out?” said the strategy director. We were with a consul-
tancy client, a multinational working on what were by any standards large
government contracts, and we were looking at three intertwined problems.
One issue involved two companies (our client and a competitor who at that
time wasn’t our client) seeking to position themselves to get the lion’s share of
government work on a contract. The second was a higher-level issue about
their long-term positioning relative to their main competitor with the relevant
government department – the customer. And the third was how to manage a
situation in which these two competing corporations and the government
department were all going to collaborate as a partnership.
This sort of knotty, multilevel problem where multiple players have to
develop strategies for situations where they are at one moment competing and
at another collaborating is not unusual these days. And in reality, of course,
the picture was much more complex and bigger than this: each of these three
issues affected each of the others, with short-term advantage and longer-term
positioning pulling in different directions, and each of these two companies
had huge supply chains with thousands of suppliers for whom they competed,
but at the same time they collaborated on some supply deals, and the same
issues could be seen rippling down through the guts of the supply chain.
A different approach
The effect on organisations and individuals was disorientating and desta-

bilising. Working out strategic positioning and strategic direction was hard
because of the contradictory forces in play, so organisations dithered, moving
in one direction and then almost immediately backing off. For individuals, the
tension was palpable, and a sort of dislocation set in, with people collaborating
in public but fighting behind the scenes – although, of course, what was going
on behind the scenes was also visible to both partners and competitors.
And on this occasion, as so often, we couldn’t see how any of the conven-
tional strategy approaches could help us at all (FigureÂ€1.1). Working out which
box in a 2×2 matrix wasn’t going to tell anyone much about how the two compa-
nies were differentiated or achieved cost leadership. Five Forces, and Porter’s
Value Curve (1980) didn’t hold the key, nor did Blue Ocean Strategy (2005). And
yet the strategic situation had the potential to have both short-term conse-
quences and very much longer-term and higher-impact consequences that
were genuinely strategic in their scope. Once we could get to a strategy, then
you could imagine that Porter’s Value Chain (1985), or Strategy Maps (2003), or
Business Model Generation might help with designing the execution, but none
of these tools helped provide a practicable guide to formulating a strategy.
Figure 1.1
Conventional
strategy
approaches
In fact, even categorising the different strands of this particular strategic

knot as ‘competitive’ or ‘collaborative’ was fairly speculative and felt like a
simplification of something far more subtle. If one of these companies moved
4
WHY PATTERNS OF STRATEGY?
to occupy and excel in one area of expertise and at the same time the other
moved to adopt a similar position of pre-eminence in an adjacent area of
Â�specialism – was that competition or collaboration? Was our client moving to
the only position left after the other comÂ�pany had already chosen their posi-
tion, or was it the other way round? And as these huge corporations gently
pirouetted around one another under the watchful gaze of the government
department, did it matter whether these moves had been discussed and agreed
before they happened or whether the agreement followed the process in which
each moved to fill the space vacated by the other in this huge corporate pavane?
Luckily for us, we did not have to rely on conventional strategy tools.
This happened to be a story involving two multinationals, their suppliers
and a government department, but at around the same time we were dealing
with another large client in an almost identical tripartite situation involving a
competitor and a government department. Similarly, we could use the
example of two business schools and their common customers who are in a
similar situation, or the example of eight not-for-profit organisations, their
customers, their regulator and a shrinking budget. This sort of strategic situa-
tion of multiple players manoeuvring for a position of advantage isn’t rare; it’s
normal, and the conventional strategy tools don’t even touch it. For our two
tripartite strategy situations, the solutions developed were quite different: one
involved the client changing their responsiveness to the customer/partner at
the same time as shifting their stance relative to the competitor/partner; in the
other situation, the solution lay in increasing the agility of the organisation to
enable more innovation around products and services to out-innovate the
competition. Both strategies were successful, but working out which strategy
to use in which case couldn’t have come from the conventional models.
The conference experience

The hall is full, the keynote speaker is on the stage and starts to talk. And part
way through his comments, he says that “around 90% of strategic plans are not
implemented.” This was a mainstream international management conference and
moreover one where almost the entire discipline was based on following the
strategic plan. And yet one of the keynote speakers – a professor well-respected
in the field – had just said that these strategic plans on which the work of the
hundreds of people at the conference was based, overwhelmingly didn’t work.
Nobody challenged this report on research findings. Nobody said, “Surely that
can’t be so!” much less, “But the evidence from X contradicts that.” It was as if the
statement was so shocking that the only way to deal with it was to ignore it. So,
of course, that is exactly what everyone did. An entire management discipline
whose work depended on strategic plans being the basis of their work could not
accept that they were building on a ‘model’ that doesn’t actually deliver.
5
Although there is a sort of tacit conspiracy to not talk openly about the
failure rate of conventional strategy, we find that in private conversation or
when talking to small groups, almost nobody expresses real surprise at the
scale of the failure. It fits with people’s personal experience. As one veteran
said to me, “I’ve never seen a strategy executed in my whole career.” He’d had
quite a long career.
So is the “around 90%” just a freak statement? Some of the big names in
strategy including, of course, Henry Mintzberg have talked extensively about
the failure of strategy and strategic planning, and as Gary Hamel said, “The
dirty little secret of the strategy industry is that it doesn’t have any theory of strategy
creation” (1997).
Failure of strategy development

If we were using a map to get somewhere, and around 90% of the time we
ended up in the wrong place, we would certainly look for a new way of navi-
gating. Normally if something fails, it would be fine to take that as a starting
point for improving the approach. And yet, if around 90% of strategies fail (and
another survey stated a 98% failure rate), then something is very, very wrong.
AÂ€10% failure rate calls for a bit of reflection and tweaking. AÂ€20% rate and
you’d take the tweaking a bit more seriously. At anything over a 50% failure
rate, we’ve gone beyond tweaking; we’re no longer talking about an approach
that is a bit wrong. Over 50% means there is something fundamentally wrong.
It seems important to explore some of the assumptions underpinning the
extant approaches to strategy to understand why these might cause problems
and then to explain how the approach in this book deals with things differently.
There are a lot of reasons we could give as to why conventional strategy
not only fails so often but should be expected to fail so often. Doing a thor-
ough job of going through these would take the whole of the rest of the book,
and others have already tackled that task more extensively. This, then, is just
a quick canter through some of the most salient issues. Broadly for us, these
fall into problems of formulation and problems of execution.
When we ask, “What is strategy?” it often appears that the ‘label’ of
strategy is applied to things that senior people do, or that have a high price
ticket, or that have long-term implications, or all of these – so broadly some-
thing ‘important.’ Some responses are incoherent, but there is a fairly consis-
tent core to those responses that goes: “Strategy is about knowing where you are,
deciding where you want to go and planning how to get from where you are, to where
you want to be.” Well, that’s OK as a description of organising a trip to the
seaside, but it’s not business strategy.
Traditional approaches mostly see strategy formulation as developing a
plan to get from AÂ€to B and focus on categorising organisations or markets to
6
WHY PATTERNS OF STRATEGY?
decide where B should be. AÂ€small group of senior people sets to work and,
generally, the work will start with an analysis of the marketplace, examine the
as-is situation for the organisation, define an attractive to-be direction for the
organisation, and then move on to the change plan to get there. If we look at
how the theory suggests people do this – take the strategy books off the shelf
and look at the tools in them – then many of today’s approaches to strategy are
actually analyses dressed up as strategies. Many taxonomies are in use, mostly
four-quadrant models comparing two parameters, such as a matrix of industry
attractiveness vs. business capability. Choosing where to put our resource
across such a matrix is not a strategy; it’s just a resource allocation process. It
doesn’t take into account what others are doing or how fast they are doing it.
So what’s wrong with that? It assumes that the destination of our
strategy exists – as if it was an actual place like the seaside. But it isn’t. Strategy
is about the future, and the future doesn’t exist; it gets created, and it gets
created by the various players in our strategic environment – including us.
This isn’t just a semantic or academic point. If we think the point of strategy is
to get from AÂ€to B and B doesn’t even exist but has to be created, then where
is the process of creating B in our matrices? And where in our analyses are the
other players in the environment who are going to create it? In practice, much
strategy is ill-conceived because, as we approach B, we realise that we should
instead be trying for C or D instead, so we abandon the journey to B and start
the process over again: the plan fails.
We ascribe undue and overoptimistic weight to our ability to predict the
future. The equivalent of “Build it and they will come” could be “Plan it and it
will be so.” As you read this now, it is clearly illogical, yet organisations fall
into this trap again and again. So it is highly unlikely that the strategy set will
be appropriate and sufficient for its environment. As von Moltke put it, “No
operation extends with any certainty beyond the first encounter with the main body
of the enemy,” or, more colloquially, “No plan survives contact with the enemy.”
Organisations acknowledge change, to an extent, by putting a strategy review
process in place. In practice, this is in the form of tweaks and minor redirec-
tions on the periphery of the strategy. After all, the next big strategy refresh
process won’t be needed for another couple of years, will it?
One of the really common explanations about why strategy fails has to
do with problems in execution. Sometimes the failure is blamed on the actual
techniques of transferring the plan into action. Sometimes it’s blamed on
more amorphous resistance by the organisation, and often cited here is the
quotation usually ascribed to Peter Drucker: “Culture eats strategy for break-
fast.” Both of these may be true, and arguably they are about the same thing,
but neither really explains why this should be. There are several reasons,
and some are about the social or organisational dynamics of having a small
group going off and formulating a strategy that may not be understood,
7
communicated or practicable. But at least one reason for ‘resistance’ to

strategy is that the organisation is locked into its operating environment:
serving customers, dealing with suppliers, struggling with competitors,
responding to regulators, and those short-term operational demands consti-
tute the pressing agenda of most of the organisation. The strategy simply
gets overwhelmed by the direction that emerges from the welter of how we
respond to these conflicting demands – emergent strategy.
Conventional strategy doesn’t deal with this well or even at all. The
matrices and the A-to-B destinations conveniently ignore the ‘pull’ our
strategic environment exerts on us through the relationships that our
Â�
Â�organisation already has.
In traditional approaches to strategy development, there is usually some
assessment of the competitors (private sector) or other actors in the same
marketplace (public sector). This might look at the services they offer, the
quality of those services, how they perform, and potentially any visible
changes in direction. Very often, that’s it – a one-off snapshot of the competi-
tors. Working with an R&D based organisation, we explored a set of strategic
themes. One of these focused on the importance of being ‘competitive.’ When
we asked a director the straightforward question, “Competitive with whom?”
she wasn’t able to answer us and had never considered that it required looking
outside the organisation to make comparisons. Most of the energy and atten-
tion goes to how your organisation would like to be positioned in the market-
place, independent of those other actors. This is looking at only one half of a
relationship without taking into account the living and changing nature of the
other end of the relationship. And, as Gregory Bateson put it, you cannot plan
for just one end of the relationship:
Breach a holistic structure, and you say, or do it without saying: IÂ€am only
going to attend to this end of the relationship. IÂ€am going to study the role of the
doctor. Now a role is a half-assed relationship, it’s one end of a relationship.
And you cannot study one end of the relationship and make any sense. What
you will make is disaster.
Your organisation is changing, purposefully or not, and so are the other

organisations in the marketplace. Your customers are changing – both who
they are and what they expect, want and need. All the actors in the market-
place are linked together systemically, and significant changes on the part of
one actor will have an impact on the others. To develop a meaningful strategy
requires understanding the relationships in the marketplace and the interplay
between them. And because conventional strategy doesn’t look at the
dynamics of interaction well – or even at all – we really shouldn’t be surprised
at the failure rate.
8
2 HOW THIS IS
DIFFERENT .Â€.Â€.
Almost nothing about the Patterns of Strategy approach is the same as

conventional approaches to business strategy. There are too many different
terms and tools for us to list them in this section, and they will appear in their
natural order throughout the rest of the book. But if we scale up to the level of
basic ideas, there are six major differences:
1 multiple interdependent actors,

2 competition and collaboration,
3 manoeuvres,
4 strategic fit,
5 exchange of value and
6 time.
Good strategists may deliver any or all of these as outputs and what is
different with Patterns of Strategy is that it gives you the tools to use these as
part of the strategy development process rather than simply seeing them as
outcomes. For example, first to market is a well-established strategy based on
time as an outcome, despite the fact that almost none of the conventional
strategy development approaches build time into the strategy design process.
Multiple interdependent actors

When we are infants, we see the world as an extension of ourselves. Other
people are only real to us in that they do things we like or do things we don’t
like, and we react accordingly. We see them in terms of our agenda and
whether they help that or not. Understanding that other people are individ-
uals like us, with their own motivations, agendas and freedom of action,
comes surprisingly late in the development of most children. Some people
never grow into this realisation and go through life in an infantile emotional
state, expecting others to comply with their wishes and getting upset when
they don’t.
Conventional strategy conforms to this infantile stance. There are no
other actors in it. Instead, other players are modelled as passive recipients of
our strategy, as if the world is simply waiting to conform to our needs if it’s a
market and to roll over if it’s a competitor. Either way, the assumption is that
others will conform to our strategy. There may be several recipients, but there
is only one actor and it’s us. And because this underlying assumption is struc-
turally built into the strategy, it means that the strategy can only really be
expected to work when the world looks and behaves like this – which is never.
It’s almost as if strategy can be conceived in a vacuum, as if the world
was a clean sheet upon which we can simply impose our will. Sadly, of course,
this is exactly how it’s done far too often – the board comes up with a strategy
that is mostly about what it wants the organisation to become.
The need to build
the options and capabili-
ties of other actors into
your strategy seems so
obvious, it’s uncomfort-
able to realise how poorly
conventional strategy does
this. We’ve described earlier
how often conventional
stratÂ�egy fails and that there
are multiple reasons why this
should be, but even if none of
Figure 2.1 the other factors we talk
Strategies in about there was present, this
collision alone would be enough to
account for the wide-
spread failure. If, let’s say, ten other significant actors are operating in your
environment, it’s a fair bet that most of them won’t be acting in your best
interests. Assuming each of these strategies has an equal chance of success
and they all affect one another and therefore each has the potential to desta-
bilise any of the others, you have at best a one-in-ten chance that your strategy
is going to work as planned (FigureÂ€2.1). It doesn’t even require any of them
to intentionally act against you for your plans to be destabilised, any more
than a car crash is intentional. All that is needed is for multiple actors to be
manoeuvring in the same strategic space without taking into account the
10
How this is different .Â€.Â€.
direction, speed and proximity of others. Try driving a car on a busy road in
that way and see how long it takes for something to go wrong.
As strategists, it’s time to grow up and face the unpleasant truth that
other organisations are also actors, capable of independent thought and action
and that any strategy that hasn’t modelled their options, their choices and the
effects that those might have on us is .Â€.Â€. well, a fantasy really.
For us, the concept of actors is fundamental to strategy. The term ‘actors’
is borrowed from game theory where it is used, pretty much as we use it, to
describe any parties that have power and a set of options that they can select
and decide to use in a situation. What game theory does is look at what can
happen if different actors choose to exercise particular options and specifi-
cally how decisions by one player can trigger responses from another. The
‘game’ is then the interplay of a series of actions by the different actors as each
decides how to move to create advantage for themselves. In the same way,
Patterns of Strategy models how two or more actors interact, what their
options are relative to one another and what is likely to happen if particular
moves and countermoves are played.
Crude game theoretic models constrain the players within a tight set of
predefined rules. Since our approach borrows some aspects of game theory, we
were extremely conscious of the risk of this. We have a fixed set of different
types of options that can be played with, but what each of these represents in the
real world is pretty flexible. For example, the variable of ‘power’ may represent
relative financial power in one strategic situation and intellectual horsepower in
another, or indeed we could model the interplay between two actors, each of
whom has deployed one of these different types of power against one another.
We believe – and to date experience bears out – that there is sufficient flexibility
within the factors we use for modelling to deal with any strategic situation.
Competition and collaboration

Much of the talk in conventional strategy is around competition and competi-
tive advantage. We say ‘talk’ because many of the models that people actually
use for developing strategy don’t deal all that explicitly with competition.
Obviously, it’s quite difficult for most conventional strategy to deal explicitly
with competition because that would involve modelling the actions and
options of competitors and, as we’ve seen, most strategy confines itself to a
single perspective – ours – and a single actor – us. Hence it doesn’t model
competitors as actors, and without that, it’s difficult to model competition.
Despite it not being very explicit, the idea that the underlying purpose of
strategy is to generate competitive advantage and that business environments
11
are fundamentally competitive in nature remains an important principle in

conventional strategy. And, of course, it is true that lots of environments are
competitive and that, even amongst organisations in the public and third
sectors, there can be intense competition. We’re not at all downplaying the
need to recognise competition. Indeed, we’d argue that Patterns of Strategy
deals with competition much more directly than most other strategy
approaches, allowing us to model each move in the cut and thrust of a corpo-
rate duel.
But competition isn’t all there is to life and isn’t even all there is to
Â�business life. All organisations and economic systems depend absolutely on
cooperation and collaboration; without them, there can be no commercial trans-
actions. Competition is optional, but cooperation and collaboration are
mandatory – at least at some level. No organisation is purely competing; no
organisation is purely collaborating. Therefore, it’s critical to have a strategy
approach that can deal effectively and equivalently with the challenges and
opportunities of both collaboration and competition.
In many strategic situations, the players have to collaborate in some
way, and we need ways to think about these situations in strategic terms.
Even when we look at intensely competitive situations, all is often not quite as
simple as it appears. Imagine two industrial giants locked into a competitive
struggle but each basing its operations on a series of collaborations both
within their organisation and with partners and suppliers outside their
Â�organisation. And, of course, in a great many cases, ‘competitors’ actually
collaborate more than they compete. There are whole industries where the
main players coordinate their actions to provide almost identical products to
identically defined markets with hardly any differentiation, and you can view
this as competitive behaviour, which it is, but you can also see it as coordi-
nated action by two or more actors – which it also is. And the lack of ‘real’
competition in this situation saves all the players from having to invest in real
differentiation and to take the risk that goes with that. Even without any overt
market fixing, it’s collaboration with a thin pretence of competition – and this
is normal.
We’re conditioned to think of competition as some sort of a natural law.
Partly, this is the Darwin influence. When Darwin was writing On the Origin
of Species, he had observed that species do evolve, but he couldn’t see the
mechanism driving that. His friend Herbert Spencer was working on theories
of competition in economics and suggested that this might be the mechanism
in biology too. But of course, it isn’t a natural law; if it were, then we wouldn’t
need antitrust legislation and Competition Commissions to ensure that
competition was maintained in business and to prevent organisations from
collaborating ‘too much.’ You don’t need legislation to enforce the law of
12
gravity, and if competition was a natural law, you wouldn’t need legislation
to enforce it either. Instead, the driver of evolution in biological systems is
structural coupling, which we describe in ChapterÂ€3.
Conventional approaches to strategy don’t really help much in model-
ling strategic situations where collaboration is key or indeed those common
situations where we collaborate over some things and compete over others.
Conventional strategy models have no real language for this. Patterns of
Strategy maps strategic relationships that can be competitive, collaborative or
a combination of the two. The approach can be used for designing different
types of collaborations or different types and approaches of competition and
for planning transitions between collaboration and competition.
Manoeuvres
Strategy tends to be both thought of and executed as a mental construct – ‘the
plan,’ some document, some models, some projections. As Henry Mintzberg
described back in 1978, “Strategy is a pattern in a stream of decisions.” Interest-
ingly, we find that even those senior teams who pride themselves on their
pragmatism still take this position: that a strategy is essentially about a pattern
of thoughts.
As far as it goes, this is fine, but we take a different position, that strategy
is about the organisation manoeuvring within its strategic environment to
change its position relative to other players. This is much more in keeping
with Mintzberg’s revised definition from 1985: “Strategy is a pattern in a stream
of actions.” And for us, the shift is huge, from thinking about strategy as some-
thing purely mental – something distinct from action – to thinking about it as
what really happens on the ground, about who changed, in what way and
with what effect.
The difference isn’t just academic. Leaving strategy as an abstract
thought process is one of the mental traps that leads to its divorce from reality.
What happens isn’t the plan; what happens is what happens – it’s what ‘they’
did that affected us and what we did in response. Strategy is a sequence of
actions and events that unfold in real time, not according to a five-year plan
or an annual budgeting cycle.
So our third big difference is mapping strategy as a series of manoeuvres
that organisations execute. AÂ€manoeuvre is a change in our disposition of
resources in focus and time: real people and real resources being deployed in
real actions and activities. And it turns out that whilst there are literally
millions of possible permutations of strategic position that you could map
using Patterns of Strategy, there is a relatively small number of frequently
repeating patterns. In one training workshop with around 12 senior managers
13
from different organisations, the same strategy pattern – the same sequence of
moves to gain an advantageous position – came up no less than three times.
In other words, a quarter of them had similar strategic situations and derived
the same approach in each case. The detail was very different, the contexts
superficially were very different, the way each manager described their situa-
tion was quite different, but the underlying structure of the situation proved
almost identical.
There are three dimensions in Patterns of Strategy – fit, power and
time – and strategic manoeuvres are about changing these. Ensuring an
adequate fit with the operating environment is essential for survival, so the
core of Patterns of Strategy is about understanding the nature of key rela-
tionships for an organisation – in other words, how we fit our environment
or how fit we are. The two other dimensions of power and time are about
how we achieve fit. By changing those relative to other actors within a stra-
tegic arena, we can change the structure of how we fit together.
As well as providing a different language for understanding the fit of
ourselves and others within a strategic arena, Patterns of Strategy looks at
what options the different actors within that arena have to manoeuvre and so
change how they fit. Patterns of Strategy unfolds as a series of manoeuvres
that the different actors can play out to arrive at new configurations of fit.
The difference is important in this way: conventional strategy that is
thought of as a plan, as a mental construct, can be carried on in parallel with
reality. It can be played out almost as a fantasy, with no reality checks other
than “Are we actually following the plan?” In contrast, a strategy that includes
the actions and reactions of other actors forces you to check the reality as you
go, testing whether they have reacted in the ways you expected. AÂ€strategy
that looks at the interactions not only of your organisation with the other
actors but also of those between other actors provides feedback from the real
world much faster and more directly about whether your strategy is working.
Therefore, the chances of your strategy becoming an exercise in wishful
thinking are much smaller.
Strategic fit
Patterns of Strategy is far from unique in talking about the idea of ‘strategic
fit.’ Several well-known writers on strategy have used the term, although its
meaning is inconsistent and, outside academe, the term ‘strategic fit’ gets
used for a bewildering array of totally different business issues, many that
have almost nothing to do with strategy.
If strategic fit is a common idea, what’s different here? Although the
term is often used and sometimes defined, our experience is that it’s mostly
14
used in an abstract way, and there is often a disconnect between the concept
of strategic fit and the actions in the action plan. To some extent, this is an
inevitable consequence of not modelling other actors as – well, actors. For us,
strategic fit is a function of how we relate to other actors in our environment,
and if we don’t model them we can’t meaningfully model our fit.
Strategic fit is about our ability to survive. It isn’t an abstract concept, it’s
about how similarities and differences between organisations affect their
ability to maintain relationships with their environment so that they can
continue to keep a two-way value exchange flowing. This is quite granular; if
we change our cycle time or the type of innovation we engage in or a range of
other key variables, what is the effect on our strategic fit with X? And what
might be the effect on Y? And what then would be the change to the strategic
fit between XÂ€& Y? And is that a good thing for us or not?
So the difference is actually modelling our strategic fit and its conse-
quences, understanding what the key variables and factors are that we can
use to alter ourselves to change our fit and exploring how other actors might
do the same. Strategic fit isn’t just a statement of intent, not just a position to
be set out, it’s a constantly changing process of co-evolution driven by the
decisions taken and changes made by a range of actors, not just ourselves
alone in our environment. Understanding strategy in terms of strategic fit
means being able to play with those key variables to find a set of actions and
anticipate likely responses from other players that will allow us to thrive and
prosper on our terms.
Exchange of value
Several strategic approaches deal with the concept of value, notably Porter’s
Value Chain and Value Curve, and Osterwalder’s Business Model Canvas.
All these approaches model value from the perspective of your organisation
as a value provider in return for money. The shift here is to a focus on a bilat-
eral exchange of value and on an exchange of a wide range of value types.
Different stakeholders value different things in the same situation, and it’s
that asymmetry that drives all commerce. Suppose you want to buy a pint of
milk. You have to want the milk more than the 50 pence or whatever it costs,
and the shop has to want the 50 pence more than the milk, otherwise there is
no transaction. That’s a very financial and simple example, but the idea of
value exchange in a relationship is fundamental in the world of Patterns of
Strategy. It could be that you are exploring the relationship with a key sector
of your market, as well as the value proposition you must offer, in order to
command the financial premium that you are seeking. That’s another Â�financial
and familiar example, but there are all sorts of ‘soft’ things that organisations
15
value that drive behaviour in the dynamics of their environment. For example,
being similar to other organisations – part of a herd – is actually really attrac-
tive to many organisations, and the value exchange is strong and subtle at the
same time. Each member contributes value through its literal presence and
‘weight’ and gains value through the presence of the marketplace, which is
shaped by the herd. In all relationships, there is a value exchange of some sort.
It isn’t necessarily a positive exchange in both directions, and if the relation-
ship becomes too asymmetric, with one organisation being grossly the winner
in the exchange, then it may be too toxic to survive. But understanding the
who-gets-what-value in the zero-sum or non-zero-sum world of game theory
is crucial, as it underpins the understanding of what value you are getting in
the current situation, what value you may get if you make no change (and it
will change because the world will change around you, altering the value and
value types available, even if you stay still) and what value could be possible
if you manoeuvre to attain an improved strategic fit.
Time
For us, the two strangest differences between conventional approaches and
Patterns of Strategy are the first one we discussed – the lack of multiple actors
in conventional models – and this one, time. There is no time dimension in
most strategic models. Usually if time is represented at all, it creeps in as a
timeline on an action plan, but that’s about all. Like the multiple actors
problem, it’s almost as if the expectation is that the world will stand still for us
while we conduct our strategy, just as all the actors are expected to stand
around and then passively do whatever our strategy dictates for them.
The reality is, of course, dramatically different. Time is a critical variable
in strategy; it’s the dimension we use to measure windows of opportunity and
a key variable (though once again rarely considered) for strategic risk: how
fast is this problem travelling towards us, and how soon could it hit us? As the
Duke of Wellington (1835) observed about strategy, “Time is everything.”
There are other approaches in business strategy where time is counted
as a significant factor, but they are few, little understood and rarely practiced.
Boyd’s work in military strategy, when transferred to business, stands out
both for its brilliance but also for its rarity in treating time seriously as a Â�critical
variable in strategy.
The difference here is so dramatic that it does beg a couple of questions:
is time really that important and, if it is, why has conventional strategy
ignored it so often? We think the two questions fold into the same answer. In
many business situations, speed is critical: if your competitors can change
faster than you or your environment changes faster than you, then essentially
16
the game is up. You are going to lose your strategic fit with your environment
and with it your ability to survive as an organisation. And for some situations,
the rate of change is fast, and this is obvious. In others, though, time moves
very much slower, the environment changes slowly, and we change slowly. It
can move so slowly that it’s longer than our strategic planning cycle, and time
and the change it brings are largely ignored in the strategy because they sit
outside it in a longer timeline. And much conventional thinking on strategy
has focused on these sorts of slow-moving situations – large firms moving
slowly.
Even in these sorts of situations, though, organisations that have discov-
ered how to use the time dimension have found it a devastatingly effective
strategy tool. Whole sectors and industries have been revolutionised using
time-based strategies, incumbents have been deposed and new entrants have
emerged as leaders in their field. What conventional approaches don’t give us
is a way to examine how differentials in time and speed between different
actors play out. If one company is using a 50-year long-term strategy and their
competitor is just running an annual budgeting cycle, who has the advantage
and, critically, what is the nature of that advantage, how do we use it and how
do we spot it?
The real difference that we have found with the way Patterns of Strategy
uses time is that it gives strategists a whole new set of tools to work with and
a totally different perspective. They start to see strategy as organisations
manoeuvring and countermanoeuvring in time, some moving slowly, some
fast, some seeing opportunities far in the future and moving deliberately
towards them and some focusing on short-term goals. What Patterns of
Strategy gives us is a way to work through the implications of very different
time-based approaches, where long term might be better than short term, and
where the reverse is true.
17
3
THE DARK
MATTER OF
STRATEGY
If, as we said in ChapterÂ€1, the survey reports come back with figures like
“around 90% of strategies are not implemented,” and the veteran systems
professor Russ Ackoff reports a similar finding (98% not implemented), then
apart from throwing our hands up in horror and amazement, what are we to
make of this? Well, it does prompt some interesting questions.
The first obvious one is, “Does it matter if strategy fails this often?” Some
other research results indicate that it might. Even the most successful organ-
isations are subject to failure. Of the original S&P 500, the list of the top 500
companies in the US, over 85% had failed in the 40-year history of the index
up to 2006. So if we believe there is a link between strategy and business
success or failure, could it be that the failure of strategy is linked to the failure
rate of these once successful, indeed world-class, organisations?
The second question it prompted for us is: “If the world for organisations
keeps changing and if organisations themselves keep changing – both of which are
clearly true – and if it isn’t strategy which is driving those changes, just what is
driving them?” This question is profound and triggers a whole string of other
questions. What is it that drives organisations in particular directions? What
causes some to thrive and others to fail, what drives some to try and stay the
same and others to change beyond recognition? If it isn’t their strategies, what
is it that drives the evolution of organisations and whole industries?
The answer for us came from a different world, the world of evolu-
tionary biology.
When Shrewsbury’s most famous son Charles Darwin wrote On the
Origin of Species in 1859, he hit a problem. He had observed from his studies
on the Galápagos Islands that species evolve, so he could see and record
evolution. But what he couldn’t see was what drove it. Borrowing an idea
from his friend, the economist Herbert Spencer, he postulated that the invis-
ible driver might be competition. One hundred twenty years later, the Chilean
The dark matter of strategy
biologist Humberto Maturana identified ‘structural coupling’ and not compe-

tition as the driver.
Structural coupling is a disarm-
ingly simple idea but one with
profound implications. In biology, it’s
the process whereby an organism inter-
acts with its environment in such a way
that the organism changes the environ-
ment and the environment changes the
organism. For example, we can look at
the co-evolution of a hummingbird
and the flowers it feeds on. The
hummingbird’s beak develops to fit
the flower, and the flower develops to
fit the hummingbird’s beak. As each
adapts to the other at the species level Figure 3.1
through successive generations, both Structural
coupling:
hummingbird and flower become more organisation
individuated, more specialised, more and its
uniquely themselves. When Darwin environment
talked about survival of the fittest,

what was meant then by ‘fittest’ was the fit between the organism and its
chosen environment, not necessarily the ability to run fast (although in a
cheetah or a Thompson’s gazelle, the two types of fitness are the same). What
Maturana has done with structural coupling is to explain the process that
delivers evolution. As Maturana said, there is a confusion between process
and outcome, and competition is an occasional outcome of evolution; it’s not
the process driving it.
It’s called structural coupling because these changes are structural –
they change the structure of each party in the coupling (FigureÂ€3.1). It’s the
process that drives evolution and co-evolution, and it shifts our focus from
the entities – the hummingbird and the flower, the cheetah and the gazelle –
to the relationship. As the veteran systems man and polymath Gregory
Bateson put it:
The horse didn’t evolve, the field grass didn’t evolve. It is the relationship that
evolved. The horse and the tundra with grassy plains are interlocked. It’s an
evolution in which the grass needs the horse as much as the horse needs the
grass. And you want grass, you want what’s called a lawn, in the suburbs, so
you will first of all go and buy a mower which will be the teeth of the horse, cut
that grass. You will then go and you’ll buy a roller, and the roller crushes the
19
grass down and makes it make turf. Then finally you end up going and buying
a sack of manure because you have to be at least the other half of the horse too.
Structural couplings have their own dynamic and their own direction. It
doesn’t assume any godlike intentionality about the direction of the evolution
being driven. The direction the relationship goes in is largely driven by the
dynamics of the relationship.
Transferring the model from organ-
isms to organisations is simple, and most
people we have worked with find the
idea easy to grasp and relatively easy to
work with. Organisations are structur-
ally coupled to their environments: some
couplings are with specific organisa-
tions, some with a sector or a market.
And, of course, most organisations have
multiple couplings (FigureÂ€3.2). Each
structural coupling has an effect on you
and changes you in some way. You start
Figure 3.2 to organise your activities to address the
Structural demands of that coupling and, as you
coupling: do, it changes you and you change the
multiple
organisations counterparty. Because, of course, at the
and their other side of this relationship the same
environment process of co-evolution is also happening.
Structural coupling relationships
have a natural trajectory, so the nature of the interaction tends to push or pull
us in particular directions. As we change to meet these demands or pressures,
we move forwards and, as we do so, we’re exposed to new pressures and
demands. Each time you move forwards down the path set by the structural
coupling, you are exposed to new opportunities and risks, and each time you
respond to those, you have moved a little further down the path. Each tactical
adaptation makes the coupling tighter; each change represents a commitment
of energy, resource, focus. More energy is invested in cementing each existing
relationship, whether good or bad, and they can be difficult or impossible to
get out of. The cycle is relentless, and whilst the steps may be so small that
they go unnoticed, the cumulative effect is enormous. Looking back along the
path we’ve followed, it looks like conscious choice, but mostly the choices are
determined by the situation. Our strategic direction is driven much more than
we consciously drive it. When the next step, what Richard Rumelt calls the
proximate action, appears obvious, we should pause and review. Are we
20
doing this in a mindful way? Is this where we want to head? Or are we just
continuing the inertial momentum of the relationship and being driven by its
existing trajectory? The coupling will take us where it’s already headed unless
we devise a strategy to alter the nature of the coupling or indeed remove the
coupling itself.
Just as in biology, evolution doesn’t demand the hand of a conscious
designer, so in organisations a structural coupling view of strategy doesn’t
demand that there is any conscious strategy at work. What we are looking at
is a set of natural forces that drive organisations in particular directions
without any intervention on our part – unless we are able to understand those
forces and change them. Which does explain both the failure rate of strategies
that ignore those forces and also the relentless change we see despite the inad-
equacies of those strategies.
Here are three short examples of structural coupling at work, at the
organisational, the industry sector and the national levels.
1â•‡ The automotive supply chain

A pressing and assembly company supplying components to the automotive
sector was chosen by their main customer to be a principal supplier in a
restructure of the supply chain. This promotion came with an increase in the
order book and greater security of a long-term relationship – which was nice –
but, of course, also came with a lot of other demands. Initially these were
around quality and performance improvements but soon also included pres-
sure to invest in new equipment to support the customer’s needs and to stop
investing in support for other customers. The relationship drove almost
everything in the firm, from the operating practices, to the culture, to the
strategy, to investment decisions. Each ‘decision’ and each move looked like
the rational choice – and, of course it was, but the decisions and the rationale
were dictated by the relationship, and the managers and directors were really
just going with the flow.
2â•‡ Nuclear waste

The nuclear industry has had a long-term problem with nuclear waste. Waste
isn’t the purpose of the industry, it’s an unfortunate and largely unwanted
by-product. The anti-nuclear lobby has protested long, hard and effectively
against the industry, and indeed so effectively that in many parts of the world
the growth of the industry has been paralysed. The industry and protest
movement are structurally coupled to one another (FigureÂ€3.3). Each shapes
21
the other, and in reality

the industry created the
protest movement by
its actions in producing
the waste and its inac-
tion in failing to deal
with it. The protest
movement has demon-
strably changed the
Figure 3.3
Structural
industry by stopping
coupling in the its expansion. Each is
nuclear the other’s most impor-
industry
tant relationship: they
are locked together in a
toxic embrace, and you cannot understand the identity of either without
taking the other into account.
3â•‡ Dynamics of empire

We tend to think of empires as being driven by greed or lust for power and,
of course, many are, but some, particularly the ones developed for trade, are
driven by their own dynamics. You move into a territory to trade, and that
brings you into contact with people outside the boundary of the empire who
you trade with. Some territories will be antagonistic, some unstable; in both
cases you end up with dead or captured merchants and disrupted trade. The
empire sends in diplomats, they get captured or killed, so then you send in
troops to do a rescue or a ‘police operation.’ The unstable country collapses,
and you end up running it to avoid anarchy. And suddenly the empire has
just grown again, and you now have even more neighbours to trade with,
some of whom .Â€.Â€. The dynamic is relentless and extremely difficult to side-
step. Several times in the British imperial experience when organising a ‘police
operation’ (invading another neighbouring country), British political officers
were explicitly ordered to make sure that they absolutely did not end up
annexing the country they were going into. Sometimes they managed not to,
sometimes they didn’t: as the US has recently discovered, it’s way easier to get
into a mess in a chaotic state than it is to get out of one.
Structural coupling and emergence

Not only does structural coupling drive the direction an organisation evolves
in, it conditions the way we think and the way we rationalise ‘our’ decisions.
22
It is the default and largely invisible driver of strategy that dictates where we
will go unless we actually change the nature and direction of the coupling. As
one colleague described it, it’s “the dark matter of strategy.” Dark matter makes
up most of the mass and therefore the gravitational force of the universe; it’s
everywhere but invisible. We know it’s there because of the effect it has, but
we can’t observe it directly – and so to emergent strategy.
Henry Mintzberg talks about emergent strategy – the strategy that
emerges from the decisions and actions of organisations as opposed to the stra-
tegic plans that hardly ever get implemented. Emergent strategy is the strategy
that the organisation really follows. The idea of emergence is fundamental in
systems theory, and it’s what emerges from the interaction and interdepen-
dence of the parts of the system. What we have in structural coupling is the
driver of emergent strategy.
Because your organisation’s structural couplings will drive your stra-
tegic direction, whether you are conscious of it or not, when we talk about
strategy in Patterns of Strategy, it’s important to remember that we’re not
necessarily talking about any sort of plan or even anything that is intentional.
As Mintzberg has it, your strategy is a “pattern in a stream of actions,” and
whether you are aware of that pattern or not is your choice. But whether you
choose to make yourself aware of it or not – whether you have decided it or
whether it’s been forced upon you – it is still going to be a pattern, and that
pattern will determine your future.
The implication of this is that the primary emphasis in strategic
thinking has to be on becoming aware of the forces at work in your situation.
Only once you have done this can you really formulate any strategic iÂ� ntention
that is likely to be effective. Otherwise the chances are that your intentions
will be overwhelmed by the evolutionary forces at work in your structural
couplings and, like most conventional strategies, yours will be one of the
ones that fails.
As an example, one of our favourite standard strategies and one we use
as an example in training because it is so clear is the Knight’s Move (FigureÂ€3.4).
This is a classic strategy used particularly by Japanese companies to penetrate
and take over whole market sectors. The case that is often cited of this
approach is the Japanese assault on the motorcycle market in the US (although
we tend to use the UK as an example). And of course, because it is such a clear
strategy and has been repeated several times so people can recognise the
pattern, it’s really tempting to assume it’s always a conscious strategy, but it
hasn’t always been. The US motorcycle case came about largely by accident.
The Japanese manufacturers were trying for a Frontal Attack on the prestige
end of the market but were failing to make any progress. What did work for
them was an offering at the neglected end of the market with an unglamorous
23
Figure 3.4
Knight’s Move attack by segment
but reliable little commuter bike. Faced with a situation where the plan to
compete at the top end of the market was failing and the ‘non-plan’ to take out
the bottom end of the market was working, the dumb thing to do would have
been to stick to the plan. The smart thing to do was to go with the flow. And
that, of course, is exactly what they did. They used the forces at work in the
situation that dictated what strategy could work, and all that was needed was
to spot the pattern once it had emerged and go with that. The strategy worked
as easily as water flowing downhill. The only thing that would have made it
better would have been to be able to predict those forces that conditioned the
strategy from the outset, but that was the game for next time.
Using structural coupling to understand strategic direction

In tackling this issue of spotting patterns, it may be helpful to think of it in
terms of weather. We all experience the weather as a phenomenon: we feel the
wind and the rain, we see the clouds. But although weather is a chaotic system
in the sense that we cannot predict it deterministically, it isn’t random. There
is pattern, and we can understand the phenomena of wind and cloud quite
well by understanding high- and low-pressure weather systems. Pressure
differentials between high- and low-pressure systems drive wind (FigureÂ€3.5)
and, in the same way, it is differentials between structurally coupled organ-
isations that drive strategic outcomes.
Working out which way you have to steer in order to end up where you
want to go is an everyday problem for sailors. Unless it’s a very short trip or
a very long one, what you don’t do is point at your target destination because
your actual course, as opposed to the course you steer, will be affected by at
least two sets of forces: the effect of wind (the power vector) and the effect of
current/tide. So in deciding the course to steer, you have to take these two
24
Figure 3.5
Working out direction
forces into account. Tide is extremely predictable and can be forecast years
ahead, but the wind is much more fickle.
Both of these forces that have an immediate effect on our progress and
direction are in turn driven by bigger forces; the movement of the moon
drives the tides, and differentials in air pressure drive winds. And both forces
have analogies that apply to setting the strategic direction of organisations.
The equivalent of the wind vector is the one we are concerned with in this
book, the ever shifting differentials between organisations that drive struc-
tural coupling and our immediate direction – not necessarily in the direction
we’d like. There is also an equivalent to the tidal vector with global trends
combining to create much bigger forces. Whilst the impact of these are huge
and affect whole sectors and societies, the effects are long term and therefore
easy to spot and take into account. Slywotzky and Morrison’s Profit Patterns
examines some of the longer effects. You don’t have to understand what is
driving these long-term effects to deal with them. You do have to understand
what drives the shorter-term effects of structural coupling if you don’t want
to be driven off course by those.
Where the metaphor breaks down but breaks down to the strategist’s
advantage is that we can’t change the high- and low-pressure systems that
drive the wind; we can only predict how those differentials will drive wind,
25
how strong and in what direction it will blow. But we can change differentials
between structurally coupled organisations. We can change ourselves, and
because we are structurally coupled, that will have an effect on the counter-
party and on the relationship. Unlike a sailor who can only predict the weather
to help plot their course, we strategists can both predict the forces that will act
on us and we can change them.
If structural coupling is the engine that largely drives the evolution of
organisations, then this has major implications. If there are forces – largely
invisible forces – at work that are driving us in a particular direction, then
how do we do strategy?
Clearly, the first step is to understand what structural coupling relation-
ships we are in, and what those mean. So some key questions we ask about
structural couplings are:
1 What structural coupling relationships are we in?

2 Where does a relationship like this take us?
3 Is that somewhere we want to go?
4 What will this make us into?
5 If it isn’t somewhere we want to go, what can we do to change it?
Answering those questions is what the Patterns of Strategy approach does.

Part Two explains how to model and think about the interplay of differ-
entials between structurally coupled organisations. There are no hard rules
here; it isn’t always the case that the strong will beat the weak or that the fast
will beat the slow. What we set out is a set of guidelines, not absolute rules. “It
is impossible to lay down binding rules,” von Moltke warned, “because two cases
will never be exactly the same.” So context is king, and the modelling cannot be
deterministic. In practice, however – and we do mean in practice, not in
abstract – it is almost invariably relatively easy for managers using this
approach to read a structural coupling and know pretty quickly whether it is
likely to deliver an attractive outcome or not. In practice, the guidelines are
predictive enough when set in a real-life context. By contrast, here’s a word of
warning to any academics or armchair strategists reading this: you will not be
able to make any determination about a set of differential positions without
setting that in a real context. This is an approach that needs to be grounded in
the reality of an organisation and its operating environment, and Part Four
takes you through the practical steps of defining strategy and then monitoring
its execution.
Part Three of the book has a list of strategies or strategy patterns. All of
these can be pursued as conscious and deliberate strategies, but none of them
is reliant on the organisation or a management team executing the strategy
26
deliberately. All of them can work just because of the way that the forces within
the strategic situation play out, just as water will flow inexorably downhill
taking the path of least resistance. We can choose to be conscious of those
forces or not, but without becoming conscious, they will tend to drive us and
how we think rather than us driving them. For us, the real battle here is not
the strategic conflict with a competitor; it’s the battle to become aware of just
what is going on in our situation. And that demands that we get to grips with
the forces at work. This is what we’ll look at next.
27
4 FROM CONCEPT
TO STRATEGY
Given that traditional strategy is so problematic for all the reasons we’ve
discussed and if the real driver of strategic direction is structural coupling, a
process that drives evolutionary progress through strategic relationships,
how do we build a strategic approach that helps us first understand those
powerful evolutionary drives and then harness them rather than work against
them or in ignorance of them? To not “fight forces, use them,” we first have to
be able to model them.
Dimensions, elements and strategies

Patterns of Strategy is built up from a series of .Â€.Â€. patterns. Whether strategy
is competitive or not, Patterns of Strategy sees strategy as about using the
resources (including time) at your disposal to change your position relative to
your environment (changing which structural couplings you have, or the
nature of them, or both), so that you can thrive there
Strategy: Changing our fit with the on your own terms. For each strategic relationship or
environment to our advantage by the structural coupling, there are three dimensions that
differential use of power and time. we map on both sides of the relationship (fit, time and
power) and within each of those dimensions is a
number of elements. There are three fit elements, two power elements and
one time element.
The fit elements are:
● differentiation (how similar or different each actor is);

● drive (the relative impact each actor has in driving change in the
coupling); and
● stretch (for each organisation, how it is changing within the relationship,
either because of the structural coupling or through self-initiated change).
From concept to strategy
The power elements are:
● strength (relatively stronger or weaker than the other actor); and

● concentration (the spread of activities where power is used, relative to
the other actor).
The time element is which actor is faster.

Most of these are relative, and that’s what you’d expect, as strategic
advantage or disadvantage in any relationship comes from comparison. As
Bateson says, it’s the difference that makes the difference that’s important.
Across the relationship, the similarities and differentials between
these elements, and what those represent in reality, drive the coupling and
its possible directions. The strategic thinking process is then to explore
what we can change in our own set of elements, what options are available
to us and what effect exercising those options may have on the future path
of the relationship – in particular what the counterparty might do in
response.
For each of those elements, there are options an organisation can exer-
cise (depending on their situation), and exercising one of those options
constitutes a manoeuvre that will change the nature of the relationship.
AÂ€strategy is built up from a series of these manoeuvres. In later chapters, we
describe each of the elements of fit, time and power in more detail, as well as
what effect different options and combinations can have in different contexts.
So there are patterns of similarities and differences at the element level on
either side of a relationship, and putting a series of these element-level
patterns together makes a strategy pattern – a set of manoeuvres to gain
advantage.
Patterns as archetypes
We also use the word ‘patterns’ in Patterns of Strategy in a rather literal way.
Combining all the elements of fit, power and time in structural couplings
gives us millions of possible combinations (and of course, all organisations
are in many more than just one relationship). However, we have found that
there are a number of distinct and recurring Patterns of Strategy – archetypes
for which it is possible to encode both the manoeuvres themselves, and the
indicators of manoeuvre progression for each party. We have documented
more than 100, and 80 are included in this book. These provide powerful
insights into the strategic options available; returning to Boyd’s Energy–
Manoeuvrability theory, what manoeuvres are possible from here, what will
they require of us, and how will we know if they are working?
29
Momentum and manoeuvre

Understanding structural coupling gives us a picture of the probable future
trajectory of a strategic relationship – the direction and momentum. And this
is where the relationship will take us if nothing intervenes to change things.
For us, strategy is about deciding what we might do to maintain that
trajectory if it’s taking us somewhere we want to go, or what we can do to
change it if we don’t like the outcome. We do that by first exploring and then
exploiting the effect of similarities and differences in the position of elements.
As with military strategy, the best strategists tend to rely more on difference
than on similarity. As Sun Tzu put it: “When strong, avoid them.Â€.Â€. If united,
separate them. Attack their weaknesses. Emerge to their surprise.”
So what happens if you are stronger where they are weaker? Or faster
where they are slower? Or, conversely, when will it help you to be slower
where they are faster? What happens if you concentrate your resources more
than they do? Or in this situation is there advantage to be had from diffusing
your efforts as widely as possible? Exploring these questions of difference
and options are what manoeuvring in business strategy is about. And that is
true whether we are talking about strategies of collaboration or strategies of
competition. If we are in partnership with another organisation, most of the
value in that relationship will be driven by the differences between us, whilst
the ability to work together will be driven by the similarities. So being really
clear about what needs to be the same and what needs to be different is just as
important in collaboration as it is in competition.
Levels of strategy
‘Strategic’ is a massively overused term in business, and it gets used for all
sorts of things that really have nothing to do with strategy at all. It has pretty
much become a euphemism for anything we think needs to be seen as impor-
tant. This reflects much of the confusion and absence of real content in the
field of strategy; the only way you can get away with hanging the label ‘stra-
tegic’ on anything is if nobody is clear what is and isn’t strategic.
We’re not on a mission to claim back the term for posterity, but we think
it’s important for the purposes of this book to be clear about what we do and
don’t mean by ‘strategic.’ For us, there are decisions that are strategic, and
these are not necessarily the most important decisions taken in the organisa-
tion (although they may be), and they are probably not the most long-term
decisions. However, if you get them wrong, they may be terminal, in which
case your strategic decisions might be as long term as it gets for your organ-
isation, but if you get them right, there should be decisions that are more long
term that the strategic ones.
30
To frame the approach, we’d like to locate it within a typology of organ-

isational decisions, where some are bigger and longer term than strategy and
others are shorter term and more limited in scope. And to help that, we want
to refer back to where strategy as a concept came from, and that’s in the
context of military actions for political ends, or as von Clausewitz put it “the
continuation of political intercourse with the addition of other means.” Our typology
has six levels going from longest term at one end to shortest and most imme-
diate at the other.
1â•‡Doctrine/policy
The longest-term decisions we take we classify as doctrine, and for most
organisations these are fundamental identity issues: who are we, what is our
place in the world?
In politico-military terms, doctrine can last a very long time. England
and then Britain had the same foreign policy doctrine for around 600Â€years,
which was to prevent any power gaining hegemony in Europe. In the 14th
century, that meant France, in the 16th century Spain, in the 18th century
France again and in the 20th century Germany. This was a pretty regular cycle
time of approximately 100-year periods and 200-year cycles, as it took
100Â€years to displace a hegemonic power and another 100 for a challenger to
grow in the vacuum that had been left. Doctrine has a much longer shelf life
than any strategy, and this doctrine only changed once the European Union
started. As an aside, it also offers an explanation of why some Brits are so
uncomfortable with the European project: it overturns centuries of successful
policy and the national identity that was formed by that and provides some
insight into the Brexit decision, in which the UK voted in 2016 to leave the
European Union. Another example is the Monroe Doctrine in the US, which
first dictated and then influenced US foreign policy on Latin America for
around 150Â€years (European attempts to intervene or colonise would be
treated as acts of aggression). Although the choice of identity is a huge deci-
sion, its long shelf life means that if it has been well chosen, it doesn’t
need revisiting unless something fundamental changes, and so it’s quite
cost-effective.
In business, the equivalent doctrinal questions are: “Who are we as a
company, what business are we in, what will we be known for?” Are we in IT or
engineering or retail? Organisation decisions at this level rarely last as long as
in the political sphere, but often they last for the lifespan of the organisation.
It isn’t unknown for organisations to survive 100Â€years, and a 20-year lifespan
for such a decision is common. If you look at Rolls Royce, founded in 1906,
their doctrinal position since Mr. Rolls met Mr. Royce in the Midland Hotel in
Manchester has centred on engines. Sectors grew and faded, but the focus on
31
building excellent engines continued. For IBM, founded in 1911, the recent
shift from a manufacturer of ‘business machines’ and computers towards
consulting and information services is a doctrinal shift.
2â•‡Capability/infrastructure
Choices of capability can be almost as long-lived as doctrine, and in a way
they are the “how” to doctrine’s “who or what are we?” The reason they tend to
be so long-lived is that some choices of technology are expensive, have a long
shelf life and require major changes in skill sets and working practices, and
these can take a very long time to shift. In a real sense, decisions about capa-
bility and infrastructure are meta-strategic as they both constrain and enable
particular strategic options and close down others. Because they have a longer
life than strategy, they are generally taken in the absence of full information
on what strategic initiatives they will need to support.
In the politico-military sphere, this includes decisions on which tech-
nology, organisation and tactical approaches to use. Do we use bows or swords?
Do we invest in naval power or land forces? Do we organise around combined
forces or a single discipline? Military capabilities are tied to social systems:
whether or not we have conscription will affect tactics and weapons choices.
Social systems heavily influence technology choices and tactical approach
choices. Because of this societal link, these decisions are usually longer than a
war, often 100Â€years or more. Even simple decisions about equipment can last
a long time. The British Army is currently using two weapons in front-line
service that are approximately 100Â€years old. That’s the equivalent of starting
World War IÂ€with some of the same weapons that were used at Waterloo.
In business, the corresponding decisions about investment in capability,
technology and organisation choices include deciding things like program-
ming language in software or infrastructure choices in retail: do we go for city
centre high street shops or out-of-town malls? Large stores, or small ones? In
manufacturing, do we build capability around metal or carbon fibre? These
decisions can be generational to reverse: moving from a steel-based manufac-
turing system to a carbon fibre–based system is not necessarily either quick or
easy, and it requires deep and long investment in skills as well as plant. In
business, capability and technology choices often have a 20-year lifespan and
sometimes very much longer than that. Choices of management approach
have a much longer shelf life. Taylorism is over 100Â€years old and though
widely discredited is still very common in practice. The Deming-based contin-
uous improvement/lean approach is over 60Â€years old and is still seen as
radically new in some quarters. Changes in ‘thinking infrastructure’ are
generational, so pick your theory with care!
32
For Rolls Royce, their move into jet engines was a capability shift but not
one that needed a change at the level of doctrine – which was still around
building excellent engines. For IBM, the shifts from mechanical business
machines to the early computers to mainframes to PCs to consulting services
are all capability shifts, but only the last demanded a shift in doctrine.
3â•‡ Grand strategy

‘Grand Strategy’ is an old term. Typically, it was used to cover specific objec-
tives within a doctrine, but at a policy level rather than at a now-go-and-do-this
level. So it sits somewhere between doctrine and strategy. As an example, the
British had a Grand Strategy in the 19th century to limit Russian influence in
the Far East. The dividing line with doctrine can be blurry, but our reason for
including it here is that it tends to occupy a much shorter time frame.
In the politico-military context, this would include choosing and
building alliances or deciding on who our enemies are. It’s informed by
doctrine and longer term than a strategy. In its 600-year no-hegemony-in-
Europe doctrine, the doctrine remained fixed, but Britain had a series of
Grand Strategies to fulfil the doctrine, and there were repeated changes of
enemies and allies – in particular, the French and Germans swapped places in
British affections several times. It has a shorter cycle time than doctrine does,
usually longer than a war, usually shorter than a century.
In the sphere of business, it includes things like deciding which sectors
to operate in, changing sectors, choosing and building strategic alliances,
even things like deciding your build vs. buy policy. The choice of sector in
many cases is actually more important than strategy since being a weak player
in a buoyant sector can be much more lucrative and viable than being the
strongest player in a weak sector. These sorts of decisions tend to have a
shorter shelf life, typically of a few years.
For Rolls Royce, this level of decision making took them into different
market sectors within the same doctrinal area, originally automotive, building
luxury cars, but quickly diversifying into aero engines and then into the
marine and industrial engine sectors. For IBM, sectoral moves were originally
geographic and usage, but the bigger shifts were accompanied by shifts in
technology and capability.
4â•‡Strategy
The subject of the book! And not the decisions with the longest shadow unless,
as we said earlier, you get it terminally wrong, in which case it’s likely to
be the last mistake you make. Strategy for us is about the organisation
33
manoeuvring relative to other organisations to achieve a position where it can

thrive, preferably on its own terms.
In the politico-military field, strategy can be conducted at the level of a
war, a campaign within a war, or a battle. Strategy defines the way forces
manoeuvre for advantage against an enemy. It always takes into account
terrain and other players: allies, neutrals, enemies and what they might choose
to do. Strategy is typically quite short-lived, it usually operates over periods
from weeks to a year, but exceptionally (and generally when it’s really good),
it might cover only a few days, for example the Waterloo campaign – 3 days,
Desert Storm (planned by Boyd) – 5 days, the 1967 Arab-Israeli War – 6 days.
In business, as far as we are concerned in Patterns of Strategy, strategy
involves a wide range of business manoeuvres to achieve and/or secure a
position of advantage. This includes decisions on how we change our position
relative to markets, market segments, competitors, peers, suppliers, allies and
so on. It will involve shifts in value proposition, where and how we deploy
our resources, operating rhythm, type of innovation and the like.
Clearly, many of these decisions will be constrained by some of the
longer-term decisions covered earlier. In particular, the nature of the resources
available to shift around and whether those are suitable for the task at hand
will depend on capability level decisions that generally cast a long shadow.
5â•‡Planning
To fulfil a strategy, we need a plan that has the detailed description of who
needs to be where, when, doing what and with what resources at their
disposal.
In the military, this includes Order of Battle and logistics planning. And
it can be at the level of a campaign or engagement. Planning tends to be
focused on our organisation and on what that does, not on the actions and
decisions of the enemy. In business, this is what is normally called strategic
planning, and it is the linear description of how we get from where we are to
the objective. It can also include operational planning (even when that is
called strategic planning) and deciding on the alignment of internal resources
to deliver a business objective.
6â•‡Tactics
This is both a set of repeatable approaches that we know how to do and that
can be routinely delivered, as well as the choices of how to deploy these in a
particular situation. In the military, this includes force manoeuvres within an
engagement (e.g. within a battle). In business, for any organisation, this
34
includes a set of normal business operations from procurement through

production to delivery, including product or service development.
Fitting these levels together

It is, of course, tempting to assume that these six levels fit together in a nice
neat hierarchy, but the reality is less clean than that. Because all six run on
quite different cycle times, they sometimes affect one another in surprising
ways. Similarly, whilst it’s tempting to assume that the higher up and longer
term, the more important the decision, it’s often the case that for example,
tactics will trump strategy or planning; in many cases, operational compe-
tence allows organisations to outperform rivals even when their strategy is
rudimentary at best.
Traditional business strategy tends to concentrate on two areas: first,
“who do we want to be?” – really a question of doctrine or sometimes grand
strategy – and second, it goes from there almost straight to planning. The criti-
cally important area of capability tends to be treated as a separate technical
question aside from strategy, rather than one that has deep implications for
our strategic capability.
We see a gap in the conventional strategists’ ‘toolkit’ covering certainly
level 4 (strategy as we define it) and aspects of levels 2 and 3 (capability and
grand strategy) as well. The approach we outline in Patterns of Strategy is
designed explicitly to deal with level 4 strategy questions – how should this
organisation manoeuvre to gain advantage? – but it can also be used to
address the questions of levels 1–4. Coming directly out of it is a plan – one
that is different but not totally alien to conventional plans, although based on
completely different thinking.
35
5 WHAT IS
STRATEGIC FIT?
If we’re basing our understanding of strategy around ‘fit,’ and if the drive is
towards getting a ‘good fit’ with our environment, that naturally begs the
question of what ‘good fit’ looks like. There are very different ways of defining
this depending on your thinking style or the way you want to formulate your
strategy. Many teams using the Patterns of Strategy approach answer this
question instinctively, and they immediately intuit what is likely to be a good
fit for them going forwards. So, presented with a range of options, they will
immediately and with certainty dismiss some in favour of others and be sure
when they have found ‘the one.’ It’s as if suddenly the pieces of their strategic
future drop into place, and they just know.
Whatever the approach and however loosely these are interpreted, there
is a fairly consistent set of criteria that we use to make an assessment summed
up in the mnemonic VORSL:
1 Value – How much of the different types of value we need can we get
from this opportunity and for how long?
2 Options – Does this open the way for further future opportunities, or is
it a cul-de-sac?
3 Risk – How unpredictable is it, and how defensible will our position be?
4 Stimulation – Will this provide us with the sort of stimulation we want
for learning and growth?
5 Like – Who will this turn us into, and is that who we want to be?
Different strategy teams and organisations will weight these criteria very
differently against one another, not least depending on the natural volatility
of their industry and their appetite for risk and adventure, but however they
are weighted, these tend to be the factors we return to when assessing how
What is strategic fit?
good a planned ‘fit’ is likely to be for an organisation. So let’s look at those and
what contributes to each.
Value
The attractiveness of a structural coupling fit is directly related to value and
time. Different types of organisation are capable of providing different types
of value and need in return to receive different types of value from their
interactions with their environment. So the assessment of the value we need
and can receive from any fit is specific to each organisation. And even when
you have two organisations that appear to be evenly matched – direct
competitors operating in the same environment – there may be differences in
the value types and the weighting between value types that they need. So the
assessment of value is totally specific to that organisation’s context. Some
types of value can be measured in reasonably hard terms, revenue for
example; others, however, are more loosely measured (generally these aren’t
measured at all, but they can be), but whether we’re talking hard or soft
measures, how important each type is to you is ultimately a subjective
decision.
The standard list of value types we use for assessing the attractiveness
of fit is:
● resources, including money, capability and expertise, capacity, Â�reliability,

quality, timeliness and supplies/material;
● reputation and intellectual resources, including intellectual property,
intellectual capital, brand, prestige/reputation/kudos, knowledge (from
data through to wisdom and all stops in between) and learning;
● reach, including access to whatever it is you need, market share, Â�visibility
and synergy (ability to do something you couldn’t do on your own);
● risk, including security, resilience, predictability; and
● intangibles, including fulfilment and autonomy.
This may seem like a big list of value types to assess, but in practice, in most
situations, organisations are able to recognise the types of value that they
need overall. They may need relatively few from any structurally coupled fit
and can focus just on those and on whether this proposed fit outcome is likely
to deliver those to them in the quantity they need. One of the things a list like
this does help with is identifying new types of value that had not before been
considered, and in some situations this has been a game changer and a
deciding factor in selecting which strategic option to go for.
37
A huge amount of academic debate has gone into the measurement of

some of the more intangible value types. Generally, the mindset and context
of this activity have been from an accounting viewpoint. This viewpoint puts
demands on the standards of measurement and metrics that make dealing
with intangibles extremely hard. For our purpose of assessing the value that
can be derived from a strategic fit, the task is mercifully much simpler, and we
can afford to be very much less precise. If we know that strategic fit AÂ€can
deliver a particular type of learning outcome or access to specific intellectual
capital that we think has value for us, then the niceties of measurement really
don’t matter. We can often afford to see the value in quite binary terms: either
AÂ€holds the promise of delivering or it doesn’t, or it holds a proportion of
what we need.
When we’re assessing how much of any type of value is ‘good,’ it can be
important to think in terms of physiological limits. Just as our bodies operate
within quite narrow physiological limits for certain values, such as tempera-
ture, so do organisations. So it’s really tempting to assume that more of a good
thing is automatically better, but it isn’t necessarily so. AÂ€large increase in
your market can be as dangerous as a decrease; many organisations have run
into serious problems or crashed because they grew too fast. Too much money
can make you lazy, risk averse and therefore vulnerable to upstart competi-
tors. Too high a reputation can price you out of a market and limit your size.
Too much capacity can make you slow to change. Every strength carries the
potential for weakness if carried too far, so in assessing the value we can
derive from any fit situation, we’re often looking for ‘Goldilocks’ solutions,
not too hot and not too cold, not too big and not too small.
Once we’ve established whether a strategic fit is likely to deliver us the
types of value we want from it and in the volumes we want, the next aspect of
attractiveness is longevity. For how long will this sustain us? Different indus-
tries vary enormously here; some strategic fits can be maintained and will go
on delivering value for decades – in rare cases, for centuries – whilst in other
industries, a year is a long time. The key issue is relative time. If we are
comparing two or more options, it’s the value–time horizon these offer rela-
tive to one another, not relative to a different industry, that is important.
Options
Heinz von Foerster’s law of decision making states, “Act so as to increase the
number of choices.” Different environmental choices will have widely different
option profiles. Some will be decision cul-de-sacs requiring long-term commit-
ment or such high levels of investment that they will be hard or even impos-
sible to escape from. Sometimes this level of commitment will be contractual.
38
Sometimes it will be because a chosen relationship will be so all-consuming

we have no time or energy left to even think about exploring alternatives.
Sometimes a path will require us to become so specialised that our narrow
range of capabilities can’t be deployed for anything else: we become a one-
trick pony. Other strategic fit options may offer so many future choices that
we cannot settle and are just bewildered.
There is no definitive right answer. For some organisations, total dedica-
tion to a single customer or a single technical speciality can be a winning
Â�position; for others, this is literally a dead end.
In assessing this aspect of fit, we advocate a minor modification to the
von Foerster law: all other things being equal, act so as to increase the number
of choices.
Risk
When we’re talking about risk, we’re not considering the risk that our plan-
ning will fail; that is a completely separate issue and should be dealt with
separately. Here, we’re considering the risk that is inherent in the strategic fit,
the risk that we might not fare well in this coupling. There are two main
aspects to this: one is concerned with the probability that the situation we are
fitting to will change to deny us the benefits we were banking on, and the
second is that the situation remains stable and the benefits are there, but
someone else moves in and deprives us of the value and position we need.
The first of these is about relative predictability and turbulence in our
chosen environment. As with the longevity of value, different sectors vary
enormously. Some operate on quite predictable cycles, so whether the
longevity is short or long, you know when change will be coming. The IT
sector is famously prone to massive shifts in the technological base and
guessing what the next shift will be with any certainty is hard, but knowing
that there will be a shift isn’t, that’s fairly predictable. Other sectors are much
less predictable; breakthroughs in pharmaceuticals are notoriously hard to
predict, and within each field of drug development, whether or not a break-
through will happen is even less predictable. Some sectors are thought to be
unpredictable, and many people who should have known better asserted that
the 2007 financial crisis was “not predicted,” “not predictable,” “unprecedented”
and “inconceivable.” In fact, it had been predicted, and the history of interna-
tional finance is regularly populated with precedents. If you care to look, it’s
almost always possible to get a realistic fix on how turbulent any sector is,
although sometimes it needs a slightly longer historical perspective. Once
again, for assessing our strategic fit options against one another, exactitude
isn’t critical. If you’re deciding whether to move away from retail banking
39
into international investments in emerging markets, you don’t need to be able

to predict when the next crash will come, merely that one of these strategic
options is much more turbulent than the other and will involve crashes at
some point.
The second aspect of risk has to do with competition and specifically
whether, within our chosen strategic fit, competition is likely to deny us the
value we need from it. This is a function of two things: ease of entry for
competitors and the size of demand relative to our and others’ capacity to
deliver. There is an obvious advantage in occupying a position that others
will find hard to access. If you have invested in key capabilities, skills, knowl-
edge, contacts or reputation within a field, these can be hard for competitors
to replicate and correspondingly make your position harder to attack. The
steepness of your ascent to your chosen position is a measure of the invest-
ment needed by any would-be competitor wanting to move in. But, of course,
followers usually find the way easier than pioneers, so the cost of entry is
rarely as high for your late-entering competitor as it was for you. If your
chosen fit was easy access for you, it will be easy access for others too; there is
a straight payoff here between investment to achieve a more defensible stra-
tegic fit and going for one that is cheaper and faster for you.
When considering size of demand relative to capacity, the picture is less
clear- cut, or at least there is a wider diversity of views on what ‘good’ looks
like. Although Patterns of Strategy is about achieving a desirable strategic
fitÂ€– whether that’s commercial or non-commercial, competitive or non-
competitiveÂ€– it’s easiest to talk about this issue in terms of commercial
markets and market share. There is a monopolistic view that the ideal posi-
tion is where you are the sole supplier to the market. The converse argument
is that holding a monopolist position means that would-be competitors find it
hard to compete directly, so they do it indirectly, and one way to do that is to
attack your market using a completely different approachÂ€– maybe a para-
digm attack or a move to break the market structure. Monopolists rarely see
such attacks coming and are particularly vulnerable to them. So a monopolist
position can both encourage and create vulnerability. Much work has been
done on the concentration of power onto market segments, particularly by
Japanese strategists, based on the work of the English engineer Lanchester
(more on that in ChapterÂ€8). Following this approach, market domination can
typically be achieved with around 40% of market share. This has the advan-
tage that it leaves room for other competitors to compete directly, and when
they compete directly, you can more easily see what they are up to. Â�Obviously,
most organisations can’t get anywhere near this and, for them, domination of
a niche may be an option. Where there is no possibility of achieving any sort
of domination of a niche no matter how small, then assessment of the threat
40
from competitors should be based on relative market share: if six players of

around the same size occupy a market, then the competition may be fairly
relaxed or totally frenetic, but at least it will be with relative equals and the
threat of sudden ejection from your chosen market should be relatively low
– or at least not sudden.
Stimulation
The essence of a structural coupling relationship is that it changes each party
in the relationship. AÂ€key element to consider in assessing strategic fit options
is then how each will change us. ChapterÂ€6 goes into the different gradations
of change we consider. In assessing the relative attractiveness of each strategic
fit option, the essential variable here is whether your organisation is suited to
the type and speed of learning, change and growth that this particular envi-
ronment will demand of you. Like individuals, organisations have massively
different appetites and capabilities for change. Some prefer stable environ-
ments; others crave challenge and high rates of innovation and find stability
boring. Demanding environments suit ‘athletic learners’ – organisations that
can really stretch themselves and in so doing change the world around them.
As well as the sheer rate of change and predictability of it, different
organisations tackle change in very different ways. Some are good at low-
level incremental change, polishing and refining their products and processes,
taking lots of small steps towards perfection. Others prefer bold leaps, doing
their change in big steps. Neither is right or wrong, and you can do the same
volume of change in the same time with either technique, but the nature of
that change is likely to be different. Some levels of perfection only come with
small steps, some transformations can only come with big ones. Choosing
between alternative strategic fits is about matching your capability and appe-
tite for change to the environmental fit: does it present the sorts of challenge
you need? Too much? Or not enough?
Like
One obvious aspect of “what is this going to feel like?” is cultural fit. Does a
strategic fit demand that we shift from being a bureaucratic organisation into
an entrepreneurial one or, conversely, does it involve having to cope with the
slow pace of a bureaucratic partner if you are entrepreneurial? Is the prospect
of having to work alongside aggressive entrepreneurs at odds with your
ethical position as a group of community activists? Does an option involve
working with a partner who has a command-and-control culture when yours
is consensus based? What will that cultural fit feel like and, if there is a
41
mismatch, will it help us grow – however hard that might be – or will it just
be toxic?
You can analyse choices all you like – and yes it helps to do that – but
ultimately all decisions are emotional. This is a physiological fact; it is physi-
ologically impossible for human beings to take a decision without engaging
emotion. And there is a very good reason why it has to be like that. We can
make judgements about the past or present, but all decisions are about the
future and, because it hasn’t happened yet, the future is unknown and ulti-
mately unknowable. That means there is a degree to which any decision is not
susceptible to rationality. Our intuition fills the rationality deficit and gives us
a way to deal with the uncertainty about the future. The uncomfortable fact is
that we decide mostly based on emotion and then rationalise our decision.
We’re suggesting that you try to reverse that order, to do the rational assess-
ment first, and then give intuition its role – its legitimate role.
The nature of structural coupling is that the fit will change us and we will
change the environment, so the question for ‘like’ is what will this strategic fit
option turn us and our environment into, and is that someone and somewhere we
want to be? Simple as that. In asking that, it really helps to have gone through
the other factors we’ve considered, so if one option involves massive restric-
tions to our autonomy but relative security, are we going to be happy with
that? If an option is going to mean giving up on the dream of developing the
next big thing, can we live with that denial of our potential?
42
Figure P2.1
PART TWO
DIMENSIONS
OF STRATEGY
Introduction
Ensuring fit with its operating environment is vital for any organisation, so
having a way to both describe and design fit is key. Time and power provide
levers to change the nature of our structural couplings, relative to other actors,
and so improve our achievement of fit. The chapters in this part of the book
examine the three dimensions of fit, time and power and we provide a brief
description of each here as a form of orientation. We refer briefly to the 80
strategies in these chapters, where a particular Patterns of Strategy element is
relevant to a strategy, and the strategy name and the page of its full descrip-
tion are both given. AÂ€short definition of each strategy is also included in the
catalogue at the end of the book.
We also include a summary diagram of all of the Patterns of Strategy
elements and terms and how they link together (Figure P2.1). The dimension
of power, as an example, has two elements, concentration and strength, each
of which can have one of three values (stronger, balanced and weaker, for
example), and there are two power enablers of critical mass and agility. Each
of the terms in the diagram is outlined in this overview and then described
fully in Â�ChaptersÂ€6–8. For ease of reference, this diagram can also be found at
the beginning of the book.
There are three parts to fit: differentiation, drive, and stretch, and we
outline each in turn.
Fit – differentiation
Differentiation has three possible positions: herd, edge or individual. In most
sectors, there is a recognisable herd – organisations that take their line from one
another. They offer similar products and services, engage in ‘best practices’
Dimensions of strategy
(copying one another’s techniques), use the same management approaches,

even buy the same software products. The herd is easier to spot from the
outside, herd insiders are often unaware that they are part of a herd as they can
assume the herd is the whole world. Herd organisations have little differentia-
tion from each other. The other two positions are defined relative to the herd in
any sector.
Edge organisations sit at the edge of the herd, they may be leaders of the
pack, they may be the last, they may be off to one side, but their position as an
edge organisation comes about because of a difference in one of the other
dimensions. They will be either stronger, weaker, faster or slower than the
norm for the herd, or they may lead by shaping the herd. They have some
differentiation from other herd members, particularly when looked at from
the outside-in.
Individual organisations sit quite apart from the herd in their sector;
they are not just a bit different, they have full differentiation, and are recog-
nised for that from both within and outside the herd. Individual organisations
have to be different from herd or edge in terms of the other two dimensions:
their deployment of power or their use of time (or both) must be different
from the herd’s.
Fit – drive
This element of fit is about who is the driver of change within the coupling.
Drive has three possible positions: shape, co-evolve or react. An organisation
that is shaping is initiating change in the other actor in the coupling signifi-
cantly more than the other way around. To shape, it must trigger a change in
the other actor in the coupling, so the shaper drives change in the other actor
in the coupling.
Where an organisation is a net ‘receiver’ of change, then it has only two
choices: do nothing or react. It may have no capability for change, even though
the other actor in the coupling has changed the environment for both actors
through its shaping manoeuvre. Or it may have some capacity for change but
be forced to react as a defensive response to the shape action by the other actor.
In some cases, the actors within the coupling co-evolve, with each
making changes that affect the other to a roughly even degree or jointly influ-
encing the environment of which the coupling is a part.
Fit – stretch
Structural couplings are about change, about how each actor in the relation-
ship changes the other, and stretch is about the nature of change in each actor
46
INTRODUCTION
as a result of the coupling. There are five possible positions: incremental,

radical, disruptive, confound and paradigm shift. Four of these are on a
continuum; the other is different in kind.
Incremental is a stretch in small steps. The classic continuous improve-
ment model is an example of incremental change.
Radical requires step changes rather than just incremental changes.
Radical change can involve entry into new markets or new technologies or
simply introducing very different operating processes. Like incremental, it is
an evolutionary change, aimed at supporting the organisation to compete
against the incremental and radical changes of others within the herd.
Disruptive stretch is a change to not just how we do something but more
fundamentally what we do. So disruptive change to a structural coupling will
cause substantial stretch in that coupling and is likely to create new markets
or sectors or new ways of creating value. In products or services, it means a
change that fundamentally alters the way customers can use the service.
A paradigm change to a structural coupling requires a change in the
basic assumptions, a total shift in worldview. It will often involve a completely
different approach – maybe a totally different business model or offering a
different class of value.
Confound comes from outside, and results from another actor – usually
a competitor but not always, acting with an intent to disrupt and destabilise
your plans and actions.
Time – speed
Time may have several aspects, such as process speed, decision time or
product refresh rates, so one actor may be faster than another in one aspect
and slower in another. Not all will be significant to the nature of the coupling.
Speed for each actor is defined in relation to the other actor, where there
is a significant differential in their pace of action or change – whether strategic
or operational. The three possible positions are faster, synchronised or slower.
Where one organisation is faster than the other actor in the coupling, it gains
the advantages of nimbleness and being the first mover. It may be able to
create or seize opportunities and to generate a source of competitive advan-
tage. It provides the possibility for the organisation to move out of the herd to
either an edge or an individual position.
If one organisation in the structural coupling is slower that the other,
then it runs the risk of losing a leading position and being subsumed by the
herd. However, there are circumstances in which being slower can create a
competitive advantage and enable the organisation to adopt either an edge or
individual position.
47
If both organisations in the coupling are working at a similar speed, then

they are synchronised, and time is providing differentiation for neither. This
time dimension is very context specific; where two organisations need to
work in lockstep (as in a supply chain, for example), it can be vital that the
activities where they have interfaces are synchronised.
Time – enablers
The organisation has three ways to alter its relative speed and create a time
advantage: foresight, cycle time and change rate.
Foresight is the ability to sense and to make sense of changes in the envi-
ronment before they happen. This increases the chances that an organisation
can identify and seize key opportunities and avoid or mitigate key threats.
Change rate is the speed at which an organisation can build new capabilities
or develop and blend existing capabilities in innovative and distinctive ways.
An organisation that can reshape itself more swiftly than the other actor in the
coupling is better able to reposition itself advantageously. Altering cycle
times on design, delivery and production, or more generically on the decision–
action cycle at all levels in the organisation, is a way to alter the organisation’s
speed relative to the other actor.
There are two parts to power: strength and concentration, and we outline
each in turn.
Power – strength
Power may have several aspects, such as operational capability, access to
markets or key knowledge, so one actor may be stronger than another in one
aspect and weaker in another. Not all types of power will be significant to the
coupling.
Strength for each actor is defined in relation to the other actor, and again
it is about differentials. There are three possible positions: stronger, balanced
and weaker.
When one actor in the coupling is stronger than the other, it has the
potential to develop advantage through the deployment and configuration of
its resources, either internally (to build or grow capabilities) or externally (to
build or grow channels, sector share or market share). By definition, the other
is then weaker, although this is not necessarily a competitive disadvantage.
In a balanced strength situation, the resources of the two organisations
are relatively evenly matched, and no advantage accrues to one actor over the
other from their deployment of resources.
48
INTRODUCTION
Power – concentration
Concentration for each actor is defined in relation to the other actor, and we
look for a significant differential in the concentration of power. There are
three possible positions: single, multiple and diffuse.
Organisations can choose different ways in which to configure their
power and resources. None is better or worse; each can provide advantage.
The nature of the concentration is very context specific.
A small start-up company could have the vast majority of its resources
focused in a single area. But the majority of organisations focus on more than
one thing at a time, with either a multiple or diffuse concentration of power.
An organisation with a number of core products and operating in a number
of key countries has distributed its power to multiple objectives, and one that
is spread over a very wide range of lines of business, countries, partners or
types of products is likely to be diffuse.
Power – enablers
The organisation has two additional ways to alter its relative power and create
advantage: critical mass and agility. They are defined by whether they are
sufficient to create a strength advantage or significantly alter the number or
range of activities.
An organisation has a range of resources that it can deploy in either its
steady-state activities or use to achieve and sustain change. These resources
range from people to money, from brand to knowledge, from equipment to
intellectual property. One actor deploying strength or breadth of resources
sufficient to achieve change in the coupling is using critical mass. An organ-
isation that has (or can create) available resource for rapid deployment has a
high degree of agility, especially when that resource can be deployed with no
constraints on where or how it is used.
49
6 D ESIGNING FIT
As we’ve seen with the exploration of structural coupling, the fit between the
organisation and its environment is fundamental. It is fundamental to
constructing and maintaining the identity of the organisation, defining what
it is, what it values, what value it provides to the environment and, of course,
the direction the organisation will develop in if nothing decisive is done to
alter that direction. Decisive action to change that direction is what strategy is
about. Given the energy that is invested in existing structural couplings,
change is typically fighting against the prevailing wind – which is a primary
reason why so much strategy fails.
So the issue of fit is fundamental to understanding, formulating and
executing strategy. Of our three dimensions – power, time and fit – the ques-
tion of fit is in some ways the most important, firstly because the existing fit
will dictate the default direction of the organisation unless we act to change
that and secondly because we can see the other two dimensions, power and
time, as means to achieve fit.
Fit is in some ways the most elusive of our three dimensions. The concept
of power and time are at least familiar – even if time isn’t used in most
approaches to strategy. The concept of fit is intui-
Fit:â•‡ The nature and attractiveness tively easy but less familiar. In Patterns of Strategy,
of our couplings with other actors there are three elements to fit: differentiation, drive
in our environment and stretch.
Differentiation is about the degree to which we
Fit: Differentiation are part of the herd or individual. Are we defined by
The degree of similarity or adhering to the norm or by differences from the
difference to others norm? Are we about being the same or different?
Where do we look for guidance on our next move:
inwards to our peers or outside of the peer group?
Designing fit
Drive is about the degree to which the counter- Fit: Drive

party in a structural coupling is driving us vs. us Differential between leading or follow-
driving them. Who predominantly leads, and who ing others, through time
follows in this relationship?
Stretch is about the nature of change that is being driven in us by this
relationship. The significance of structural coupling relationships is that they
change our structure; when applied to organisations,
the structure in question isn’t necessarily the depart- Fit: Stretch
mental structure or reporting lines; it’s the structure The nature of change in us as a result
of our activities: what is it that we do that is different of the coupling
as a result of this relationship? And how different is
it? So the element of stretch uses some terms taken from models of innovation
to characterise different degrees of stretch we are subjected to, or that we
choose to engage in to maintain our fit.
Figure 6.1
Elements of fit
Types of fit
The exploration of fit starts with the question: fit with what?
Unless it’s brand new, the organisation for which we want to come up
with a strategy is coupled to something currently, and the objective of strategy
is to change that. So the first question is what is it that we’re currently coupled to,
51
and what do we want to be coupled to? The options we set out here are around a
set of structural couplings to different types of stakeholders: markets, sectors,
key partner, regulator, and others. The implication of this isn’t that an organ-
isation would couple to a market and not to a sector or to a regulator and not
to a market; without a market, you’ll go out of business, so ignoring that
would be life-threatening. What we’re trying to focus on here is which struc-
tural relationships is the strategy supposed to be changing, and then how is it
supposed to change them? And of course, a strategy could try to change the
fit with several structural couplings at once but, as should be clear by now, the
more we try to change in any move or at any one time, the more vulnerable
we are.
Is the strategy going to redefine what we’re coupled to or redefine how
we’re coupled to it? Are we going to change to a different relationship or
change the nature of an existing relationship? Of course, the nature of a
coupling relationship involves change anyway – it has a natural trajectory –
so what we’re talking about for a strategy is changing it in a direction that it
wasn’t going in anyway.
Broadly speaking in Patterns of Strategy, we can model structural
couplings – look at the fit with: an individual organisation, with a group of
organisations (e.g. a market), or within an ecosystem. The simplest of these is
the fit with a single organisation.
We can model relationships and fit with groups of organisations, such as
markets, when we can see those as largely self-referencing systems. You can
be classed as being part of a market segment when your actions, attitude and
values align with others in that segment, when you align yourself with them
and they with you. One way to manage fit with the environment is to fit a
section of the market.
The drive to do this is extremely strong. When we fit a market, the
market knows what to expect of us and is tuned to understand the sorts of
language we use and to appreciate the sorts of value we can provide. Corre-
spondingly, we are attuned to the language of that particular market. So
communication between organisation and its market should be relatively
easy. It’s easy for us to find out market needs and for the market to under-
stand our offer. As long as that market exists and as long as we keep listening
and attuning our offering, this should be a fairly stable structural coupling.
Individual customers may come and go but, overall, the market will be suffi-
ciently stable most of the time to keep us in business.
In fact, markets can be so stable they will thwart many attempts to
disrupt them. Lord Leverhulme of Lever Brothers (which became Unilever)
once famously said that he knew half his advertising budget was wasted, but
he didn’t know which half. AÂ€study by a team of statisticians showed that in
52
Designing fit
that particular market, the advertising around product launch could be effec-
tive in getting a product to its ‘natural’ market share but that spending after
that had almost no impact at all. Myriads of product ‘battles’ between P&G
and Unilever over soap powders and detergents had almost no effect in the
long run. AÂ€high advertising spend might have an impact whilst the promo-
tion was on, but the effect wouldn’t be sustained. Customers would soon
revert to their normal choices. Occasionally, when the company wanted to kill
off a product and it was withdrawn, the market would refuse to comply and
demand the product be reinstated. The obvious attraction of a market coupling
is stable income.
Market fit strategies are often herd strategies because mature markets
behave like herds. So, even though the detergent market was dominated by
two big players – P&G and Unilever – each had a huge portfolio of ‘competing’
products, which is what customers actually chose between, and these brands
constituted the herd. Similarly, during the years when Ford and GM were
fighting it out over the same market, the market was presented with a wide
range of products and GM’s divisionalised structure was designed specifi-
cally to give customers the appearance of a choice of brand from seemingly
different herd members when in fact Buick, Cadillac, Chevrolet and the other
ten GM brands were all from the same company. So part of the structural
coupling to a herd can involve creating a herd even when you are actually a
duopoly.
Market coupling strategies are often combined with diffusion of power
and with the organisation matching its change rate to the natural pace of its
market. But this is not the only alternative. The risk of a market-based fit is
that, although normally the market will move relatively slowly and predict-
ably, occasionally things can change radically and fast when a player enters
the scene who plays by different rules and either fragments the herd or
disrupts the natural pace.
If you are modelling your fit within an ecosystem, then you run parallel
models with each of the major players within that ecosystem and some may
be groups of organisations and some individual organisations.
Differentiation – herd/edge/individual
Differentiation is much talked about in conventional strategy, but the reality
is often highly misleading. In many cases, organisations that claim to compete
and trumpet their differentiation from the herd are really herd members who
overwhelmingly emulate the offering of the rest of the herd and differentiate
only on the smallest details of product or service. The herd is easy to spot
from the outside, although herd insiders often don’t realise that they are part
53
of a herd, focusing on the small degrees of differentiation rather than on the

huge areas of similarity. Being in the herd is safe, a literal safety in numbers,
as John Kenneth Galbraith (1989) said: “In any great organization it is far, far
safer to be wrong with the majority than to be right alone.”
We distinguish three positions of differentiation: herd, edge and indi-
vidual. In most sectors, there is an easily recognisable herd, organisations that
offer a similar value proposition, behave in the same way and reference one
another. For every herd, some organisations are inevitably at the edge, either
at the leading edge or the trailing edge or at the side. We can identify which
are the leading and which are the trailing edges of a herd because leading and
trailing are relative to the direction of travel of the herd. Leaders are by defini-
tion the herd members that are being followed by the herd but that are still
recognisable as part of the herd: “If you are shooting for second place, your strategy
is determined by the leader,” as Al Ries and Jack Trout (1994) wrote. The trailing
edge consists of those organisations that pick up the changes in the herd last.
Individuals sit outside the boundary of the herd. They may be defined in their
own terms – by what they are and stand for, or by reference to the herd – in
other words, by what they are not, not part of the herd. They may be well
ahead of the herd, or well behind the direction of travel, or completely off to
one side just going in their own direction. We can view individuals as totally
separate from the herd – which in one sense they are by definition, but they
do have some really important and subtle effects on the herd. Individuals act
as ‘attractors’ for the herd. The herd has pressures on it, both internal and
external, to cohere, to draw ever closer together. Having individuals outside
the herd but visible to the herd has the opposite effect. Individuals extend the
perceived range of what is possible. In practical terms, this means that,
usually, the herd will follow a leader, and the leader will be heading towards
territory already marked out by an individual. For an individual, there is
either a risk or a bonus (depending on your point of view) that they become a
leader of the herd rather than an individual. If you want to stay an individual,
then keeping your distance is critically important.
Whereas being stronger or slower are observable attributes of what we
are, being part of the herd, on the edge or an individual is, in theory at least, a
matter of choice about where you want to position yourself and what sort of
organisation you want to be. In reality, of course, it’s not at all that simple, and
from a structural coupling point of view, whether or not we are part of the
herd may be something that is imposed on us either by the movement of the
herd or because of the perception of other players. If your customers think
you are part of the herd – if they can’t see the difference – then you are part of
the herd. AÂ€dramatic example of this was provided by the iPad story. Apple
had always stood well apart from the IT herd; they had a clearly defined
54
Designing fit
market of dedicated followers who believed in their design philosophy, their

operating system, their coolness and just their sheer difference from everyone
else. And Apple thrived on that difference, on their cool, creative, ‘outsider’
image. That was until the success of the iPad. When the iPad became too
successful, two things happened that changed Apple’s fit with the market.
First, they sold so many that it was no longer possible to pretend that it was
niche or cool or rebellious; it was a mainstream product, being bought en
masse by a mainstream market. Second, hot on the heels of that, the industry
moved in and camped on the same ground as Apple, producing copies. What
had been a position of splendid isolation totally away from the herd became a
position that was only just on the edge of the herd.
The herd in collaboration

Herds are fundamentally collaborative. They are often thought of as a cut-
throat competitive environment, but at root they are an agreement, whether
tacit or overt, to do the same type of thing, and the process of referencing
other herd members is essentially a form of collaborating.
Part of the benefit of the herd is that each
organisation in the herd takes on some of the Differentiation: Herd
strength of the herd. Collaborating as a herd is a Organisations that are similar,
powerful way to generate additional value for each with comparable products and
organisation in the system. This is partly through services, practices and culture
joint development and the use of capabilities that do
not exist in any one organisation but instead are a property of the system. In
addition, there are potential benefits from sharing knowledge, assets or exper-
tise, together with the ability to leverage or influence customers, suppliers or
market position for the advantage of the whole system. AÂ€variant is to collabo-
rate within a small bounded area while competing in other activities. This is
typically in commodity/back office activities. The auto industry has a large
degree of sharing with regard to parts distribution, for example. In this case,
the purpose of the collaboration is cost savings.
A major part of the benefit is the recognisability for members of the herd,
and this affects both customers and potential partners and suppliers. The
customers who form the market for the herd recognise members of the herd
as potential suppliers, which means that all the members of the herd have
relatively easy access to a wider market without the effort that an individual
would have to make. Both Horizontal Integration (page 226) and Cartel
(pageÂ€156) achieve that. Effectively being part of a herd means you collaborate
in marketing the herd – an advert for you is also an advert for the herd.
For suppliers and partners, the ‘sameness’ of the herd members makes
55
collaboration very much easier; if you are used to dealing with one herd
member, then dealing with another herd member is similar and familiar in a
way that dealing with an organisation from outside the herd is not. Islands of
Sanity (page 285) utilises herd behaviour by creating stability for the herd to
coalesce around in times of turbulence.
The herd in competition

Within a herd, many of the dimensions on which each herd member could
compete are subsumed by the identity of, well, the herd. There is a very strong
herd in supermarkets, with a bunch in the middle and two variants of edge:
premium quality and low cost. Lots of prime-time TV advertising, no real
difference.
Yet in a competitive situation, there are several advantages to being
part of the herd. As in collaboration, each herd member benefits from the
strength of the herd. This significantly reduces uncertainty. The herds’
structural coupling to their environments is extremely strong, so if you sit
in the middle of the herd, then most of the time the environment will adapt
to maintain its fit with the herd. Being part of the herd demands that you
conform to the herd but offers the promise that the environment will adapt
to suit you and, that way, your fit with the environment will be maintained
and so you will stay in business. In other words, the world of the herd is
usually extremely stable – until something really disruptive comes along.
This is a massive saving of energy for herd members; they don’t have to be
agile, they don’t have to move fast and they don’t have to look too far ahead.
Edge: leaders and laggards in collaboration

Within the system that is the herd, the edge players – the leaders and laggardsÂ€–
have vital roles. Both define the direction the herd is moving in. Herds know
their environment largely through one another, so leaders are critical in
showing the way for herd members to move next, and laggards also act as
markers of direction and speed of travel: “Remember when we all operated like
X?” The direction of travel is often about some sort of (generally slow) change
or innovation, and the leaders are by definition the first to introduce the herd
to new opportunities. For the herd, this minimises
Differentiation: Edge both the risk and cost of innovation, as the burden of
An organisation on the fringe adoption is spread, and several potential leaders
of the herd, trailing, leading may invest in different innovation directions, only
or to the side some of which may be picked up and pursued by
the herd.
56
Designing fit
Being in the centre of the herd can seem very attractive. It’s safe, you are
surrounded by organisations similar to yours and you have deep and rich
knowledge of the market. The market knowledge makes it easier to detect
weak signals of tactical change, especially regarding your competitors. Yet
there are also some clear downsides to being in the centre of the herd. Firstly,
that same market knowledge can create a form of collective blindness that, in
turn, can lead to stasis. As George Patton said, “If everyone is thinking alike, then
somebody isn’t thinking.” Being embedded right in the middle of a familiar
environment can make it harder to detect the signals of significant strategic
change; you are just too distant to see them. In addition, when the market and
organisations within it are so stable, they are also likely to be comprised of
‘old’ building blocks, which feels low risk. But in fact the reverse is true: an
established, mature organisation in the centre of the herd may be taking no
significant risks, lacking in innovation and making no significant changes at
all, which in the long term will kill an organisation. To be viable, it needs to
change to thrive.
For the Leader (page 290), the advantages of leading are, of course, first
access to the new opportunity and the prestige of leading a herd and so setting
its direction – which is quite different from the image associated with being
an individual. For laggards, the advantages are that all the hard work of inno-
vation has already been done for you, and the way forwards is absolutely
clear: “They went that-a-way.”
Edge: leaders and laggards in competition

Leaders are at the forefront of the herd’s competition with other competing
herds and, of course, in their competition with individuals outside the herd.
In that competitive struggle, being the leader brings the benefit of the strength
of the herd, combined with some of the advantages of a First Mover (pageÂ€164).
The herd itself is also a competitive environment and at the edge, the intra-
herd competition can be fierce. The only defining characteristic of a leader is
that they have followers, and between potential herd leaders the competition
is to be the one that the herd chooses to follow. This means that leaders have
to deal with uncertainty – the uncertainty that their choice of direction will be
the one the herd chooses to follow, so leaders sacrifice that protection from
uncertainty that those in the core of the herd enjoy. Yet the direction setting
of the leader is a powerful motivator, and Streets Ahead (page 130) purpose-
fully extends the gap between the leader and the following herd for that
reason.
Both leaders and laggards are the most vulnerable members of the herd.
Leaders are vulnerable to takeover by predators. Laggards are vulnerable to
57
loss of market share if the market perceives they have drifted too far from the
herd’s value proposition, and the Wolf (page 296) looks their way for its
targets. In regulated sectors, the laggards are also the most vulnerable to
unwelcome attention from the regulator.
The edge of the herd brings a different perspective. Being at the edge
brings increased visibility of your organisation: you stand out amongst the
mass of the herd. If your organisation is strong, this is a positive advantage. If
not, then there is the risk of predation from within or outside the herd. You
can still have most of the advantages of the deep market familiarity that is
held by those in the centre, and you also have the huge advantage of easier
access to other markets and sectors – a key source of innovation, which the
Expert (page 192) builds and uses. And by being at the edge and looking out,
it is more likely that you will identify relevant weak strategic signals in suffi-
cient time to respond to them. First Mover exploits new opportunities, and
Crusader (page 273) crystallises a new set of values into its offering.
Brompton Bicycles is an edge organisation, and the differentiation is
delivered by a folding bicycle, with a very compact size when folded and
stored. They maintain links to the herd in that the handlebars, pedals and
saddle are in the same position as a normal bicycle, although its appearance is
very different. Differentiation hasn’t meant inefficient, though, with all the
models of the folding bicycle based on the same frame, and riders can
customise their own cycle with a range of accessories.
Unilever’s Sustainable Living Plan aims to double their turnover, reduce
their absolute environmental impact and increase their social impact. So far,
so good, and many organisations have banner headlines like these. But
Unilever has started to implement ways to address these challenges. They’re
in this for the long game, and one key step was to stop full quarterly reporting
to financial markets, recognising that this can misalign whole organisations to
focusing on the next set of figures – short-termism acting counter to longer-
term goals – and they stated that any investors unhappy with this could go
elsewhere. On environmental impact, Unilever is looking beyond its supply
chain to examine how their products are used, reducing the amount of water
needed in rinsing after washing clothes, for example. In terms of social impact,
they focus not just on emerging markets but also look to develop products for
some of the poorest people in the world. Edge? Well, maybe. Time will tell if
they have adopted a leading edge position (because other organisations in the
herd would follow) or whether this is an emerging individual.
The financial collapse of 2007 may offer some insights into herd behav-
iour. The use of innovative financial instruments linked to mortgages started
the dominos falling when the housing bubble burst, and banks began to reap-
praise the amounts of risk they were carrying on their balance sheets, leading
in turn to sharp increases in interbank lending interest rates and a sudden
58
Designing fit
reduction in overall liquidity. The banking ‘herd’ (and its regulators) felt they
were acting rationally, and with hindsight it seems that a perception of safety
was created by observing the similarity of your organisation and its approaches
with those of others. As John Maynard Keynes observed in 1931 during the
Great Depression: “A sound banker, alas, is not one who foresees danger and avoids
it, but one who, when he is ruined, is ruined in a conventional way along with his
fellows, so that no one can really blame him.” Plus ça change.
Individual in collaboration
Individuals thrive on and are defined by their difference, and that means that
they bring a different kind of value into any collaboration. Individuals can
make for attractive, even exotic partners for collaboration, but for herd
members, they are unfamiliar and can be difficult to engage with. In mergers
and acquisitions, the very difference of value that an individual brings can
often get crushed by the need to conform to the herdiness of the acquiring
party. So whilst there is huge potential for individuals in collaboration with
herds, it’s rarely an easy relationship. The Standard
Bearer (page 294) defines the standards and direc- Differentiation:
tion for regulated herds, and so only an individual Individual
position gives it the necessary neutrality. The Trou- An organisation separate and
bleshooter (page 196) is an individual, resolving different from the herd
problems in the couplings of its customers.
When individuals collaborate with one another, the results can be
fruitful, but engagement remains an issue. At least two individuals coming
together are both familiar with difference and uncertainty; they may have
relatively few other reference points with which to navigate the complexities
of partnership.
Individual in competition
The position of an individual standing outside the herd offers a greater range
of opportunities, much more freedom of manoeuvre, but also exposes the
individual to more risks. Independents (page 169) can pick their markets,
create new markets and build a degree of customer intimacy with niches in a
way that is hard for herd players. They can be as innovative as the market will
stand rather than being limited by the dragging inertia of the herd. They can
choose to lead the herd not from the edge but from a position that the herd
will take years to get to, or they can stand apart, maintaining traditional
values that the herd have abandoned, or they can be off to one side of the
herd, doing their own thing with a particular niche. The Harlequin (page 317)
uses changes in identity to maintain separation from the herd.
59
The cost for the individual is that they have to create and maintain
their value proposition alone. The risks for the individual are that their
value offering will be rejected by the market, that they will ‘get it wrong’ or
be so far ahead of the market that others will reap the benefits of their inno-
vative thinking. And they are more at risk of predation – including by herd
members who can see the acquisition of an individual as a fast track to
move to an edge position. The risk that individuals mostly avoid is the
lemming effect that herds are subject to. When herds fail, almost all of the
herd members suffer. The individual standing apart is in a far safer posi-
tion. We saw this with the economic crisis in 2007: a chain reaction of
collapse across the financial and banking sector as the whole complex web of
collaboration – interbank lending and interdependent financial instruments –
started to unravel, and a collapse of one component threatened the whole
system.
Drive – shape/co-evolve/react
Part of the nature of a structural coupling is that it changes us, and we change
whatever it is we’re coupled to. But, of course, relationships are not always
symmetrical, so drive is about the symmetry or asymmetry of the relation-
ship. Predominantly, through time, do we shape changes, or do we react? Or
is the relationship one where both sides move at around the same rate and
each sometimes leads and sometimes follows, where it’s hard to say what or
indeed who triggered each change?
In practice, this is relatively easy to identify for most organisations if
they look backwards. If you take the last few years of changes you have gone
through that are relevant to the relationship you are looking at, what or who
initiated those and, for each of those, what was the reaction of the counter-
party in the relationship? You pretty soon get a sense of whether you are
being pushed, whether you are pulling the other side, or if it’s more like a
dance. As with stronger and weaker or with faster and slower, shape and
react are a matched pair. If you are shaping, it follows that the counterparty in
the relationship is reacting and vice versa. Similarly, co-evolve follows the
same pattern as balanced and synchronised – if one party in a structural
coupling is co-evolving, by definition they both are.
Shape ↔ react in collaboration

Most collaborations are built around asymmetric shape-and-react relationships.
Supply chains and strategic partnerships are just two common Â�examples
of shape-and-react collaborations. Both are asymmetric, the key difference
60
Designing fit
between them being that the asymmetry is reversed. In a normal supply

chain, the customer drives and the suppliers react. So the customer is in the
driving seat, saying what they want and in large industrial supply chains, it
is normal for the customer to dictate not only the design and standards of the
deliverables but also the operating practices of their suppliers. Indeed, it is
frequently demanded of customers that they manage the relationship with
their suppliers in this way. Companies that have sought to outsource produc-
tion to sweatshops in far-flung parts of the Third World, in the belief that
these would be out of sight and mind and that they would therefore not have
to shape the relationship quite so tightly, have found to their cost that this
was not quite so simple. You can outsource control, but you can’t totally
outsource risk.
Partnerships can come with different shape-and-react characteristics.
The Remora (page 177) reacts to their customer’s needs, and the Jeeves
strategy is initially one of reacting to build credentials, moving to increased
shaping and Strategic Partner (page 181) over time. Jigsaw (page 137) shapes
the larger partner in the area of the Jigsaw’s expertise. In a full Strategic Part-
nership, the supplier is engaged precisely to provide support and advice that
will shape changes in the customer. If you have a relationship where the
customer tells the supplier what they need, what to provide and how to
provide it, then you may choose to call it a Strategic Partnership, but it’s
nothing of the kind. The whole point of a Strategic Partnership is that the
supplier understands more about their area of expertise than the customer
and also understands more about how that area of expertise can affect the
customer for better or worse and, critically, is trusted by the customer to
provide strategic advice in that area. This makes it explicitly a shape
relationship.
Shape vs. react in competition: shape wins

We define strategy as: “Changing our fit with the envi-
ronment to our advantage by differential use of power and Drive: Shape
time.” So on the face of it, being able to shape the We predominantly drive
future direction of the relationship gives you a head change in the coupling
start in getting it to a position of advantage for you.
And of course, that is also the case in reality. In lots of situations, what we are
trying to do in strategic manoeuvring is to get to a situation where we can
shape things. Being able to shape means we can create situations where we
prosper and – if we wish it – our competitors don’t. There are different strate-
gies that deliver a shaping effect. Puppeteer (page 279) shapes a puppet, which
in turn shapes your competitors. Scorched Earth (page 207) shapes a
61
competitor’s actions by denying them a key resource, and Market Maker

(page 253) shapes the market to receive your product. In most situations,
being able to shape is preferable to reacting (to being shaped), and that is true
whether we are in an expansionist or defensive mode.
But it’s not always true.
Shape vs. react in competition – react wins

So just what are the advantages of reacting rather than shaping? The dynamics
of this are intimately bound up with power and time.
First, in terms of power, in some situations it takes more energy to shape
than to react. In situations where shape is going to require you to redesign the
way a whole sector or market is going to work, that takes some thought, and
moving a whole set of other organisations to where you want them can
consume a lot of energy unless you happen to be particularly good at recog-
nising big levers. By contrast, react can be a much easier ride. Of course, this
isn’t always so, and if you are in a position to shape, it’s relatively easy to find
ways to make the react process energy-sapping.
Drive: React Keeping up with the Joneses (page 226) simply
We predominantly respond to matches your product range to that of the herd.
change in the coupling Feint (page 314) does just enough to make it look as
though you are reacting and no more.
The time component that can make react an attractive proposition is
similar to the argument that the use of time in defensive situations generally
involves slowing time down. React is usually (though not invariably) slower
than shape. As a result, there is usually a time lag in acting between the two.
In situations of high uncertainty and associated risk, the delay between shape
and react can provide a safety buffer. Just because one organisation has the
ability to shape doesn’t necessarily mean they know what they are doing, and
having a delay can provide time to assess the most appropriate response. In
many situations, react is the prudent option. In highly competitive situations,
allowing your opponent to shape makes them show their hand and that can
give you an opportunity to build a position or craft a strategy to defeat their
intention. To turn react to your benefit in competition, though, you do need
some sort of advantage over your competitor; simply being passive isn’t likely
to deliver an attractive outcome.
Co-evolve ↔ co-evolve in collaboration

Differentials between actors in collaboration create tensions, which can be
creative or destructive, depending on whether they stretch the relationship
62
Designing fit
beyond breaking point or just enough to move each party forwards at a

healthy pace. Conversely, when you have same-state relationships, these are
less tense. As with balanced and synchronised, co-evolve is a naturally easier
position for collaborators. Organic Growth (page 248) and Piggyback
(pageÂ€173) organisations match the changes in their market, and Parasite
(page 198) stays in a cosy corner with its customers, not challenging them to
develop. In co-evolve situations, each party in the relationship is responding
to the other in a relatively even way, and this has a number of advantages.
Co-evolve is the type of drive that is most conducive to intimacy. Inti-
macy doesn’t necessarily imply personal relationships; it’s about the degree
of fit, with repeated matching of each other’s moves driving changes in the
other party and ourselves. Co-evolve tends to drive towards strong stable
bonds, and the intimacy of relationship tends to make the collaboration more
stable, whilst the stability tends to increase the level of intimacy – a self-
reinforcing cycle. Whether it is a virtuous or a vicious cycle depends on what
is happening outside the relationship. On the positive side, with co-evolve
there tends to be a faster development cycle between the two actors, so the
pace of their co-evolution can be significantly faster and smoother than with
asymmetric relationships. So co-evolve can also be highly productive for
change and learning. Shape and react relationships can lead to dramatic
change, but the stretch in the relationships tends to be
lumpier. The inherent lags in a shape-and-react relation- Drive: Co-evolve
ship mean that change tends to be stored up at the shape The actors in the coupling
end and then released in surges to arrive at the react end in mutually adapt
indigestible chunks. With most co-evolve relationships,
the pace of change is smoother.
The downside of co-evolve is that it can be stultifying. Even with a fast
co-evolutionary cycle, if that doesn’t have sufficient stretch in it, then it can
lock both actors into co-evolving at too slow a pace compared to other players
in the environment. In that situation, the co-evolve relationship can become a
straightjacket both psychologically – restricting what you can see and in terms
of manoeuvres – and physically, restricting what you can do. Both actors can
become so focused on this key relationship that neither sees that the world
has changed around them. Intimacy can have its price.
Co-evolve ↔ co-evolve in competition

In competitive situations, co-evolve is relatively common, particularly in herd
situations where the pace of evolution is slow and organisations reference one
another more than they observe the world outside the herd. Herd members
change in response to one another, and there will be a natural flow of stimulus
63
for change that ripples through the herd. Each response by a member of the
herd triggers responses in other members. It’s relatively common to see the
effects of herds co-evolving. Apparently, all of a sudden, half the major car
makers will bring out nearly identical new styles or designs to fit a new niche
they are trying to create. Co-evolve allows herds to act as a collective brain
with each member firing off others to co-create a unified direction and
purpose, even when (or particularly when) they are all competing for the
same customers.
Co-evolving in a herd is challenging, as there are only small areas where
each can shape. In the supermarket example, we see a co-evolving cascade of
loyalty cards, price match schemes, two-for-one offers – tiny shifts. Yet, given
that Tesco, just one of the UK’s supermarket chains, took one in eight of every
pound spent on the high street at one time, a tiny shift in market share can be
telling.
Many one-on-one long-term competitive situations between relative
equals (classic duopoly) settle down into a co-evolve relationship. And they
stay long-term competitions because they are co-evolve relationships. Shape-
and-react relationships tend to be unstable as eventually, everything else
being equal, shape will gain the upper hand over react, and the relative
equality, the balance of the relationship, will break down into a stronger ↔
weaker competition with a clear winner.
Stretch – incremental/radical/disruptive/paradigm/confound
The last element of fit is stretch. The idea that the relationship changes us as
we change the counterparty is fundamental to structural coupling, so natu-
rally we need to understand what the nature of the change is that we are
undergoing – whether that is initiated by us, or driven by the relationship.
Not all change is equal, and we need to know not only the rate of change but
also the type of change. It’s important to remember that the type of change
and the rate of change are independent of one another. You can have an
organisation that carries out a lot of small changes that in terms of the overall
rate of change amounts to more change than another organisation doing a
really big paradigm shift, but doing it only once in a generation. There are real
choices in the approach to change, and we separate rate of change from stretch
deliberately to force consideration of both the type of change – stretch – and
the amount of change that can be delivered in a given length of time – rate of
change.
In Patterns of Strategy, we distinguish five different types of change:
incremental, radical, disruptive, paradigm and confound. The first four of
these are on a spectrum of change derived from models of innovation and
64
Designing fit
going from least to most change. The last of the five is quite different and is a
bit of a wild card. Some of these distinctions are quite identifiable, whereas
some are more nuanced shades of grey, but in modelling a relationship, it’s
important to remember that what we are after is relative rather than absolute
positions. What we want to know is whether there is a significant difference
in the type of change that the two actors in the relationship are undergoing.
It’s less important to know exactly at what point we start to think that incre-
mental change has switched to radical change than it is to recognise that the
nature of change in two organisations is qualitatively quite different.
Incremental change is, as its name suggests,
gradual. The most common example is the contin-
Stretch: Incremental
Continuous improvement,
uous improvement approach advocated by Deming.
minor changes
So it is characterised by small changes to the existing
service or process, or product, or organisation. Examples include Rapid
Refresh (page 272), which increments the product range, and Zebra (pageÂ€316),
which uses the security of the herd to hold stretch to a minimum. Veneer
(pageÂ€315) pretends to use radical change to hide low stretch and Linus (page
296) provides reassurance on herd membership and
its associated low levels of stretch. Stretch: Radical
Radical change differs from incremental in Step changes in ‘how’ we work
degree. Business Process Re-engineering set out to
be radical change. Sometimes the difference is easy to spot. An incremental
approach would take a process and carry out small changes to it, whereas a
radical change might well involve starting with a clean-sheet redesign of the
process. The difference is much easier to recognise in reality than it is to
define, simply because it begs the question how much change do you have to
carry out to a process or product for it to stop being incremental and be
counted as radical? And since the difference is hard to define, we won’t try to
define it. Like incremental change, radical change is evolutionary, and it’s
aimed at supporting the organisation to compete against the incremental and
radical changes of others. Intermediation (page 274) and Disintermediation
(page 271) deliver radical change as they restructure their coupling to the
market. And an effective Cluster (page 146) generates radical new value
propositions. Stretch: Disruptive
Disruptive is significantly different and comes Change in ‘what’ we do
with an accepted definition. Disruptive change is
change that requires a behavioural change. If IÂ€switch from driving a diesel
car to a petrol car, then that is an incremental change; the switch doesn’t make
much difference to me, the driver. IÂ€just have to remember which pump to
use. If IÂ€switch to liquified petroleum gas, that is radical; IÂ€have to go to partic-
ular petrol stations and use a different part of the station. If IÂ€switch to an
65
electric car, that is disruptive; IÂ€have to change my whole routine and prob-
ably my driving habits. It’s not just a change in how we do something (this
would be incremental or radical change); it’s a change in what we do. Mergers
and Acquisitions for Synergy (page 236), Change the Game (page 224) and
Stitch in Time (page 132) each deliver disruptive change, developing new
markets or sectors, or new ways of creating value.
Stretch: Paradigm Paradigm change is different again. Here we
A change in worldview, a are looking at changing the whole basis on which
completely different approach we operate. A Paradigm Attack (page 129) can
involve a change in the value set or the whole logic
on which the organisation operates. So selling the car and switching to using
only a bicycle and public transport would be a paradigm change. Rumpel-
stiltskin (page 274) completely redefines how waste is seen, turning it into a
source of revenue. Marketect (page 259) restructures the market, fundamen-
tally altering the value proposition.
All those types of change are fairly common in business, and within a
sector or a business ecosystem, there are chain reactions of change often
starting with the paradigm and cascading down through disruptive to radical
to incremental. The first shift to buying music on demand from the Web was
a paradigm shift. As that paradigm becomes embedded, each application or
service using the same paradigm is a lesser type of change – selling films the
same way was merely disruptive – and as more players pile into the market,
the level of change falls to radical or incremental improvements on a now well
established theme.
Stretch: Confound Confound, the last of our five types of change
Purposeful destabilisation of
is quite a different matter, though. Unlike the others,
us by other actors
confound is not a state we initiate ourselves or
welcome when it comes. It results from change initiated deliberately by a
competitor to confuse or disturb your plans or operations. It’s a deliberate act
of deception or sabotage. The move to pre-empt their product launch with a
spoiler campaign, the creation of a separate organisation to hide your entry
into a market – these are confound moves, and as von Clausewitz said, “The
backbone of surprise is fusing speed with secrecy.” In Guerrilla (page 309) warfare,
the target is thrown into a state of being confounded. Loki (page 318) and
Troublemaker (page 128) deliberately destabilise structural couplings between
two other actors. Scapegoat (page 318) and Pied Piper (page 304) seek conceal-
ment, of toxic business in one case and of the true strategic intent in the other.
Stretch – incremental ↔ paradigm in collaboration

All structural couplings need to drive change, and all organisations need at
least some change in order to survive in the long term, so stretch is essential.
66
Designing fit
There are excellent strategies that reduce the degree and rate of stretch to the
absolute minimum, but by and large, change is essential and collaborations
that don’t engender change are doomed. The degree of stretch is critical,
though, and where two actors in a relationship are separated by more than one
type of change, the tension may be difficult to maintain. If you have one organ-
isation that does only incremental change trying to partner with another that
does paradigm change, the relationship is likely to be difficult and full of
misunderstandings. Having a relationship with an organisation that does
radical change, on the other hand, could help to increase both the type and rate
of change of the incremental player. Looking from the other direction, the
paradigm shifter is likely to see the incremental as slow and unadventurous –
even though they may be doing more change overall and may well be carrying
out change on a very much faster cycle. Stretch is good, but too much change
or a type of change we’re not used to can be difficult, even damaging. This is
particularly important in situations like strategic partnerships. Strategic part-
ners should be selected precisely because they are able to accelerate the rate of
change in their partner, and often this will be by bringing a higher level
of change to the party. But there are two dangers here: the first is that the type
of change proves too big a stretch, and the second is that the strategic partner
cannot sustain the tension of raising the game of their partner and collapses
down to their level. In either case, the value of the partnership is lost if the
tension cannot be maintained. This is an endemic problem in management
consultancy, where you see many companies touting themselves as partners,
but actually operating at the same level of change as their clients.
Stretch – incremental ↔ paradigm in competition

As with stronger and faster, it’s often the case in competitive situations that
the higher the type of change you can deploy, the better. For a weaker organ-
isation needing to compete against a stronger one, upping the game by
deploying higher levels of innovation is one of the preferred options, and if
you can execute a paradigm change, that can cut even the biggest of giants off
at the knees. As Sun Tzu said, “Supreme importance in war is to attack the enemy’s
strategy.” The paradigm shift from mainframes to PCs almost did for IBM and
propelled a bunch of brash upstarts to the front of the market. The bigger the
scale of change, the better .Â€.Â€. in some situations.
As with collaboration, though, the issue with stretch in competition is
whether you can take ‘them’ with you, where ‘them’ is the market. As Â�Geoffrey
Moore has pointed out, the history of innovation is littered with innovators
who failed to do this. Innovation is easy, and even paradigm shift isn’t that
hard, but getting markets to move is. And this is exactly the same problem of
the tension that comes with stretch. The greater degree of change, the greater
67
the tension is between us and the market, and if that tension is too great, the
relationship can simply snap.
Conversely, of course, organisations that operate at a level of change
below their competitors risk tension the other way. If their competitors can
move the market then, incredibly quickly, you can find yourself in a position
of lagging both the herd and the market. Once the herd decides to move, it
moves suddenly and devil take the hindmost.
All of which means that the question of the right level of stretch in any
particular strategic situation is much more nuanced than a simple “more is
better.” What we can say with certainty is that the organisation that has a
bigger repertoire of change types has a very much better chance of survival
and success than its less capable and flexible competitors.
Stretch – confound in competition

Deception has a long pedigree in military strategy, and whilst many may
think that it has no place in business other than in the hands of disreputable
con artists, it is in fact surprisingly common in both competition and
collaboration.
In competitive environments, it’s commonplace for organisations to
hide their true identity behind front companies, particularly in the financial
sector. Similarly, whole strategies are built around launching products to
Â�pre-empt competitors, denying competitors access to supplies, information or
assets, or manipulating third parties – media, government or regulators – to
destabilise your competitors.
In collaboration, deception is less common, but it is one way to deal with
such tensions caused by differentials in types of change. Confounding a
partner into believing that you are actually reacting to their demands when
you are actually shaping them is one way of sugaring the pill of steeper inno-
vation adoption.
68
7 U SING TIME
Of the three dimensions in Patterns of Strategy, time is the least well under-
stood, in business strategy at least, although in military strategy, of course,
things are different. As Sun Tzu said, “Quickness is the essence of war.”
In fact, many conventional approaches to business strategy manage to
ignore time altogether and focus solely on how resources are deployed
through pure power approaches. It’s almost as if much of conventional
strategy has been conceived to fit a world that is just static – as if it’s just
sitting there waiting compliantly for us to do what we wish with it. This is, of
course, one of the major reasons why conventional strategy fails so often: the
world isn’t static, and having a strategic planning and execution cycle that is
slower than the rate at which the world changes means that the organisation
will always be trying to deliver a strategy that is already out of date and that
was designed for a world that doesn’t exist anymore.
Overall, the reason that time is a key dimension of strategy is that it is
the key dimension of strategic risk and opportunity. Organisations that are
not able to react to a strategic risk in time tend to go out of business. Organisa-
tions that can’t mobilise to seize opportunities before they’re gone tend not to
thrive.
Considering time as a key strategic dimension assumes that the
environment in which you operate is constantly changing rather than
Â�
assuming that it is static and stable. This means that you keep observing the
strategic environment for changes that present either opportunities or threats.
The implication of that observational mindset is that you continually generate
a stream of options to optimise your fit in the environment and achieve your
goals. Having options is important but insufficient, as you’ll also need to be
effective at switching between options in a continual process of adaptation.
Organisations that do understand how to use time in strategy have a huge
advantage over those that don’t. They can choose when to apply power, and
that means that they can do it at the most advantageous time, which in turn
means they can use their power more effectively and more efficiently. As
Wellington said, time really is everything; unless you can change at least as
fast as your environment, you will not survive long term.
In Patterns of Strategy, there is one principal element of time and three
supporting elements to enable the organisation to alter its relative speed. The
principal element is whether you are faster, synchronised or slower than the
other actor in the structural coupling, and the important question to explore
is this: at what are you faster, synchronised or slower? The supporting
elements are: foresight – the ability to sense and make sense of changes both
within and outside the organisational boundary; cycle time – the elapsed time
it takes you to complete certain activities; and change rateÂ€–
Time: Differentials in our the effectiveness and elapsed time for the organisation to
speed and rate of change adapt itself. Foresight and change rate can work as an
relative to others important pairing, since being good at one can mitigate
weakness in the other. Strong foresight gives you more time
to act on or react to changes, allowing organisational change to be slower and
still get there. And if the foresight is weak or has fallen short in a particular
situation, an organisation with a high change rate can still adapt and retain its
fit. Obviously, being strong in both gives you more flexibility. As with power,
there are two overarching capabilities that organisations need. The first is to
know how to choose appropriately between the different time options, and
the second is to be able to utilise them.
Figure 7.1
Elements of time
Different types of time

There are different aspects of organisational capability which are relevant in
using time to affect your environment and to alter the structural coupling in a
way that is advantageous to you. Of course, it’s not the case that you will be
faster (or slower) at everything or synchronised in everything. It’s about
70
Using time
recognising where in your organisation time is a difference that makes a

difference, and this helps to answer the question: at what are you faster,
synchronised or slower?
There are several areas where time is critical, and the first four will be
covered in greater depth later. They are:
● Foresight and horizon: The further ahead you can spot threats and
opportunities, the more time you have to plan and prepare. For threats,
there is an ‘event horizon,’ a point at which any avoiding or mitigating
action will be too late. You need to know how far you can see, and how
much lead time you need to prepare.
● Change rate: As Machiavelli put it, “Whosoever desires constant success
must change his conduct with the times,” and the most successful organisa-
tions are those that can do this again and again.
● Operational cycle time: This is the time to execute each of your critical
operations, from R&D to manufacture to delivery. This is about the core
processes, those that deliver value to your customers. Reducing cycle
time on ‘internal’ processes may increase efficiency but is only rarely
differentiating.
● Decision–action cycle time: The elapsed time from knowing that a
Â�decision is to be made, orientating yourself to the current and future
conditions and actually taking the decision, and then implementing it.
● Tempo and variance in tempo. The organisation that can operate at only
one tempo relative to its competitors or the market or the regulator or
any other key stakeholder has reduced its strategic options dramatically.
In contrast, the organisation that can shift the tempo at will not only has
a better chance of matching the needs of the moment but also has the
capability to disrupt the strategies of competitors. Being able to operate
in multiple gears is not something that ‘just happens.’ Both this and the
management and operational capacity of achieving the actual switching
from one speed to another need to be designed into both the organisa-
tional structure and its operating processes. It is also likely to require a
degree of agility in order to be able to boost capacity and capability in
key areas of your organisation when you need it and shift the balance of
time. Cyclical industries need to be able to handle this well in order to
flourish when the economy is growing and to safely tighten when times
are tough, protecting core competencies and assets until the next upturn.
So do organisations that are substantially upstream of the customer in
the supply chain, where amplified volatility in demand (the so-called
bullwhip effect) will require the organisation to alter its speed very
quickly.
71
Speed - faster/synchronised/slower
Is faster always better? Often yes, but by no means always. While offensive
time-based strategies rely on speed, defensive time-based strategies rely on
slowing time down. Faster and slower comprise a pair in a strategic rela-
tionship, so if one actor is faster (in a particular dimension), then the other
is by definition slower. AÂ€faster ↔ slower relationship is fairly stable as it is
very hard – by its very nature – for the slower organisation to catch and
overtake the other. If one organisation is synchronised, then so is the other
by definition. The very nature of herds means that most organisations in the
herd itself (rather than at the leading or lagging edge or individual) will be
broadly synchronised through time, with all the organisations following
the herd trajectory at a similar pace. In addition, there are many strategies
where synchronisation of at least some activities across the structural
coupling is essential in order to enable the two organisations to work in
lockstep.
Faster ↔ slower collaborations

In collaboration, difference in speed can drive a tension into the relationship,
and this can be positive or negative. In a positive way, the faster organisation
acts as something of a pathfinder, with the slower organisation following up
and often using its power to exploit the path. This is often found in R&D
based collaborations, where nimbler (and often smaller and weaker) organ-
isations explore a range of ideas and their potential, while the slower (and
often larger and stronger) organisation prepares to scale the innovation and
deliver it to market. But in a negative way, the speed differential may not be
valued as you and the other organisation are always – literally – out of synch
with each other, both practically and culturally. The faster organisation
bemoans the tortoise-like pace of the other and resents the drag that it puts on
progress, while the slower one wants to exploit the capability it has devel-
oped to be successful in today’s world and wants the other to stop rushing off
into the future and destabilising today’s delivery. In engineering-based
sectors, some slower organisations in a collaboration can utilise their slow
process to rein in their faster collaborator, which wants to drive faster product
development cycles. In the defence sector, warfare has shifted from being a
power–power confrontation, with the stronger winning, to a much more
nuanced and complex situation where power can still confer substantial
benefit but asymmetry, surprise, and use of unconventional fast approaches
can be hugely effective.
The nature of how the armed forces want to wage war is changing
rapidly, and therefore their requirements of the defence industry are also
72
Using time
changing rapidly. But developing some of the major platforms for the forces,
such as ships and aircraft, requires the defence industry to have invested
heavily in long-lifespan equipment, infrastructure and workforce skills. Too
much churn in military requirements makes it impossible for the new product
development cycle to keep up, so in this case the supplier dictates overall
speed to the customer in the collaboration. This slower pace does bring some
benefit to the faster organisation, as it curbs a potentially expensive charge
into new and untested waters. It also provides some mediation to an intrinsic
human characteristic that is to press on briskly when we are unsure of our
way and, of course, this behaviour applies to organisations too. When complex
problems show up, almost anything can be preferable to the pure agony of
stopping and really thinking them through, and a purposeless busyness can
take over. So in today’s world of challenge and complexity, there are occa-
sions when a bit of slowness and pause for thought is no bad thing.
Faster vs. slower – faster wins

The speed of the decision–action cycle is critical, and in a competitive situa-
tion, your speed of decision–action cycle must be faster than that of the
competition as well as faster than the rate of environmental change. AÂ€shorter
decision–action cycle time destabilises competitors and creates confusion; it
reduces the time available for their decision–action cycle and potentially the
range of strategic options that are possible for them. They’re still messing
around at the pit stop, trying to decide which tyres to put on, and you are
back out on the race track. So organisations that operate on a shorter decision–
action cycle time than the environment, or that can change more in a given
time than their competitors, or that can react to
changing events more quickly can use time as a key Time: Faster
differentiator, and the Falcon (page 118) exemplifies We perform or change faster
this. Good foresight means that you can steal a march than the other actor
on your competitors in spotting changes and poten-
tial opportunities and risks in the marketplace, and the First Mover strategy
(page 164) utilises this. AÂ€faster change rate gives you the lead in exploiting
those opportunities and mitigating against those risks. The Go-Between
strategy (page 141) requires immense speed of execution once the strategy has
become visible in order to prevent others from stealing the opportunity. Faster
operational cycle times give you the lead in delivering value to your customers.
The effective Guerrilla (page 309) uses frequent short cycles of harrying their
enemy and then withdrawing. The Rapid Refresh strategy (page 272) in retail
relies on the regular and frequent provision of new product offerings, and
Augmentation (page 268) is a less aggressive version of this, adding new
73
features to an existing offering. In this case, the goal of the strategy is to

provide just enough newness to keep customers engaged with your offering
and reduce the numbers who switch. Easy Entry (page 226) is the counter-
point to Lock In (page 221), shortening contract periods to make it easy to
decide to buy. In a Bubble scheme (page 273), prices are whipped up, creating
a sense of urgency on the part of the potential buyers and exploiting a common
drive to cash in on something good. This drives the buyer’s decision–action
cycle and pushes them to act quickly and irrationally, only to feel regret when
the bubble finally bursts.
The advantages of being faster than the competition are obvious, but
there are similar advantages in many apparently non-competitive situations as
well. In the case of a heavily regulated sector with a small number of key
organisations, this was in theory a non-competitive and collaborative situa-
tion, but under the surface, it was intensely competitive with providers
fighting for market share, brand prestige and political influence. The organ-
isation that moved the fastest was able to introduce initiatives that the
regulator then responded to: the Puppeteer strategy (page 279). These
Â�
responses in turn started to dominate the regulator’s thinking and became the
tune that the regulator told the other organisations to dance to. Essentially,
the fastest was able to drive the changes through the structural couplings of
the sector and was able to force the strategy of its choice onto its competitors.
They in turn were forced into reactive strategies. Un-savvy competitors will
think that they are having to react to regulatory requirements – just part of the
bargain of belonging to that particular herd – and potentially not even realise
that they are actually being forced into a slower position than the edge
organisation.
But there are also circumstances where slower delivers advantage over
faster.
Faster vs. slower – slower wins

Where the advantages of faster are reasonably obvious, the disadvantages are
perhaps less so. Of course, just like driving a car, moving faster inevitably
exposes organisations to risk just because they are exposed to more in any
given stretch of time and, since events happen more quickly, the reaction times
for management need to be quicker. As well as conferring greater potential
advantage to you, faster can bring greater risk. Slower can therefore be a
winning strategy in times of high uncertainty. If the level of uncertainty means
the risks of action exceed the risks of inaction, then slower can be appropriate,
especially if other players in the sector can be tempted, tricked, goaded or
encouraged to take the risks for you and to show the best way forwards.
74
Using time
Slower, combined with a high level of readiness to act Time: Slower

and good intelligence on who else is doing what, can We perform or change slower
be a winning strategy. It is no accident that most large than the other actor
(successful) organisations are not the fastest movers
in most sectors, and that Fast Follower (page 123) is a frequently used strategy.
It’s fast enough but not the fastest. It provides increased security of a de-risked
market and offering, and the smart Fast Follower will work hard to learn (and
learn fast) from the First Mover’s successes and disappointments.
There are also strategies, mostly in mature or declining markets, where
it is important to exploit laggard customers who are loathe to incur switching
costs or where it helps to actively reduce the churn and proliferation of new
products and services, slowing down rates of change as much as possible.
These are primarily defensive strategies. The stability and predictability of
being slower become advantageous. They reduce the decision-taking load on
managers and cut the amount of resource and energy needed for adaptation,
and both of these reduce the costs for the organisation. They don’t imply any
particular cycle time – this should be the natural cycle time of the operations –
whether that is seconds on a production line for an end-of-life product or
years waiting for the political climate to change. Being slower (or even
standing still) can be a winning strategy when coupled with high power,
particularly positional power, since the organisation can then afford to wait
for others to give in and accede to their position. When there is a high posi-
tional power, the slower position can be used to hold other organisations in a
sector or relationship to ransom. Faced with rising discontent about the failure
to find a solution to the nuclear waste problem, the nuclear industry in many
countries was asked to come up with a long-term answer to the problem.
When their proposed solution – deep burial for long-lived and high-level
waste – was rejected, many adopted a standstill strategy. Effectively this
involved waiting until mounting economic pressures around energy prices
and security on the one hand and carbon emissions and global warming on
the other hand changed public opinion sufficiently to allow them to proceed
with their plan. As the Wait Out strategy (page 227), this was practicable only
because of the positional power held by the industry. They controlled the
waste and what was done with it, and they had an income that wasn’t imme-
diately threatened by the waste problem.
Long Tail (page 217) milks the remaining revenues available in a
declining market, and one key component is slowing the rate of change and
resisting the temptation to improve the offering. Lock In can use contracts to
hold onto its customers by making it unattractive or difficult for them to
switch to other, newer offerings. Household services such as power and tele-
phony have traditionally used fixed-term contracts, and financial services
75
such as mortgages, pensions and insurance make it expensive for the customer
to switch. In these sectors, at least, Lock In may become a more difficult
strategy to execute, as regulators increasingly reduce the Lock In terms to
benefit the consumer. Dragonfly (page 213) has a new product introduction
cycle time of .Â€.Â€. zero, making a virtue out of a heritage value proposition.
Settlers (page 245) use slower in a different way. They wait while a
market is created by other players who make substantial investments and
take the risks associated with novel offerings. Then they move in and both
reshape the market and steal market share from the existing players. Manu-
facturers of generic pharmaceuticals have everything to gain from flourishing
R&D based biopharmaceutical companies, as these build future markets for
the slower-paced Settlers.
Being successful at being slower in mature or declining markets requires
you to ignore the calls from the environment to change while exploiting the
strategic opportunity. But alongside that you’ll need a key element of fore-
sight in order to know when to stop ignoring the calls for change because the
market has entered its terminal phase. It’s a classic exploitation vs. risk situa-
tion, in which you need to balance today’s profits with tomorrow’s potential
famine if you get your exit timing wrong.
A couple of time-based strategies aren’t about faster or slower. Instead
they explore what is possible when moving backwards and forwards in rela-
tion to their customer’s experience of time. A Stitch in Time (page 132)
provides a preventative solution for an offering that is already on the market,
and Time Bandits (page 249) deliver solutions (a support contract, for
example) that follow on from or precede another purchase.
Synchronised in collaboration
Synchronised organisations move at the same speed and with the same cycle
times as those to which they are coupled. So the changes they make happen at
roughly the same time, they happen with the same frequency and they take
roughly the same time to carry out. Changing at the same pace as other organ-
isations to which you are structurally coupled is one way of tightening the
structural bond with your chosen environment. Rather like individuals,
organisations recognise and feel more comfortable when they’re in synch
with the others they’re working with. Moving at the same speed as the other
organisations in your sector, or as the market you supply, or as a key partner
makes it easier to maintain the same language and
Time: Synchronised appropriate values because you are making the
Both actors perform or change same changes at the same time and experiencing the
at similar speeds same issues. Having the same language and values
76
Using time
means that, for example, you can learn market needs, and the market can
easily understand what you offer.
Belonging to a synchronised herd also conveys some risk-reduction
benefits. The whole of the herd is maintaining the fit with the market, so that
you are less likely to get out of step with your customers. The cost and risks
implicit in the change rates of recruitment, change, innovation and training
are reduced. Because you move and learn as a sector, skills and learning and
new ideas are easily imported. Innovations have already been tried and
tested. And the risk from predators or destabilisation is reduced the more you
appear as part of the herd, as competitors looking to target your sector will
tend to spot any organisation that shows a difference from the herd. In regu-
lated sectors, moving at a different speed to the rest of the sector will tend to
single you out for special attention from the regulator.
In some cases, organisations are not just moving at similar speeds on a
similar trajectory, their activities are actually synchronised. In an Outsource
(page 197), the two partners need to synchronise in operational and decision–
action cycle times, and in an Alliance (page 150), the partners also need to
synchronise change rates. The platform provided by the Go-Between synchro-
nises key activities of the different actors. In Vertical Integration (page 248)
and in some cases of Strategic Partner (page 181), the synchronisation of key
supply–demand interfaces is crucial. An automotive components supplier
bidding to become a preferred supplier to a major car company had to restruc-
ture their operations so that their production cycle matched that of their
customer. Unless their components arrived on time each day, the whole
factory would grind to a halt. Both the operational cycle time and the change
rate had to be geared to synchronise with their customer. In another example,
Dell creates laptops in customised batches of one and with material invento-
ries of virtually zero. You place an order (online only) for exactly the laptop
you want, and the exquisitely engineered and synchronised supply chain
kicks in, with the build of your new laptop starting almost immediately and
often completing within 24Â€hours.
Synchronised in competition
Being synchronised with a herd carries a penalty. If you only move in time
with your market or sector or key partner, then opportunities for time-based
differentiation are unavailable. Organisations in a herd often only have one
tempo, would find it very difficult to operate at a different tempo and often
only have one change rate too.
But the advantage of synchronisation in a competitive situation is the
comfort and security of being part of a herd that enacts a collaborative intent,
77
that of shaping a market. It’s about being part of the trajectory of the herd and
slipstreaming in its strategic direction of travel. Take UK supermarkets. The
herd of ‘value for money’ supermarkets has shared a journey, from high street
to large, out-of-town suburban locations, in order to provide wide choice for
the once-weekly shopping and are now moving back to town centres to
provide core items local to home. Although different players have led each of
these moves, the herd has moved together, and all have gained the benefits
(as well as the disadvantages) of that journey.
Foresight
Foresight is the organisation’s ability to sense and to make sense of changes in
the environment, and it needs good perception capabilities. Clearly, the accu-
rate interpretation of environmental signals is crucial in order to understand
both what is happening now and what could happen in the future, as input
to positioning the organisation for success. For Wellington, this was a matter
of life and death: “All the business of war, and indeed all
Time: Foresight the business of life, is to endeavour to find out what you
Prediction and interpretation
don’t know by what you do; that’s what IÂ€called ‘guessing
of changes in the environment
what was at the other side of the hill.’”
Increasing foresight – the awareness of how the environment might look
further ahead – allows the organisation more time to introduce change, so this
can be a substitute for improving the rate of change or the cycle time. There is
a payoff here: increasing agility or rate of change reduces the need for fore-
sight, while increasing foresight reduces the need for agility or a rapid rate of
change. Improving both is a winning combination. In the film M*A*S*H and
subsequently in the long-running TV series, the colonel’s secretary ‘Radar’
O’Reilly got his nickname partly because he was the first to hear choppers
coming in carrying wounded, but he was also always aware of what the
colonel needed to do before the colonel was, and he would have everything
organised with the papers for the colonel to sign before the colonel was even
aware of the need. Longer foresight, faster cycle time.
The value of foresight is nothing new. Weather forecasting is foresight
in action. In World War II, the Danes initiated the North-East Greenland
Sledge Patrol in the summer of 1941 to counteract German landings along
the northeast coast of Greenland. Weather in Greenland is a predictor of
weather in Europe despite the enormous distances involved, and so the
patrol aimed to prevent Germany from getting critical meteorological infor-
mation that they could use to assist their U-boat campaign in the Atlantic or
for land and air campaigns in the European theatre. Merchants in Holland in
the 15th century used informants across Europe to report on weather, so that
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they could adjust their cargos to fulfil food shortages caused by inclement
weather.
In the context of Patterns of Strategy, we’re mostly interested in stra-
tegic foresight rather than operational forecasting, and this tends to take
the form of either scenario planning or good intelligence gathering – having
the feelers out. The problem is, of course, that although scenario planning
and good strategic risk management can help prepare the organisation for
future changes in the environment, it is far from foolproof and isn’t guar-
anteed to identify key changes. Spotting so-called weak signals is crucial,
and front-line customer staff are key eyes and ears here. Through their
customer interaction and their boundary-spanning position, they are
uniquely positioned to spot the early indications of changes in the market-
place. In the words of William Gibson (2003), “The future is already here – it’s
just not evenly distributed.” That soft information is key input for scenario
planning, needed to imagine potential futures and explore options for
shaping or reacting to them. Autolycus (page 160) uses foresight to spot an
opportunity that others have overlooked and then deploys a rapid change
rate to seize it.
A key aspect of sensing the environment is consciously looking for indi-
cators of emerging strategy from your competitors. If you can use these to
model and assess their strategy, then you have developed valuable foresight,
and this puts you in a position where you are highly likely to compete success-
fully. The converse of this is used in deception strategies, where your real
intent and strategy are concealed from your competitors for as long as
possible, denying them the lead time to prepare, which foresight would other-
wise give them.
Change rate
This is how much change you can carry out in a given Time: Change rate
time period – usually a window of opportunity or Rate of developing or adapting
risk. That can be done in a range of cycle times. So, capabilities
two organisations might achieve the same amount of
change in a certain elapsed time, one by implementing lots of small changes
with a very short cycle time, and the other organisation might do it by imple-
menting just one big change – a relatively slow cycle time. The amount of
change might be the same, but the way of achieving it may be completely
different. Von Foerster’s rule applies here, as well as for other elements in
Patterns of Strategy: “Act always so as to increase the number of choices.” Every-
thing else being equal, the organisation with the most flexibility in the system
will have the most influence on the system. Being able to use multiple change
79
rates in multiple dimensions of your organisation will give you the most choice
on what strategies to use and when to use them.
The ultimate organisational competency is to understand and define
which capabilities will deliver value to you and which are commodity in
your context, as well as what the realistic lifespan of each is. And then
managing change rate becomes a balancing act between here-and-now and
there-and-then. There is tension between exploiting today’s capabilities in
today’s opportunities and developing new capabilities to create or respond
to tomorrow’s opportunities. Your change rate needs to be able to accom-
modate your planned changes, and also your reactive changes that you
decide or need to take, based on the actions of others. Boyd analysed the
performance of fighter jets in the Korean War. Although the Russian MiG-15
was roughly equivalent in aeronautical capabilities to the US F-86, the
Americans were winning – and winning by a factor of ten. He applied the
term ‘asymmetric fast transients’ in explaining this. ‘Transient’ meant
theÂ€shift from one state to another, and ‘fast’ meant the time to achieve the
shift, and the F-86 was able to change from one aerial manoeuvre to another
more quickly than the MiG-15. In competitive business, as in dogfighting,
success comes from delivering a continuous flow of changes in state, in fit,
disorientating the competition. They have no time to decide on their own
strategy (let alone execute it); your shaping (and reshaping) ability puts the
competition into a constant and demoralising state of perpetual reaction
and re-reaction. You have more options when your organisation is capable
of effective and speedy adaptation.
Darwin’s ‘survival of the fittest’ was applied to the natural world. Specifi-
cally, though, he meant fittest for that environment. The different species of
finches on each of the Galápagos Islands have adapted to exploit the partic-
ular conditions and food sources available to them. Throughout time, animals
and plants have survived, thrived or died, depending on their ability to exist
in their environments, and change at a rate congruent with the rate of change
in the environment. The horsetail plant has remained virtually unchanged
over 300Â€million years because it matches its environment so well; the plant
today looks identical to the fossil record, although smaller. Coral has only a
very narrow band of tolerance of sea temperature in which it can flourish, so
that if the sea warms in a particular location, it dies. But it has survived ice
ages and greenhouse effects because its larvae can relocate to a more favour-
able area of the ocean.
These scenarios are equally applicable to business. AÂ€business must
evolve in step with the rate of change in its environment in order to survive
and thrive, like the finches. An organisation must change to meet the chal-
lenges in its environment or cease to exist, like the coral. And some
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organisations that appear to be supreme today may have no suitable business

environment in which to flourish tomorrow, such as the polar bear as the
Arctic ice cap shrinks. Change rates don’t necessarily have to be fast; they
need to be appropriate for the situation. Normally, they need to be at least as
fast as the changes in the environment and, if you are in a competitive situa-
tion, then faster than your competitors too. This makes managing the rate of
change a strategic imperative for organisations and businesses, and in
competitive situations, it means that you need to monitor the change rate of
other actors as well. Monitoring the life cycle of markets and niches within
them is well understood, even if not always well done. Observing the refresh
rate of products or services from your competitors, significant changes in
their processes and enabling technologies, and how fast your competitors
reorganise are all important. These observations provide insight to you and
point up what change rate you will need to be able to react effectively and
what change rate you will need to shape effectively, both of which rely on
your change ‘muscle.’
The Harlequin (page 317) requires perhaps the strongest change ‘muscle’
as this strategy depends on an organisation being able to reinvent itself,
breaking its existing structural couplings and rapidly rebuilding new ones.
But it’s unusual; muscles have a key characteristic: use them or lose them, as
an unused muscle atrophies very rapidly. An organisation’s ability to manage
change also decays over time. Organisations and herds that have been in
stable environments for a long time haven’t needed to change much and so
lose their change ‘muscle.’ The financial crash of 2007 was a game changer for
public sector organisations across the world, largely shielded until then from
the competitive pressures and general speedup of life in the private sector.
They went from established, repeated year-on-year service delivery and really
low change rates to the implications of plunging budgets. It was by any stan-
dard a massive change and shone an uncomfortable spotlight on a whole
generation of public sector managers who had never seen – let alone had to
manage – change quite like it. In some organisations, it induced a kind of
paralysis, a hunkering down “until things get back to normal.” Even though
their foresight could and should have told them that this was the new normal,
most organisations continued doing what they had been doing, for another
couple of years in some cases, reducing the time available to plan for and
respond to those budget cuts. When they finally did move to action, they had
to do it really fast, further exacerbating their situation.
Managing rate of change positions strategy as a series of time-bound
advantages. The duration of a competitive advantage depends on the rate of
change within the sector. The faster the rate of change in a market, the more
temporary are any advantages gained, and the faster decision–action cycles
81
need to be. As rates of change in general speed up, the opportunities for
‘sustainable’ competitive advantage (where it is possible to build long-lasting
and stable capabilities and create insurmountable barriers to change for
competitors) are decreasing, even in markets or sectors with a relatively slow
rate of change.
Rate of change and innovation

Yet, even in stable situations, an organisation can keep its change muscle in
good shape by experimenting with non-mission-critical innovation. Innova-
tion both challenges and builds the capability in change rate for your organ-
isation. The innovation can be focused internally on the configuration of your
organisation and its ecosystem, it can be focused on your product and service
offerings (or bundles of offerings) or it can be focused on ways in which you
engage with your customers. With a globalised marketplace in most sectors
(and all that brings in terms of competition) and a digitised marketplace in
most sectors (and all that means in terms of speed), your innovation rate is a
critical type of adaptation. It doesn’t always have to be large disruptive inno-
vation, it can be many small or even tiny innovations (think The Toyota Way),
but having the capability to innovate – and innovate at a speed faster (a faster
cycle time for innovation) than the change in the environment – is important
for most organisations and most sectors. The concept of learning organisa-
tions was du jour in the 1990s (and got a bad name for not delivering, mainly
because it stayed a concept in most places), yet as GE’s Jack Welch said: “An
organisation’s ability to learn, and to translate that learning into action rapidly, is the
ultimate competitive advantage.”
In Moore’s technology adoption life cycle (the Chasm model), an inno-
vator creates a new idea for a product or service. Innovators want to be first
and will exit when the new idea is no longer ‘cool.’ The visionary can see
where that innovative idea could create disruptive change in their business or
organisation and adopts the idea, and here’s where change rate starts to
matter. Risk-averse herd buyers (early and late majorities) want clear evidence
that the innovation works to solve their problem in their sector. If you have
made the investment to develop the innovation and create the evidence base
for its utility, then you will obviously want the rewards from doing that. The
Tornado (page 246) needs a fast change rate in order to be able to scale
delivery of your new product and to consolidate your market position and
brand as key benefits of First Mover before the Fast Followers come along.
Incremental improvement in established offerings (for late majority and
market laggards) will deliver advantage as well as developing your organisa-
tion’s capability to manage a slower change rate and smaller changes.
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Throughout the life cycle, there are opportunities to benefit from exercising
the change muscle.
Cycle time
Cycle time applies to all aspects of business. Opera- Time: Cycle time
tional cycle time is the rate for turning the handle on Rate of delivering each
production or delivery processes, and product cycle iteration of a core process
time is a particular example of the speed of new product
development and introduction. Decision–action cycle time measures the
speed with which management teams can convert a new situation into a deci-
sion and then into action.
If you are in a fast-moving consumer goods arena, for example, a compet-
itively fast product cycle time is essential. Generally, the decision–action cycle
affecting organisational change is the slowest, although there are some notable
exceptions to this. Some sectors, such as petrochemicals, depend on long-term
investment in technical infrastructure where the lifespan of a plant could be
measured in decades before obsolescence. Here the organisation will adapt to
the constraints and requirements of the plant in order to deliver the required
products. Other sectors with low product cycle times, such as development of
military or commercial aircraft, depend on the long-term development of a
highly skilled workforce. It’s really hard to accelerate the development of this
and even harder to wind back the clock when the skillbase has been lost; the
loss of manufacturing skill through the 2008 global recession will be almost
generational in its replacement. By contrast, an operational cycle time of
seconds played a major role in the Wall Street Crash of 1929. The ticker tape
machines, running at 285 words per minute, enabled transactions to be placed
faster than they could be read and enacted, and the differential in time meant
that the traders got more and more out of touch with reality.
Exploring these types of cycle time gives you options on where you
want to be faster (and where it might be achievable and realistic to be faster)
and where it’s acceptable to be synchronised or slower. Product cycle times
are more likely to bring you advantage in emerging markets, and operational
cycle times will do so in established and technically complex markets. In the
very nature of being in a herd, membership will impose herd cycle times on
you, but with edge or individual differentiation, you will be able to flex them.
Operational cycle time

Different organisations, even within the same sector, can operate at very
different cycle times, and even at just an operational level, that difference can
83
have a huge impact. Probably the best known example is the set of changes
introduced by Taiichi Ohno in the Toyota Production System. Before this,
large car plants had run using vast press shops where the same press would
run with the same dies stamping out the same components month in month
out. Changing dies on machines was a huge task, rarely undertaken and typi-
cally taking a day. In the immediate post-war period, Toyota didn’t have the
capital to buy enough equipment to run in this way and didn’t have enough
orders to run dedicated presses either. Ohno’s solution was to dramatically
reduce the operating cycle time. Production runs of the same component went
from months to hours, and the switching time for dies went from a day to in
many cases a minute. The result was a revolution in operating practice, based
on much faster cycle times, but this operational and tactical manoeuvre
provided a huge strategic advantage and completely changed the economics
of car production. It drove similar changes in supply chain management (also
based on faster cycle times – the Kanban system), quality management (based
on a faster cycle time of improvement and much higher rates of change) and
changes to product innovation (faster R&D cycles). The impact of these
changes on predominantly operational cycle times was a huge competitive
advantage over the US car industry.
Decision–action cycle time and John Boyd’s OODA loop

John Boyd was a US Air Force pilot, later assigned to training US Air Force
pilots, where he became known as ‘40-second Boyd’ because of a standing bet
that he could beat anyone in an aerial dogfight within 40 seconds, starting
from a position of disadvantage (he hardly ever lost his bet, and his tactics
manual for aerial dogfights is still in use today). Later still, seen as one of the
top military strategists of the 20th century, he was called back by Dick Cheney
to help engineer the strategy behind the devastatingly powerful US action in
Iraq after the Iraqi invasion of Kuwait. AÂ€key focus of his strategic thinking
was about how to use time – and particularly the decision–action cycle time –
to your advantage and to the active disadvantage of your competitor. Boyd
characterised organisational behaviours that are important to delivering
rapid decision–action cycles, analysing successful military manoeuvres to
understand what the victor did and how they needed to work internally to be
able to do what they did. These behaviours are fully transferable to a business
context.
He was at heart a modeller, appreciating the value of having a model of
a situation or an actor in its environment. Part of that value is to recognise that
it is always incomplete and always wrong in part, and so can be used as a
touchstone or reference model, looking for where reality and the model don’t
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Using time
match. As Stafford Beer wrote, “We think we’re in control but all that we’re
controlling is the projection of the model in our heads. If that isn’t a good fit to what-
ever is out there, we’re useless.” Actively looking for mismatches between your
expectation and reality is a key way to improve the quality of your under-
standing of a situation. Aligned to that, he applied the concept of entropy –
the intrinsic disorder or chaos of a system – to the characteristic of a system to
keep changing even as you (try to) manage it back to its original form. This
may all seem a bit theoretical, but it defines the core elements for his OODA
loop.
His OODA loop (Observe, Orientate, Decide, Act, and there’s the
Â�decision–action cycle time) hardwires the need to keep interacting with your
environment, to keep comparing what you know of it (or thought you knew)
with what is actually showing up. The environment will be changing on a
continuous basis, and for you to have a good grip on what those changes are
and what they could mean for you, you need to keep checking in and as a
result revising your models. The better you understand the environment,
both in absolute terms and relative to your competitor, the more insight you
have for your decision taking, and the faster you can enact your decision–
action cycle time. It’s a massive form of competitive advantage, and looking
for those mismatches is also a source of potential new ideas and innovations.
Many organisations strive for perfection and excellence, developing the best
possible fit for today’s environment. Often attributed to Darwin is this: “It is
not the strongest of the species that survives, nor the most intelligent that survives. It
is the one that is the most adaptable to change.” Boyd’s message is that you should
actively strive for excellence in adaptation.
So exactly what is the OODA loop (Figure 7.2)? Boyd saw that making
decisions, appropriate decisions, more effectively than your competitor is key
for success. This is because the organisation that goes through their decision–
action cycle faster than their competitors can effectively destabilise that
competitor because the competitor is busily reacting to a situation that has
already changed. As you speed up your decision–action cycle time, it destabi-
lises your opponent, reduces the time available for their decision–action cycle,
wastes their time and creates confusion as they are forced into continually
reassessing what’s going on, undermines their current strategy and poten-
tially reduces their options for manoeuvre as well. Your competitor is having
new situations and the need to make decisions pushed at them faster than they
can cope, resulting in them taking poor decisions or being paralysed into
taking no decisions at all. Meantime, you are maximising your use of power in
time to create a winning situation. Think back to 40-second Boyd: in the incred-
ibly shortened cycle times of aerial dogfighting, your opponent is reacting to
what you last did and where you last were, and you are already moving onto
85
Figure 7.2
Boyd’s OODA loop
your next manoeuvre. Overwhelming and demoralising – core ingredients of

Boyd’s strategic recipe. No wonder Boyd hardly ever lost his bet.
Although the OODA loop could be read as four sequential steps, they
tend to overlap, and you cycle through them continuously. In practice,
youÂ€start not with Observe but with Orientate. This is Boyd’s key step of
modelling – to capture and structure what you know about the situation. And
here are a couple of key points. The quality of your model of your environment
Â�
and couplings determines what you can observe. With a poor model, you will
be blind-sighted to even observe and notice some aspects of your environ-
ment. Even assuming that you can observe those aspects, the quality of your
model determines how you will interpret or make sense of what you observe
and what those observations actually mean. So Orientation shapes what you
Observe, what you Decide and how you Act and is in turn shaped by the
feedback from your interaction with your environment. Boyd stressed: “Also
note how the entire ‘loop’ (not just orientation) is an ongoing many-sided implicit
cross-referencing process of projection, empathy, correlation, and rejection.” His
comments here show the importance of thinking, of blending ideas, impres-
sions and information, of creating and testing hypotheses. It’s about looking
at an opportunity or problem from multiple perspectives. In any environment
and particularly in a competitive one, the more that you can keep your models
of the environment (your Orientation) well aligned to that environment, the
better your decision taking can be.
When you move to Observe, it is key to look for mismatches between
what your current model and thinking predicts, and the reality that you find:
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Using time
“the difference that makes a difference.” Observe isn’t a passive state of merely
looking. It’s about actively exploring, actively seeking information and in
particular actively seeing indicators or evidence that your current under-
standing is flawed or plain wrong. This isn’t common, though, as people tend
to look for and give weight to information that confirms their assumptions and
beliefs about the situation more than the information that tends to challenge
them. Yet, of course, it’s the information that challenges your assumptions that
helps you to update and improve your understanding of your operating envi-
ronment, and so improve the appropriateness of your decisions.
Your decisions need to be explicit when you want to alter the model of
the situation (in order to highlight to the organisation that the Orientation has
changed) or when you want to align them to a new goal or purpose. Until that
re-Orientation is complete, however, your organisation will still be operating
with its old model of the situation, so building the organisation’s ability to
re-Orientate quickly is critical for you to maintain a faster advantage. Scenario
planning (one form of foresight) is a form of exploration of Observation and
Orientation. In creating possible futures and building options to achieve fit in
those possible futures, you are building the shared models of Orientate, your
ability to Observe effectively, as well as building leader capability in rapid
re-Orientating. The targeted use of innovation can do much the same. It’s
about developing an individual and collective mental agility in order to notice
that your thinking has become blinkered and to be able to create new ways of
thinking. Re-Orientating is critical for continued success, of course, as
described by Peter Drucker: “The greatest danger in times of turbulence is not the
turbulence, it is to act with yesterday’s logic.”
OODA for implicit and explicit decision taking

Faced with an unexpected situation or when we Observe that our model
(Orientation) is flawed, then decisions need to be explicit – new information
gathered, prepared, solutions worked through. The ‘explicit’ decision process
may need to engage a wide group, and all this takes time.
In reality, the vast majority of decisions aren’t taken using the explicit
model and insights of an overt scenario planning exercise, or by an information-
rich portfolio review, or by exploring innovative possibilities. Most decisions,
both operational and strategic, are predictable and are taken based on the
implicit knowledge and insight of the organisation. The key to speed in these
decisions lies in the ‘implicit guidance and control’ connections in the OODA
loop, and there are several ways to develop these in your organisation. It
takes time to build this implicit knowledge and insight, but the payoff in
terms of faster decision–action cycle times is massive.
87
This implicit knowledge is built in five main ways. The first is about
practising. Since you can predict most types of decisions an organisation will
need to take, it’s possible to explore and rehearse these in order to build collec-
tive mental models and develop information systems for the relevant decision
support information. The more these predictable decisions can be rehearsed
and explored, the slicker they get, and in OODA, speed matters. If you already
know what plan to execute if your competitor does X, that shortens the
Â�decision–action cycle dramatically.
The second technique is what many in the military refer to as
Â�Commander’s Intent. It’s the clear communication of a concept that gives
focus and guidance to the organisation. Importantly, it has to provide action-
able guidance so that, in any context, it answers the question, “What should
IÂ€do now?” AÂ€third approach is making a contract between leaders and staff
about what shall be done to deliver the organisation’s goals. The leader
describes an outcome that is required for the organisation. And the outcome
is given in terms of a ‘what,’ leaving the subordinate free to determine the
most appropriate ‘how’ for the given context. This is strengthened further by
the use of backbriefing – another military approach – in which the staff
member plays back to the leader their grasp of what is being asked of them,
together with the implications of delivering it. It’s a way of testing under-
standing in both directions.
The fourth way is intuition applied by an individual or by a team to their
own activities and area of competence. Think about surgery, for example. The
best results are generally delivered by a team of theatre staff who regularly
work together. Why? Because they have a collective memory and collective
expertise. They have shared experiences of both successful and unsuccessful
procedures and the learning that they have gained from those. They know
each other’s rhythms and patterns of working. The unconscious feel for how
to act next is developed through repeated practice or training and is invalu-
able in ambiguous or rapidly changing situations; individuals and teams use
their initiative and expertise within their own scope to contribute to the
overall goals of the organisation. And there’s a fifth element, which is about
trust, along with a sense of unity and cohesion. There are few shortcuts here
because trust is built by a group of people working together over a prolonged
period in a variety of different circumstances. As a result, they truly know one
another, everyone’s strengths and weaknesses, warts and all. It’s not the
profiled teamwork of the psychometric test; it’s the deep knowing that comes
from working together, in good times and bad, over a prolonged period.
An organisation with a clear focus or direction, together with a
trusting, empowering culture built on shared experience and deep indi-
vidual competence, can make decisions really quickly and move to
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Using time
accurate implementation with speed because of the ability to act with intu-
ition. Although it takes time to create (it requires people to deeply and
richly understand their organisation, its environment and the interplay
between the two), it enables implicit decisions and creates the freedom to
act locally with speed. Each decision–action cycle is faster, and the switching
from one decision–action cycle to the next is faster. These five elements
combine to create the ‘implicit guidance and control’ of Boyd’s OODA
loop, in which speed arises from an environment that enables people in the
organisation to use their initiative to deliver the organisation’s goals.
89
8 U SING POWER
Of the three dimensions in Patterns of Strategy, power is the most widely

used as a strategic tool and, for many organisations, it’s the only tool they
know how to use.
In Patterns of Strategy, there are two principal elements to power and
two supporting elements. The two principal elements are, firstly, whether you
are stronger, balanced or weaker and secondly, how concentrated your avail-
able power is – single focus, multiple focus or
Power: Differentials in our resource diffuse. These two principal elements are comple-
and capability and their deployment, mentary and to some extent, the second can be used
relative to others to compensate for the first, so relative weakness can
be compensated for by concentrating resources to
build a localised advantage of power in a particular area. When we say that
power is the most used tool, it’s actually the first of these that is used most;
Figure 8.1
Elements of power
Using power
sheer size and muscle is used by the strong against the weak. The art of
concentration of power is less common and less well understood but can be
devastatingly effective. The supporting elements are critical mass – having
sufficient power to simply overwhelm – and agility – having the ability to
rapidly shift where and how you apply the power available to you.
Different types of power

Many different types of power are relevant here, and essentially any form of
capability that allows you to significantly affect your environment and specif-
ically to change the nature of a structural coupling can be relevant. So Â�typically
this will include things as diverse as:
â•‡ 1 Market: The capability to access markets or particular segments or the

position you hold in them.
â•‡ 2 Geography: The capability to reach markets, partners, suppliers and the
like.
â•‡ 3 Brand: Your accumulated reputation and your ability to deploy that to
effect, whether that’s your ability to solve problems – Arup’s brand has
been largely built on solving the problem of how to build the Sydney
Opera House – or whether that’s the quality of your products or service.
â•‡ 4 Technology: Your strength in using particular technologies and/or your
breadth of technology.
â•‡ 5 Operational: Your capability to deliver, efficiency and scale.
â•‡ 6 Skills: Most importantly, the ability to do things others can’t.
â•‡ 7 Intellectual property/intellectual capital: Assets, or intellectual horse-
power, or a combination.
â•‡8 Financial: Which can take many forms despite being counted in the
same currency, so fixed assets have very different strategic implications
to a war chest that can be deployed at a moment’s notice to achieve
agility.
â•‡ 9 Ownership of a standard: This could be as a regulator enforcing regula-
tion in a marketplace or the owner of a de facto standard. Either gives
you the whip hand.
10 Relationships: The number and breadth of relationships (formalised or
not) that you have, giving you access to capacity and different
capabilities.
11 Organisation structure: This can substantially affect (positively or nega-
tively) your ability to deploy your power effectively and efficiently.
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Strength – stronger/balanced/weaker
Given the dominance of strategy based on power, it’s tempting to assume that
stronger is inevitably better than weaker. And if domination is your game,
that may well be true, but the picture isn’t quite that simple, and there are
many successful strategies where balanced or weaker is essential. Stronger
and weaker form a pair in a strategic relationship; if one is stronger, the other
is by definition weaker. Similarly, when we have balanced on one side of a
relationship, it follows automatically that we have balanced
Power: Strength on the other side as well. Balanced ↔ balanced relationships
Differential in relevant can be stable through time because neither side has an abso-
resource and capability lute advantage in power, and this stable relationship can
be either constructive or destructive. Similarly though,
strongerÂ€↔ weaker relationships can also be stable since there is a natural and
recognisable ‘pecking order.’ When a stronger ↔ weaker relationship becomes
unstable, the result is usually over fairly quickly; either the stronger player
will crush the weaker, or the weaker player finds a strategy that is not built on
power that undercuts the stronger competitor and uses their own strength
and size against them.
Stronger ↔ weaker collaborations

In collaboration, differentials in strength tend to drive particular sorts of rela-
tionship, and there can be an assumed subservience that goes with being
weaker. This assumption can be held on either side of the relationship, so the
stronger party can assume that the weaker partner should be subservient, and
equally the weaker partner may assume that they need to be subservient for
the relationship to work. This assumption of a natural pecking order deter-
mined by size and power is so deeply held a belief in many people that it
becomes a default, a set of tacitly held beliefs. This can make it harder for
partners to build a robust, non-subservient relationship. There are particular
types of relationship where this set of assumptions can work well for both
sides, and the Remora strategy (page 177) is an archetypal example of this.
There are many reasons for wanting a relationship with a weaker partner
that is not subservient, and mostly these are so that the stronger partner can
fully access all the advantages that come with being smaller in order to coun-
terbalance the disadvantages that come with being bigger and therefore
stronger. At the same time, the weaker partner can gain some of the advan-
tages of greater muscle without the disadvantages of greater size.
In particular, what weaker partners can bring to a collaboration is speed,
agility, foresight, concentration of power in specialist areas, higher levels of
innovation and a faster rate of change. Doing this as fully as possible, so that
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Using power
both parties get as much as possible from the relationship, demands that
theÂ€weaker partner acts openly as a Strategic Partner (page 181), and
whilstÂ€thisÂ€term is used frequently, it’s extremely rare to find true Strategic
Â�PartnershipsÂ€ – and that has often to do with the assumptions about the
‘natural order’ that come with the power differential. The Jeeves strategy
(page 186) has evolved specifically to deal with this situation and is a strategy
where the reality of a weaker partner, acting as a Strategic Partner and driving
some aspects of the relationship, is hidden behind a pretence that they are
subservient and that the natural order still prevails.
Stronger vs. weaker in competition – stronger wins

The advantages stronger has over weaker are fairly obvious. The stronger
party has the muscle to overwhelm competitors, whether that is in terms of
financial or industrial or intellectual power or market coverage or global
reach. Authority (page 293) typifies this. Being stronger means that you can
deploy more resources in more places and for longer, so that you can outflank
competitors by offering bundles of value on either side of the core value the
weaker player is able to offer – as Microsoft has done again and again, leaving
competitors’ value propositions looking thin and exposed. Similarly, being
stronger means you can afford to operate below cost
in a market, just in order to push a weaker compet- Strength: Stronger
itor out. Sometimes strength is needed to scale up We have more capability than
rapidly and cash in on a market opportunity, and the other actor
Tornado (page 246) does exactly this.
In a defensive situation, being stronger can make you less vulnerable to
attack, both because of your ability to retaliate and also simply because the
sheer size that usually comes with stronger means that you can absorb loss of
market share or position more easily, whereas weaker competitors may nibble
at your position without doing any appreciable damage. Gorilla (page 222) is
the obvious example of this, and M&A Economies of Scale (page 227) and
Brand Reputation (page 224) are defensive uses of power.
But .Â€.Â€. there are also a lot of situations where weaker can win out over
stronger.
Stronger vs. weaker in competition – weaker wins

The classic approach to defeating a stronger competitor is, as in judo, to use
their own strength against them. So, in very many ways, being stronger can be
as much of a handicap as an asset. Being stronger usually comes from being
bigger and, everything else being equal, that means having more momentum.
93
Stronger players become vulnerable as soon as their momentum becomes

decoupled from the operating environment – in other words, as soon as the
environment changes, and there is nothing for all that power to act on. Think
of someone pushing hard to move a heavy weight; if
Strength: Weaker you reposition the weight so that it’s no longer
We have less capability than the where they are pushing, they crash to the ground.
other actor It’s the same in business; weaker players generally
beat stronger ones by moving the target the stronger
competitor had geared up for, by changing the game and market expecta-
tions. Do that, and being stronger can become a positive disadvantage.
A lot of the ways in which stronger loses out to weaker have to do with
size. Stronger usually comes with size – the exception to this is when we’re
talking about intellectual strength. But if we’re talking about financial,
commercial or industrial muscle, then this tends to be related to size. As size
increases, in most cases, so does constraint and a lack of manoeuvrability. The
ability to deploy strength in new directions tends to go down as strength
increases. Big players become less agile and more set in their ways as they
grow. Agility is easier for smaller organisations; although they have fewer
resources and therefore less surplus resource available to redeploy, this is
usually more than compensated for by having fewer internal constraints that
prevent shifting resource into a new direction.
The relative lack of internal constraint, on average, enables weaker
organisations to be more flexible, and this in turn makes it easier for them to
react more effectively to changes in their environment. Similarly, organisa-
tions that are weaker generally find it easier to have a higher rate of change.
This is partly to do with a lack of internal constraints but is also because there
is less of the organisation to change, so the efforts of a few individuals can
have a disproportionate effect. The relative lack of internal constraint can help
weaker organisations to be faster – often built on higher levels of agility and
rate of change.
Size can also be deceptive and isn’t always a true reflection of strength.
With size, the proportion of dead wood in the organisation also increases;
there are just too many places for the ineffective and ineffectual to hide in. Big
players are rarely as strong as they appear. Conversely, weaker players can be
much stronger than they appear, as is the case with Camouflage (page 313),
which actively conceals its strength to avoid unwanted attention and to a
lesser degree, Mouse (page 170), which stays under the radar. Frigate Bird
(page 171) overplays its hand to grow. AÂ€stronger player with fragile alliances
can end up weaker overall than a weaker player that can build more robust
alliances.
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Using power
Although at first glance we might assume that stronger is better defen-

sively – and generally it is – that too can be deceptive. Externally, whilst
stronger can deter predators, the size that goes with it can make you a juicier
target. So unless you are the biggest beast in the jungle, size can make you a
more attractive target than a weaker player to an even bigger player looking
to extend their portfolio. Organisations that play strategy exclusively by
strength can die by it as easily as thrive by it. Conversely, weaker is usually
seen as less threatening and therefore may avoid a lot of competitive behav-
iour targeted at them. Similarly, being weaker can also result in being less
attractive as a target for acquisition if you are below the threshold at which
you are seen as adding significantly to the overall strength of a predator.
For years, Roger Federer dominated men’s tennis, playing with a range
and quality of shots that others couldn’t match. But other players came along,
bringing a new physicality and stamina to the game. In the Grand Slams (the
Blue Riband events of the tennis calendar), the finals got tougher and longer.
By this point, Federer had turned 30. He still showed periods of brilliance but
wasn’t able to sustain these through the longer matches. At this point then,
newcomers are stronger, Federer weaker. But Federer worked hard to improve
his netplay, volleys and dropshots. When he could do this successfully, it
shortened the points and reduced the physical demands of the longer matches,
mitigating the strength imbalance to some extent. In addition, these shots
impacted other players so that increasingly all the top players were forced to
adapt in this way. Federer successfully used agility – the ability to switch
between types of shots – to shape from a weaker position.
Finally, stronger tends to make you sloppy; if strength can win the day,
why bother being smart? Stronger can make you vulnerable to weaker but
smarter competitors.
Balanced in collaboration
Being balanced allows you to build symmetrical Strength: Balanced
collaborations with peers that are easier to under- Relevant capabilities of both
stand and to manage as a relationship of equals. If actors are roughly equivalent
you are trying to partner with an organisation that is
stronger, it can be tough to make the case for the value you bring, and you
tend to end up dancing to their tune. Conversely, if you partner with an
organisation that is weaker, it’s hard to not crush their contribution. With
balanced, you have more of a chance of getting the most value from collabora-
tion. Alliance (page 150) brings together complementary capabilities to
develop new value propositions. Cartel (pageÂ€156) and Keiretsu (page 157)
both exploit the strength of a designed group. A Cartel is structured to
95
maintain checks and balances on all members, and a Keiretsu interlinks a

group of organisations to provide strength and protection for all.
Balanced doesn’t offer the protection of strength and ability to dominate
or of weakness through being too small to bother with. Some see any balanced
organisation as automatically a competitor. Even in a collaborative situation,
it is easy and common for collaborations between two balanced partners to
have a competitive edge and for the collaborative-competitive mix to change,
sometimes quite quickly. Collaborative relationships can flip suddenly into
competitive behaviour. Collaboration between balanced partners can be
really powerful but can also be unstable, so care is needed over the quality of
the relationship – essentially the fit and attention to anything that could desta-
bilise that.
Balanced is the natural state for members of a herd, and within a herd it
helps you in not standing out and therefore in not becoming an obvious target:
the Musk Ox (page 202). Within a herd, the natural targets are those that are
different in any way – the leaders or the laggards or the conspicuously larger
or smaller. We can view herds as a very natural form of the collaborative-
competitive mix. Sometimes there is intense competition beneath a veneer of
collaboration but, much more commonly, the opposite is true; herds are
essentially collaborative in nature with a thin veneer of competition.
Balanced in competition
When weaker competes directly with a stronger competitor, the competition
tends to be relatively short. Either the weaker will triumph relatively quickly
through guile or speed, or if they don’t, if it turns into a longer war of attrition,
then stronger is likely to win out. With two balanced competitors, though, the
situation is very different, and both can settle into a situation of direct compe-
tition that can last for decades in some cases, with neither side gaining much
of an advantage. However, there is a natural tendency to move towards
stability, and if balanced means that neither party finds it easy to get enough
of an advantage to win the competitive battle, it’s common to shift competi-
tion to small incremental challenges. So whilst it can be a drain on resource,
it’s at least relatively stable and predictable.
Concentration – single/multiple/diffuse
The level of overall power is less important strategically than how it is
applied, and the key element here is the degree of concentration of power.
The importance of this is much less well understood in most approaches to
strategy.
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Using power
But one approach to strategy is completely built Power: Concentration

around understanding the concentration of power, and it Degree of focus of capabilities and
is extremely popular in Japan. Interestingly – or bizarrely, resources
depending on your viewpoint – it comes originally from
the work of an engineer and pioneering car designer Frederick Lanchester,
who dabbled in military theory during the horror of a war of attrition in the
trenches of 1916. Lanchester developed a set of differential equations to
calculate the effect of power on the outcome of military engagements.
Essentially with two opposing forces, one of which is weaker and the
other stronger, as the stronger side kills more of the weaker side than they
lose themselves, the power differential accelerates. Lanchester’s equations
calculate the rate of attrition on each side and therefore what the level of
damage to the winning side was likely to be, how long the engagement was
likely to take and the size of force necessary to achieve victory. This provided
a better basis for assessing the advantage needed beyond just the rule of
thumb, a 3:1 ratio of attackers to defenders that had been commonly used. It
also provided explanations of some military outcomes, including Nelson’s
victory at Trafalgar where he split a stronger French and Spanish fleet in half
so that he could concentrate his power on each half and achieve localised
superiority of power. Lanchester’s laws are used to this day in military theory.
In the 1970s, Japanese marketing strategist Dr. Nobuo Taoka transposed
this theory to market penetration, and it has remained a main plank of
Â�Japanese strategic thinking ever since. The result has been a set of business
strategies based on tight market segmentation and concentration of power,
along with a strategic doctrine of ‘segment and dominate’ where your compet-
itor is weaker and seeking a defensible position (one you can dominate) where
they are stronger. Helpfully, Lanchester’s laws provide some guidance on
what ‘dominate’ means in this context – in other words, how much power is
enough. Around 40% of market share is a commanding position that will be
hard to challenge, whilst if the market leader holds only around 25%, they
will struggle really hard to maintain their position. This gives some idea on
the strategic impact of spreading your power too thinly. The Knight’s Move
(pageÂ€113) exploits this and achieves market leadership by successive
Â�domination of segments.
So there are clear advantages to concentration, which is critically
important in any power-based strategy. However, it’s not a winner in every
case, and there are lots of situations where being less focused will be better.
In Patterns of Strategy, we model the concentration of power as single,
multiple and diffuse. These do not have to be absolute values as what we’re
interested in here is, relative to the other party in the coupling, how concen-
trated are we compared to them? So this is a spectrum of concentration with
97
three markers that are relative to one another, and we define an organisation
as single, multiple or diffuse by whether there is a significant differential in
their concentration of power.
Organisations can choose different ways in which to configure their
power and resources, depending on their own internal product development
or their desired positioning in the marketplace. None is better or worse; each
can provide advantage. The nature of the concentration is very context
specific.
A small start-up company, in biotechnology, for example, could have all
its research (and the vast majority of its resource) focused on a single area of
science. Another organisation might have a single product or be operating in
a single market. It is unusual for a large private sector organisation to have a
single focus – it would be like ‘betting the farm’ – though it is more common
in public or government-sponsored projects. John F. Kennedy’s goal “.Â€.Â€. of
landing a man on the Moon and returning him safely to the Earth” is an example of
a single focus for NASA in the 1960s. Some of our 80 strategies require the
intensity that comes from a single focus. Bowling Alley (page 231) concen-
trates on one customer or customer problem at a time in order to create a
compelling evidence base for its new offering. Niche
Concentration: Single (page 264) and Core (page 224) both hold down variety
Sole focus of effort to keep their attention on the heart of their business.
Although there are examples of single concentra-
tion, the majority of organisations focus on more than one thing at a time,
with either a multiple or diffuse concentration of power. An organisation
with a number of core products and operating in a number of key countries
has distributed its power to multiple objectives. In the early 1980s, Yamaha
configured its power in this way, whereas Honda, with a near doubling in its
product numbers, chose a diffuse distribution of power. The core model of
concentration can be adapted to allow the organisation to move sideways into
adjacent market segments. This requires the ability to identify and maintain
focus on the internal capabilities that are delivering the core of the differentia-
tion, while allowing some product innovation or customer service activities to
enable entry into new segments. This in turn enables the development of
multiple streams of offerings and the ability to attack and dominate more
segments and markets, building a wider and deeper diffusion of the organisa-
tion into the marketplace. It may also increase the diffusion of the market-
place, making it harder for an organisation using a multiple approach to
thrive. Honda used this ability in winning the Honda–Yamaha motorbike
‘war.’
An alternative is for businesses to create a repeatable and consistent
model that they deploy multiple times in different contexts. IKEA does this,
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Using power
with its broad range of products and consistent Concentration: Multiple

store design. McDonald’s achieves this with a Effort is spread over several areas
consistent service experience worldwide, even if
the content of the meal varies, depending on local tastes and religious beliefs
in different countries. These companies achieve growth by redeploying the
same core concepts and capabilities. If you get the offering right and continu-
ously evolve it across all operating units to keep it fresh and aligned to the
market, this can be a powerful way to generate revenues, with growth coming
from new deployments of the model. The risks are that the model can be open
to attack, precisely because of its predictability, and that there may be a limit
to the number of market opportunities. Vertical Integration (page 248) places
the organisation into a wide range of different markets, and Vertically Inte-
grated organisations are typically strong and hard to displace because of their
breadth.
Some organisations use multiple in concealment. With a single parent
company, Masquerade (page 318) puts several apparently unconnected and
competing brands into the same market. Scapegoat (page 318) hives off a
toxic part of the business into a new entity in order to prevent it contami-
nating the whole.
Many pharmaceutical companies invest in drug seeking in a relatively
small number of disease or therapy areas and spend the majority of their
research budgets internally – a multiple distribution of power. GlaxoSmith-
Kline, in contrast, has deliberately chosen to invest in a large number of
so-called ‘external innovation engines.’ This Broadcast (page 245) allows
them to access the best scientific expertise or tech-
nology in a ‘plug-and-play’ style rather than being
Concentration: Diffuse
restricted to the R&D capabilities they have or can
Effort is spread over a wide
build internally. This is an example of a diffuse
range of activities
distribution of power, supported by the agility of
being able to switch external partners rapidly.
The risk for multiple and diffuse offerings is one of over-adaptation.
Each additional sideways move, each additional stream of offerings, each
new market requires adaptation. And each adaptation can dilute the internal
core at the heart of the differentiating ability of the company. Balancing aspi-
rations for growth while maintaining core capabilities is a tricky business,
with some companies in regular cycles of Diversification (page 241) followed
by Divestment (page 225) or Downsizing (page 225) because they have moved
too far from their core. Honda has avoided this risk by keeping close to the
heart of their core expertise of small engines, from cars down to handheld
power equipment for use in the garden, even running a series of adverts
purely about engines.
99
Swedish company Saab took a different route and illustrates what can
happen with over-adaption and diffusion. With the end of World War II, with
core strengths in engines and in aerodynamics, Saab diversified away from
military aircraft design and manufacture to both passenger aircraft and cars,
both within the broad transport market. In the car market, Volvo was a well-
established competitor, and Saab entered the car market in a niche for a small
affordable car, growing their market presence through a series of innovative
‘firsts’ over the years. They moved into computing to meet their internal
needs for a computer that could integrate with aircraft systems and support
navigation. Again building from the expertise in transport and engines, Saab
effected a merger with a Swedish truck and bus manufacturer as a way to gain
access to the commercial vehicle market. All this diversification has since been
undone as the divisions ran into difficulty, with Saab cars bought by General
Motors, Saab leaving the truck business, and Saab Aerospace returning to its
core in developing fighter aircraft. It has since started to diversify again within
the aerospace sector as Saab Technologies, though perhaps is staying closer to
a small set of core disciplines and a smaller sector this time around.
The diffuse model is also seen in conglomerates using a Diversification
strategy to manage a portfolio of discrete business units, each of which could be
either diffuse or multiple. General Electric is an example of this, with interests
ranging from healthcare to aviation and from energy to finance. Conglomerates
Â�
protect themselves from business cycles by investing in a range of organisa-
tions. In addition, they can create internal efficiencies across the business units
and have their own internal sources of knowledge and innovation by working
across the boundaries of the business units within the conglomerate.
Many public sector organisations, particularly those in local government,
are required to operate highly diffuse models because of the broad and varied
range of services they need to provide, including statutory requirements for
the provision of some services. This reduces the choices they have about which
markets to enter or which customers to serve as compared with a private sector
organisation and leaves them with a heavy burden of complexity to manage.
Outsourcing and partnerships are increasingly used as ways to appear to
reduce the internal complexity though, of course, the public sector organisa-
tion remains accountable for the very diverse range of service outcomes. In
both public and private sectors, the Sheepdog (page 292) needs to be diffuse to
be able to match and handle the variety of activities of herd members.
Concentration in collaboration
In collaborations, there is a natural tendency for stronger players to be less
concentrated and for the weaker to be more concentrated. When a stronger
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Using power
organisation moves to being more diffuse, it can provide a more complete set
of services to a weaker collaborator and therefore increase the value of the
relationship to both. When a weaker organisation has a single focus, it can
provide a more specialised service to a stronger collaborator. You can see
these two diametrically opposite but both viable approaches very clearly in
the consultancy industry. This has a few big players who offer a ‘complete’
service, and in contrast there are small boutique consultancies that offer their
clients much more specialised support.
There is also a natural tendency for concentration to drive stability and
tacit collaboration into ‘competitive’ markets. If two balanced companies each
make concentration decisions, they can opt to go head-to-head with one
another (and Frontal Attack (page 132) is an example of a head-to-head fight),
or they can opt to concentrate on different areas. Effectively, this becomes a
carve-up of the market, and it’s an entirely natural process that doesn’t neces-
sarily require either side to talk about a deal, let alone do a deal. Indeed, both
sides may firmly believe they are competitors, but their actions are collabora-
tive; they have acted to not compete on the same ground, and that is collabo-
ration, conscious or not.
Concentration in competition – greater concentration wins

Concentrating available power allows weaker organisations to compensate
for their overall weakness by gaining a localised power advantage. In so
doing, they can win market share from stronger competitors and hold it. The
degree of concentration necessary can be calculated and is a function of your
total resource available, the size of market segments or niches available and
how much resource is needed in each of those to first achieve dominance and
hold it. This tells you how big a segment you can bite off at any one time and
therefore how concentrated you need to be.
Concentration in competition – less concentration wins

An organisation that is less concentrated than its competitor has an opportu-
nity to outflank the competition. Imagine two companies of equivalent size, in
other words balanced in power, that are pursuing different strategies based
on different levels of concentration, one multiple, one diffuse. Assuming they
are the only players in their part of the market and that this is just a one-on-
one competition, at first glance we might assume – following Lanchester –
that the more concentrated player will win. Everything else being equal, this
is true in the areas both are working in. But of course, the diffuse organisation
is operating in more areas than the multiple organisation and operating there
101
without competition, so it will win those sectors by forfeit. As with overall

power advantages, more concentrated players can have their advantage used
against them.
Critical mass and agility

The organisation has two additional ways to alter its relative power. These
power enablers are critical mass and agility.
Critical mass is the ability to deploy sufficient strength or breadth of
resources to achieve change in the coupling and specifically to effect a switch
to drive the relationship.
An organisation that has (or can create) available resource for rapid
deployment has a high degree of agility, especially where that resource can be
deployed with no constraints on where or how it is used. Agility comes with
a price tag; having resource in readiness or easily with-
Power: Critical mass drawn from other non-mission-critical activities incurs
Deployment of sufficient an overhead. Its value comes when the Â�organisation
resource to significantly can rapidly redesign and reconfigure its capabilities to
shift the balance of power achieve a desired position in the marketplace.
Organisational agility depends on two key vari-
ables. The first is structural redundancy – the ratio of available resource rela-
tive to unavailable (committed) resource in the organisation. In Patterns of
Strategy, being able to act strategically implies having the freedom of choice
and manoeuvre, to be able to break out of existing directions and do some-
thing different. The ability to do this depends partly on having enough spare
resource to effect change. The second factor is the number and strength of
constraints, which are both structural and mental and these are linked. The
basic act in designing an organisation is setting boundaries – differentiating
between types of activity and structuring them. Each boundary has assump-
tions and its own logic which is different to the logic on the other side of the
boundary. The result is a pattern of logical constraints within organisations
that map onto structural boundaries – different departments do different
things each with their own approach. They see the world in different ways
and talk about it in different technical languages. The more complex (i.e.
structurally divided and interdependent) the organ-
Power: Agility isation is and the more tightly coupled the organisa-
Resource/capability that is tion is, both internally and externally to its operating
immediately redeployable environment, the more constraint it has.
You can increase agility by developing certain
types of capability that help effect change, by reducing constraint, by freeing
up power and by exercising the organisation, just as you would develop
agility in an athlete.
102
PART THREE
80 PATTERNS OF
STRATEGY
Introduction
The patterns
You can think of this book as a recipe book. Part One is about why you might
like this style of cooking. There is some basic how-to-cook material in Part
Two, Part Three is our list of favourite recipes, and Part Four is advanced
cookery. As with any cookbook, you may take your favourite recipes and use
those few again and again. But we hope you will be more adventurous and
treat these recipes of the classics as more of an inspiration for developing your
own variants and completely new strategies.
In Part Three, we have 80 classic strategies, and by that we mean patterns
that we have seen repeatedly: they are used and they work. If we look at the
possible combinations of the elements within Patterns of Strategy, there are
millions of possible combinations, so selecting a handful like this is neces-
sarily dependent on judgement and perspective and subject to bias. We have
gone for a mixture of those we see commonly, some that are widely known,
some that we like because of their elegance, but mainly we have gone for
utility. These are absolutely not the only practicable ones, and in our
consulting, we have worked with strategy teams on many variants of these
and a number that we haven’t included here. So this list of 80 is not in any
way definitive and shouldn’t be thought of as such.
There is a key challenge for us. Our ability, our skill as strategists, is
partly in our flexibility and range. The typical household cook is said to have
a repertoire of around only ten recipes that they use regularly and a few more
for special occasions. Our observation is that most strategists have fewer strat-
egies than this in their repertoire. Yet our ability to steer our organisations to
positions of advantage depends on finding a strategy to fit our strategic
context, and if our repertoire is limited to just one or two recipes, then the
80 PATTERNS OF STRATEGY
number of strategic situations in which we can survive and/or thrive is simi-

larly limited. In a competitive situation, having a limited strategic repertoire
makes us predictable, and if we are predictable, we are vulnerable. So having
breadth of our strategic repertoire can be critical for survival as well as success.
Our hope is that by providing a list of classics, we might tempt you to be more
adventurous in experimenting with a range of less familiar strategies to see
how those might work in your context. And of course, experimentation is
possible; you can play with these strategies and invent new ones and scenario-
plan them quickly and without ever putting your organisation at risk. The
implications and reliability of a range of options can be tested in scenario
exercises before any decision is made or action taken. As those in the military
say: train hard, fight easy.
In addition to hoping to broaden strategists’ repertoire, we also hope
that this list of classics will help you recognise these patterns when you see
organisations playing them out and particularly, of course, when you see
players in your sector using them. Where those are competitors, then knowing
the pattern of the strategy they are pursuing can be a major advantage (it’s an
aid to foresight) and particularly a help if you need to either destabilise,
undermine or deflect the strategy of a rival or if you want to aid the strategy
of a partner. Conversely, if your competitors can work out which strategy you
are pursuing, that gives them an opportunity to thwart it. So we use them as
a shorthand for recognising and predicting strategic direction. In a sense,
their use as a tool for recognition is, we feel, more important than their use for
repetition. None of these should be slavishly adopted; they can be used as a
fast way to assess options, but before anything real is done, a thorough
working through of how any strategy might play out in your context should
always be undertaken. The patterns are just examples, and we expect and
hope you will tailor them or combine them: you might be creating a fusion
recipe of Gorilla with Go-Between. As with cooking recipes, the actual
product doesn’t always come out looking like the picture in the book but may
taste just as good, if not better.
The structure of Part Three

We have grouped these strategies into nine chapters, some by type of use
(strategies for small players, growth, defence, collaboration, competition,
managing the herd); some by what they are coupled to (supplier, competi-
tion, market); and one by its inherent nature (cunning plans). These
Â�groupings are obviously not the only ones we could have used. We could
have grouped them, for example, by strategies dependent on power or time
or fit, or in any number of other ways. The groupings we chose are those that
104
INTRODUCTION
seemed to us to be the most helpful in matching strategies to your context,

so that if your intention is to grow, you could go straight to the chapter on
that. Or if you are a small player facing a larger competitor muscling in on
your patch, you could more easily identify the strategies designed to deal
with that situation. Inevitably some strategies are relevant to several of these
categories, and to avoid repetition, we’ve described each strategy in only
one chapter.
The strategies come in three lengths: long, short and micro. About a
third have been written in each format. The short versions have a description
of the strategy, what it’s typically used for and a short example. The long
versions also list both the elements you need to carry out the strategy – a list
of ingredients you’ll need for this particular recipe – and the typical manoeu-
vres to execute the strategy. In some cases, these are quite standardised and
the manoeuvres usually do follow a particular sequence. In others, the precise
sequence of manoeuvres is much more flexible and context dependent. The
final third are in a micro format, outlining the structural coupling that is
impacted by the strategy and giving a short example. The reason we’ve gone
for three formats is partly because we thought this part of the book would be
too long if we did them all long and also because we felt it would be too
prescriptive. All these strategies need the sequence of manoeuvres worked
out in your context and not copied unquestioned from the text, so we’ve put
manoeuvres in only to give a feel for how to design a strategy as an unfolding
sequence of moves and countermoves.
Some of these strategies are ‘discrete’ in that they have a situation, a
starting point, a series of manoeuvres and an end point – hopefully a successful
one. Others are what we might call positional strategies. These are mostly the
strategies around building and then exploiting ongoing positions of advan-
tage. And you can look at these as a strategy or as a state of being; if you
occupy a particular and unique position in your business ecosystem which it
would be hard to displace you from, then that tends to be seen as a position
rather than a strategy consisting of a series of manoeuvres. You can, of course,
think about the manoeuvres needed to get to that position, and you can also
think about the manoeuvres needed to exploit that position of advantage, and
in a sense both of these, as well as the ongoing occupation of the position
itself, are all the ‘strategy.’ So for example, the Gorilla strategy starts with
becoming the biggest beast in your particular business ecosystem, continues
with being just that big beast but also involves how you use that position to
shape the world around you to your advantage – including frightening off or
defeating competitors who want to take over that position of privilege. Given
our definition of strategy as, “Changing our fit with the environment to our advan-
tage by differential use of power and time,” then the positional strategies
105
absolutely conform to that definition. It’s just that they operate over a longer
time frame than more discrete strategic interventions.
Notation – fitness landscape

Each of these nine chapters starts with an overview and a ‘fitness landscape’
showing the structural relationship the strategies in the chapter have to each
other (Figure P3.1). They are drawn as
mountains, with a valley and a series of
ranges, some nearer and some further
away. In these landscapes, each strategy
is a mountain peak. The ‘height’ of each
reflects the relative advantage it offers,
the ‘flatness’ of the top indicates the rela-
tive number of players within a sector
that can occupy that strategic position,
and the gradient reflects the relative
difficulty of the ascent to the peak/the
execution of the strategy. Within each
landscape, strategies are grouped by
Figure P3.1 similarity. Where a group of strategies
Key to strategy share a characteristic, they are located in
landscapes the same mountain range. So each moun-
tain range shows strategies with some
common features and a group of strategies with a different dominant charac-
teristic are in a separate mountain range. For example, strategies based on
growing capabilities form one range and strategies based on growing the
market form a separate range opposite to it.
There is also an indication of the ease (or not) with which one strategy
can be accessed from another. In some cases, one strategy is a logical next
move from a previous one, and these are denoted by ‘paths’ leading across the
mountain range from one peak to another. Conversely, the only route between
some strategies would be to go from your peak, down to the valley and back
up a different mountain range, and this shows the difficulty of such a strategic
shift. Annotations on the landscape provide additional commentary on routes
between strategies.
Notation – manoeuvres
For the strategies that are written in the long format, we have drawn on the
game of chess for our notation, and used White and Black to denote the two
106
INTRODUCTION
actors. White is always you, the organisation in focus, and Black is the other
actor. Occasionally, the strategy involves a third actor, and then we have used
a dark grey and referenced this in the text. We recognise that the metaphor is
not totally tidy, on a couple of counts. Firstly, chess is an adversarial game,
and Patterns of Strategy covers both competitive and collaborative strategies.
And secondly, while in chess the players take turns, the manoeuvres in
Patterns of Strategy may have one actor executing a whole string of manoeu-
vres (the equivalent of several successive moves by the same player in chess)
before the other actor does anything at all. Nonetheless, the White (you) –
Black (them) ‘shorthand’ works well, and the manoeuvres are shown in Black
or White depending on which actor is executing them.
Again for the long format, we have included details of the required
manoeuvres. These are described as sequences of Patterns of Strategy
elements, showing each manoeuvre in turn, and what is happening with each
actor, in diagram form and also with illustrative text. For example, a
manoeuvre might show White using agility to move from balanced to
stronger, with Black becoming weaker in consequence.
At the end of all the manoeuvres, there is a summary diagram that
draws together all the manoeuvres required for that strategy.
Patterns of patterns
These classic strategies – including the positional ones – are easy to think of as
discrete events, rather like the strategy for a battle or a campaign. But of
course, they almost always sit within a longer stream of actions. Any strategy,
even if it is successful, only works for a time and then is supplanted with or
overcome by another strategy. So after the 80 classic patterns, we present a
chapter – ChapterÂ€18 (Rock, paper, scissors) – on some ‘patterns of patterns.’
This looks at the interplay between strategies: which strategies have been
known to beat which others; which has been brought into play to overcome
an incumbent strategy. This is by no means exhaustive and is really there just
to give a feel for the interplay between different strategies through time – the
bigger dance. So if you think of a strategy pattern as being like a strategy for
a battle, these are more like the story of a war.
You can see an individual strategy pattern as the organisation manoeu-
vring relative to others according to the invisible forces of structural coupling,
or you can think of it as a plan devised and executed by a management team
(and both may be true). But when you string a set of strategy patterns together,
you see that organisation B is executing strategy X as a direct response to
strategy Y from organisation A. It’s more than a set of manoeuvres between
AÂ€and B, or Black and White; it’s a long succession of strategies between many
107
organisations and looks much more like a sequence of moves in a very compli-
cated dance. But even these can be decoded by looking at the strategies being
deployed by the different actors and how they interact. ChapterÂ€18 also
includes a model of a fairly typical business ecosystem with a description of
the strategies that we can see at work in it and some of the interplay between
them.
The chapter concludes with an example of using Patterns of Strategy to
look at organisational history, and we map the manoeuvres of one particu-
larly long-lived organisation. Doing this can be quite a salutary lesson for a
management team, by understanding which strategies they reach for reflex-
ively. Our case here is not at all unusual in repeating the same very limited set
of manoeuvre options again and again. We believe that one use for the
Patterns of Strategy approach is first recognising and then breaking cycles of
destructive pattern – after all, it’s not as if there is a shortage of alternatives.
108
Figure 9.1
Competitive strategies landscape
9 COMPETITIVE
STRATEGIES
The shadow of Michael Porter’s Competitive Advantage still hangs over the
whole field of strategy, and whether you like Porter’s approach or not, his
framing of strategy as a search for competitive advantage is still a dominant
theme. For Porter, competitive advantage comes from competitive positioning –
picking a spot that will work for you. However, this chapter is about some-
thing different from merely positioning yourself for competitive advantage.
What we are focused on here are situations where strategic manoeuvres are
aimed directly at another party to create advantage for us and disadvantage
for them. So this is much more focused and combative than simply deciding
which bit of a market or a value curve to occupy and taking that as Â�competitive
advantage. Here we’re talking organisation vs. organisation and Â�corporate
war.
What is perhaps surprising is that, of the 80 strategies we’ve included in
the book, only eight are in this chapter. To be sure, others can be used compet-
itively and, for instance, the Marketect strategy discussed in the chapter on
market strategies could easily be classed as competitive rather than market
restructuring. In the particular case of Honda–Yamaha, it was clearly direct
competition between two giants – a sort of corporate sumo or, perhaps given
the way it was played out, ninja vs. sumo. The strategies we’ve included here
(FigureÂ€9.1) are primarily competitive in nature, those that it’s hard to see
being used in a non-competitive way, which is not the case for the Marketect
strategy. The corollary is that if you are seeking a competitive strategy, do
look beyond the bounds of this chapter because most of the strategies in this
book can be used for competition.
These competitive strategies include both power-based strategies –
Knight’s Move and Frontal Attack – and time-based strategies – Falcon, Fast
Follower, Streets Ahead and Stitch in Time. Falcon and Fast Follower both
rely on coming from behind to take out the competition and demand expert
timing in execution. Streets Ahead and Stitch in Time work the opposite way
and rely on foresight to outmanoeuvre the competition and build a position
ahead of them.
Three of the strategies in this chapter – Knight’s Move, Streets Ahead
and Stitch in Time – are proactive in nature and strategies that create an initia-
tive and an initial advantage. Frontal Attack, Falcon and Fast Follower are
reactive strategies, ones that rely on seizing the initiative from someone else –
allowing someone else to move first and then outcompeting them once they’ve
shown their hand. Paradigm can be used either proactively or reactively.
The last strategy in this chapter, Troublemaker is structurally different
and relies on attacking your competitor’s structural coupling to a third party
on whom they depend, rather than attacking them directly.
112
Competitive strategies
Knight’s Move
Overview
The Knight’s Move is a classic of military strategy (so much so that it’s encoded
in the rules of chess) and a very well tried and trusted strategy in business. In
the military, it’s the classic pattern of a flank attack where power is concen-
trated against the relatively vulnerable side of the enemy – not the way they
are facing – and rolling them up. In business, it can and has been used
Â�repeatedly to take entire markets by following exactly the same pattern: a
concentration of power against a competitor’s area of greatest weakness.
The Knight’s Move has been used by organisations all over the world
but is particularly favoured by Japanese companies where it has been used
again and again to first encroach on and then progressively dominate
markets – niche by niche, customer segment by customer segment,
geographic segment by geographic segment. The strategy is often started at
the bottom of the market where the entrant is scorned and dismissed by
competitors who retreat onto their more profitable segments until those too
are wrested from them. Once it gains momentum, like a flank attack in mili-
tary strategy, the Knight’s Move is extremely hard to stop.
Typical use
Who? Typically it is used by a new entrant to a market.
When? Normally it’s used to take a market away from a well-entrenched
competitor who holds a strong market position.
What do you win? This is not just a strategy for gaining a toehold in a new
market; it’s a strategy for achieving market domination. As well as being
very hard to stop, the incremental drive of the Knight’s Move ensures
that the returns come in progressively, and you don’t have to wait for
full market domination for a payback; each niche is a battle in its own
right, and each brings its own reward.
You will need

The Knight’s Move strategy requires:
● A concentration of power. It doesn’t require an overall superiority of

power and has frequently been used by a weaker new entrant to a market
against a stronger incumbent, but it does rely on the concentration of the
power available to achieve localised and focused superiority.
113
● An advantage in agility. It doesn’t necessarily need extraordinary levels

of agility, just superiority, specifically the ability to switch resources
between niches and segments faster than competitors.
● Faster development cycle times, so you can gear up to each new niche or
segment faster than the competition.
The manoeuvres
1
Strategy preparation starts with a detailed market
Â�segmentation in which the objective is to identify a
market niche or segment held by the competition that
is small enough for you to be able to concentrate Â�overwhelming
power against and, as a bonus, small enough for the competi-
tion to not worry about too much. The classic target niche is at
the bottom of the competitor’s market – the least attractive to
them – so they will be less sensitive to any loss of market
share, and where with any luck they may be deploying their
least strategically aware managers. The easiest place to attack a new market is
from the bottom, and because your competitor’s attention will usually be
focused on the top, it may be years before they realise you have taken a size-
able slice of their market from them.
Indicators: You’re looking to test the feasibility of this as a strategy: can you
identify market niches that are small enough for you to dominate if you
concentrate power on them?
2
Having picked a suitable target niche or
segment, develop the product offering to
Â�
appeal to that niche, differentiated in what-
ever way you choose. Then it’s about concentrating
all your efforts onto the segment, and deploying
resource to it. You sustain intensity on that niche until
you have achieved a dominant position, displacing
the previously dominant player.
Indicators: Ability to dominate your chosen
niche – typically between 25% and 40% of share.
3
This is just the beginning. Knight’s Move is about building niche on
niche to take the whole market. For you to be successful, you now need
to be able to switch resource from the first niche to another, and for the
cycle time from preparation to dominance to be faster than the incumbent can
respond to your actions.
114
Then repeat: move onto an adjacent niche, one where

you can use your new market positioning in niche 1 to create
credibility and awareness in niche 2, and apply that sustained
intensity. Work through the niches one at a time until you
have a dominant position in the whole segment and then
replicate this at the market level, taking it segment by
segment.
Indicators: Rate of progress through subsequent niches.
4
The size of your target segment depends on
your ability to concentrate overwhelming
power. Where this is used by a weaker entrant
against a stronger market leader, as the strategy
unfolds by the capture of market share and the reve-
nues and resources that come with that, the differential in overall power will
shift. This means that it may become possible to bite off increasingly larger
chunks of the market. So, when it’s well executed, this strategy can accelerate
almost exponentially.
Indicators: Power shift – the differential in power (resources and income)
between you and the incumbents in the market and the rate at which this is
changing.
5
If that acceleration is fast enough, it can out-
strip the reaction time of the competition,
especially if the early encroachments go
largely unnoticed. When this happens, a whole
market can be taken with no coherent response
from the competitor, who can be left holding an unprofitable rump of the
market or forced out of the market (or business) altogether. So, one trick is
the selection of early niches or segments that will not appear on the competi-
tor’s radar (assuming they have a radar and that it’s manned and watched).
One way to achieve this is by segmenting the market differently to the
Â�competition, so that the source of a loss in sales is masked and difficult to
identify in their accounts. If you can identify a coherent niche that they can
see only as a small percentage of several of their segments, an encroachment
may be invisible for some time. It helps if you know how their accounts are
structured.
Indicators: Progress before the competitors react.
115
6
There are two classic competitor
reactions. First is a repositioning
onto their ‘core’ or prestige
Â�segments; this is essentially a retreat in
the market. This means that you’re
winning and the Knight’s Move is working and that they don’t understand
how to respond to retake lost market share. In that case, just keep going till
you have as much of the market as you want. The second reaction is that they
counterattack to retake the niche – typically with a new product or service
offering or at weakest just an advertising campaign. If they react like this, then
you have to decide whether they are likely to succeed or not. If you think their
counter is too weak to retake market share, then you can simply sit it out. If
their response is credible, then you have two choices: either re-double your
efforts on the chosen segment, or attack the next niche which will usually
destabilise them enough to prevent a coherent response. Which you choose
should depend on whether you have a greater advantage in power in this
segment or speed and agility. The strategy is finished when you are the
dominant player in your chosen market.
Indicators: Strength and coherence of competitor response – in a Â�well-executed
Knight’s Move, the pace of the attack will be so fast and disorientating that
reactions will be weak, late and incoherent.
Re-evaluate this strategy if

In some cases, you may not be able to achieve local advantage in a target
niche, and that means that your Knight’s Move isn’t working. Either you
haven’t been able to deploy sufficient resource to tip that segment in your
favour, or your competitor saw you coming and the segment you targeted is
one they really want to defend. On the positive side, once you have reached
dominance in a targeted segment, it’s time to refocus and choose the next one.
Pouring more resource into the current sector can lead to the law of dimin-
ishing returns for the resource invested.
Knight’s Move example

Once upon a time, the UK had a motorcycle industry. In the post–World War
II era, it was very diverse, with products to fit every budget from ride-to-work
bikes through to the world’s first superbikes, some so iconic that decades after
they went out of production people still write songs about Vincents (a bike so
far ahead of its class that it was decades before any other production bike
could beat its performance). AÂ€small herd of manufacturers competed with
one another in well recognised and defined market segments with very
116
Figure 9.2
Knight’s Move
similar bikes: same technology, very similar designs, same engine sizes,
similar performance, similar (lack of) reliability. There was competition from
abroad, particularly Italian bikes at the top end of the market, but little at the
bottom end of the market, except for scooters (again Italian), but they were
seen as essentially a completely different market. Development was mostly
led by investment in racing.
Japanese bike manufacturers entered the UK market the same way as
they had in the US, with products designed for the bottom of the market,
commuter bikes – the least glamorous, least profitable segment of the industry.
These bikes were tough, not particularly pretty, but relatively cheap and aston-
ishingly reliable. The imports quickly became the default option for customers
in a segment long neglected by British manufacturers. Other segments
followed, again at the bottom of the market – bikes for lads to learn on – flashy,
noisy, relatively fast 50cc machines. Again, no competition from the British.
And the Japanese moved quickly to build the bikes the learners wanted to
move onto – 250cc machines, then 400 and 500cc bikes. And suddenly they
were a threat to what the British saw as the mainstream market. Radical new
designs followed swiftly. While British designs were still based around
2-cylinder machines, the Japanese went to 4 cylinders and water cooling.
Each time, the British retreated to the more profitable niches, aban-
doning the market base and the new customers. Each group of customers the
Japanese won became apostles for their technology and, aside from the
commuter segment, tended to move upmarket to bigger (Japanese) bikes. One
by one, the British builders went out of business.
117
Falcon
Overview
The Falcon’s stoop is an aggressive manoeuvre and one of the classic hunting
strategies observed in the natural world. In nature, it’s used most spectacu-
larly by falcons and eagles, but it’s also used by some land animals. It’s an
attack from height onto prey passing below. The fastest creature on earth is a
peregrine falcon stooping on prey, and the peregrine uses energy stored in
height that can be utilised at any moment.
In business, it’s a way to use latent or positional power to suddenly take
out a competitor or to move quickly to dominate a new market. It’s often used
by an established organisation to exploit other organisations who do the high-
risk work of developing a new market segment. They then move in to attack
once the market looks more certain. It’s also used to take out competitors who
present a threat.
As with the peregrine, power is stored in a form that is ready to use at
any time, and the power can be in different forms – sometimes financial, but
it can also be capabilities or intellectual capital that can be activated and
projected into a new situation quickly. Either way, it reduces uncertainty – in
a new market, it reduces the uncertainty that you might have spent time
working on a losing proposition, whilst as a risk countermeasure, it reduces
the uncertainty that a threat can be stopped.
Typical use
Who? The Falcon strategy can be used by any player that has a surplus of
power.
When? It can be used against a player in an emerging market where the
target is concentrating on developing the market and ideally is totally
unaware that an attack is even a possibility – especially if the Falcon
isn’t even currently a player in that market.
What do you win? The Falcon strategy can be used to win developing
markets without a long development cycle or to protect against threats.
You will need

The Falcon strategy requires:
● Foresight, the ability to know which target to attack and when to launch
the attack.
● A significant advantage in power, particularly a store of latent power
that can be turned on at will.
118
● Most importantly, very high levels of agility, particularly the ability to

deploy latent energy very quickly into new areas of business, so it
requires particular capabilities at configuring resources.
● Fast cycle times, particularly to accelerate from a standstill to faster
development cycle times in order to overtake a slower moving compet-
itor who is already operating in the market.
The manoeuvres
1
The strategy starts long before any actual manoeuvre
with two things: scanning for possible targets and, in
parallel with that, developing the capabilities to mobil-
ise and reconfigure resources fast.
Where this strategy is being used to simply take out a competitor, then
the prey identification will be based on the risk they present, so you’d be
looking for organisations that present a strategic risk to yours. This could be
because they have a new technology or a new business model, something that
could make your offering obsolete. Critically, the decision on the timing of the
attack should be based on assessing their moment of greatest weakness. This
is a difficult judgement call. The longer you wait, the stronger their new busi-
ness becomes, and the harder it is to take them down, but the more committed
they become, the harder it is for them to recover. It’s a trade-off. The growth
of companies in growing markets is never steady; moments of overstretch are
inevitable and are a good bet. Look for disconnects between the growth of the
market and the growth of the prey. The ideal timing would be when the prey
is stretching to keep up with market growth but before they have got the full
benefit of a growth spurt.
Where the strategy is being used to shortcut and de-risk the innovation
life cycle, then you’re looking for prey operating in a growing market segment,
so the actual and predicted rate of growth of the segment are key metrics. In
such a segment, there are often choices of which prey to pick – whether to
target the lead player or one of the followers. Typically, the ideal prey will be
an organisation that is fully committed in a newly growing market segment.
Full commitment of the prey is helpful because that means they are already
likely to be overstretched in dealing with segment growth and are likely to be
focused on their customers and operations, not on possible competitors.
Indicators: Identification of an organisation that presents either a strategic
risk or strategic opportunity and that is vulnerable due to overstretch.
2
AÂ€whole set of organisational capabilities need to be built to allow the
Falcon strategy to work. Not least is the need to have resources that
can be made available almost instantly. This is countercultural
119
for many organisations

Â�wedded to an efficiency culture.
As well as identifying the key
resource that will be needed
and also working out how to
store it (money is easy to store,
skills less so), the management
skills of agility are needed; the experience of mobilising and redeploying
resources quickly is not widespread and is a skill that has to be practiced if it
isn’t to be lost.
Indicators: Availability of free resource to carry out the strategy. Ability to
recognise targets appropriately, particularly the vulnerability of your target.
3
Having established a suitable and vulnerable target, you
need to make sure that its size is appropriate for the
amount and types of power you have available since your
action, when it comes, must be overwhelming. The power
needed must be available almost instantly, with detailed plans
prepared for its mobilisation. At this point, you are stronger but,
as the target is still oblivious, they don’t yet know that they are
weaker.
Indicators: Size of target relative to the resource you have
available.
4
Having scanned the environment and selected a Â�target,
the execution of the strategy depends on speed of
action and specifically on the agility to redeploy your
resources before the prey can react. Scenario planning can be
extremely useful here. Experts in the Falcon strategy may
have dozens of scenarios, including operational and staff
redeployment plans ready and worked up. If the pace of your
move is fast enough, and if your timing is right (their point of
maximum vulnerability) and is done with sufficient power,
then the reaction of the prey is likely to be incoherent. And
that’s when they find out that they are both slower and
weaker.
Indicators: Time to complete the strike relative to the speed of development
of the threat or opportunity.
120
5
Whether the execution is done by building a rival
offering that takes over the market the prey has help-
fully developed for you or, by simply buying the prey,
the reconfiguration of your business to deal with the new
market has to happen really fast and has to work well. Buying
Â�
rather than building quickly in-house may seem like a shortcut, but in many
cases this strategy fails because of the problems of assimilation of an acquisi-
tion. By definition, you are talking about doing something that is new to you
and in a market segment that is new to you, so assuming that you can simply
buy another company and everything will automatically work is naïve. The
statistics on the failure of M&A (up to 85% failure rate) give the lie to this
being an easy and sure-fire option. Buy or build, this strategy depends on
having the agility to quickly reconfigure your organisation to do something
new.
Indicators: Ability to convert the target into an asset, if using acquisition or
the ability to turn market penetration into profit.
Once the technique is developed, the strategy can be repeated again and
again; as each new target will be new, the element of surprise will still work
for you, since no matter how often you have rolled this out in the past, it’ll
almost certainly be new to the prey.

This is no longer working if it turns into a war of attrition, and if the speed and
power of the strike are insufficient to win the competitive battle quickly, this
can degenerate into a Frontal Attack strategy that has very different dynamics
and implications for long-term resource drain. And even if you can achieve
the strike, it may use such a lot of your resource that you aren’t able to recoup
your invested resource.
Falcon example
In 1994, Netscape launched Netscape Navigator, a groundbreaking browser
for the fledgling Internet. AÂ€year later, Netscape floated on the stock exchange,
and its share price rose as fast as its market. On the first day, shares rose from
$28 to $75 and closed at $58 which valued the company at $2.9Â€billion.
Netscape’s success did not go unnoticed at Microsoft, and the threat it
posed was considerable. Netscape was not just another software product; it
offered an alternative to Microsoft as the dominant platform. Microsoft
watched to see if Netscape would pass some critical milestones – market
growth, market share and share price – that would enable them to increase
121
Figure 9.3
Falcon
resources to meet the increase in demand. As soon as Netscape passed these

milestones, Microsoft’s strike was put into action. Teams were mobilised,
design and work plans unveiled. Internet Explorer was launched in 1995 and
given away as part of the Windows 95 bundle. Microsoft had enough stored
people resource to pour programmers into the development and enough
financial resources to give the product away.
Netscape could not compete and lost ground to Internet Explorer expo-
nentially. Netscape started laying off staff in 1997, tried giving their product
away in 1998, and was bought by AOL in 1999. The first browser war was
over. This was not just a case of one company taking on another company.
Microsoft had won the war for domination of a market and at the same time
removed a strategic threat to the rest of their market.
Microsoft successfully repeated this strategy on a series of new technol-
ogies that threatened their dominance in the software market, sometimes by
developing a rival product and giving it away in a bundle, sometimes by
buying the market leader and incorporating their technology into the Micro-
soft bundle.
122
Fast Follower
Overview
The Fast Follower strategy is one of imitation. It is simply based on following
the First Mover, leaving sufficient time after their move that you can gain
critical learning from their successes and their failures, yet swiftly enough
after their move that you can capture enough market share for it to be attrac-
tive. As a Fast Follower, you learn from the First Mover about the business
model options, about the value proposition that excites customers and about
the features your offering needs to have in order to deliver that value proposi-
tion. There are other advantages too: First Movers invest in market creation,
educating buyers on the new offering and how to get the best from it. As well
as managing the time between entry of the First Mover and entry of the Fast
Follower, there’s a second time dimension to think about. Where the life of
the product category is short, this favours the First Mover, and when it is
longer, it favours the Fast Follower.
One study found that around 47% of First Movers fail, compared with
around 8% of products that entered early, but not first. Despite that six times
greater failure rate for entering the market first, First Movers beat Fast
Followers when buyer learning is important or when product category life is
short, building high brand loyalty and reducing the chance of switching when
later entrants appear. The ‘fast’ in Fast Follower depends on the product
refresh rate for the sector; it isn’t necessarily a short time in absolute terms.
It’s not all about time, though. AÂ€pure imitation strategy will be hard to
pull off, even if the Fast Follower has dominant strength in marketing. So the
later entrants to the market need to add some meaningful innovation to the
product, which delivers ‘best in class’ to the market and ideally makes
switching from the incumbent really easy. As second mover or Fast Follower,
it should be possible for you to develop and deliver your offering more
cheaply than for the First Mover, yet faster than the rest of the herd of Fast
Followers.
Typical use
Who? As it’s a time-based strategy, this strategy can work well either for a
large organisation muscling in on a market created by a small organisa-
tion or for a small organisation competing with a larger one; generally,
smaller organisations can move faster. Also, the smaller organisation
may not have the resources for market development needed by the first
entrant.
123
When? Fast Follower is executed after the critical factors for success in the
market have emerged from the actions of the First Mover and during
rapid growth in market size. When the market looks particularly
Â�attractive, there may be a herd of Fast Followers, so the successful
organisation is likely to be on the leading edge of the herd.
What do you win? You win market share in a proven and growing market,
at lowered risk. It is also possible for the Fast Follower to become the
market leader at the expense of the First Mover.
You will need

The Fast Follower strategy requires:
● Foresight to help you to identify the critical elements of your value prop-
osition and product offering.
● Some stretch capability to innovate on the First Mover offering.
● Strength to hold onto your market share once gained.
The manoeuvres
1
The first maneouvre is foresight-based, identifying a
market entrant whose product meets some of the needs
of the market but that has considerable scope for
improvement.
Indicators: Product introduction speed, so that you know what cycle time
you will need to operate. Product category refresh rate, so that you can time
your entry into the market and also assess its attractiveness based on its
longevity.
2
To capture market share and to take share from the
First Mover, you will need to add value to the initial
offering. This is either incremental or radical; too high
an order of stretch would disrupt the very market you want
to move into and risks breaking up the market development
already done by the First Mover, which you want to benefit
from.
Indicators: Your product offering is well received by the market and seen to
have a leading value proposition.
124
3
Having created a product that is differentiated from that
of the first entrant, you need to exploit that and exploit
it faster than other members of the Fast Follower herd,
especially any with stronger marketing muscle and reach than
you. It’s really important that your supply is synchronised with
the emerging demand, or other entrants will benefit.
Indicators: Rate of gain of market share, relative to other
potential Fast Followers, shows you how successfully you are
acquiring new or existing customers.
4
The next manoeuvre is to hold the market share you
have gained and build on it. Fast reinvestment of the
revenues from the market penetration allows you to
become stronger than the First Mover and the other Fast
Â�Followers. You will need strength both in terms of operational
capacity and also marketing muscle, to help with further mar-
ket penetration. Brand Reputation will help too.
Indicators: Rate of change in market share in your favour.
Absolute market share: are you coming out on top?
5
Taking and maintain-
ing market share with
a differentiated value
proposition cements your
position as the leader in the
product category. Even better
if you can now build best-in-
class features that further
strengthen your position.
Indicators: Retention of market share and maintenance of margin through time
will show you how attractive your value proposition really is.

Your time advantage is eroded, and other Fast Followers are gaining market
share faster than you, or more cheaply than you.
125
Figure 9.4
Fast Follower
Fast Follower examples

A fuel cell produces an electric current directly from a chemical reaction. They
differ from batteries in that they require a constant source of the reacting
chemicals to sustain the chemical reaction. They’ve been around for decades,
mostly with hydrogen as the fuel. Car manufacturers have been exploring the
possibility of using hydrogen as a car fuel. But the extraction and solid-state
storage required for this are technically very challenging, making it expensive
and hard to develop a broad sourcing platform.
Adaptive Materials is a small company, with fewer than 200 employees.
It waited long enough after the initial introduction of hydrogen fuel cells to
establish that there was a fuel cell market and to be able to define the charac-
teristics required by a successful later entrant. They learnt from the produc-
tion difficulties of using hydrogen as a fuel and decided not to use hydrogen
in their fuel cells. They knew that they could develop a hydrogen-based fuel
cell, but they wanted to create a product for which the materials could be
readily sourced, with easily scalable manufacturing. They turned to propane
as the fuel for their cell, as this is globally available even in non-urban areas of
developing countries. Their fuel cells are lightweight, portable and ideal for
use in remote locations that aren’t on an electricity grid. These characteristics
make their products attractive to diverse customer groups, from the defence
sector, where they replace heavy battery packs carried by soldiers, to the oil
and gas industry, where they are used as a backup power source for critical
sensors on pipelines. They are now researching creating grid-independent
chargers for consumer electronics such as laptops.
126
They launched a fuel cell that addressed the problems that the First
Mover encountered and identified key segments within their chosen market
who would be willing to pay a premium price for the new best-in-class
offering. And importantly, there was no significant switching hurdle to move
to their product.
The de Havilland Comet was the first production commercial jet
airplane, designed to fly higher and faster than previous airplanes. The
planned routes would require it to operate effectively in an intense schedule
and a wide variety of operating environments and temperatures. It was at the
bleeding edge of innovation in a number of dimensions, from its use of plas-
tics and advanced new alloys, to its high cabin pressurisation. Its metal skin
was chemically bonded with adhesive, rather than using traditional rivets, to
reduce weight.
After a number of the planes broke up during flight, their airworthiness
certificate was withdrawn. Exhaustive investigation found that the metal
bonding process was a major contributor to metal fatigue, along with square
windows which created a dangerous level of stress at their corners.
The Comet was a bold step forwards, but ultimately it proved that the
science and technology weren’t well enough understood. As part of the inves-
tigation, de Havilland made their research and data available in order to
prevent further crashes and tragedies. Other aeronautical companies were
handed a highly valuable opportunity to learn about the design and tech-
nology requirements for a successful commercial airliner, along with a proven
market and no incumbent player. Stepping into this vacated market, Boeing’s
707 was the first jet airliner to achieve commercial success, dominant during
the 1960s, with airport infrastructure developing to meet market demands.
127
Troublemaker
Overview
This strategy is all about the purposeful destabilisation of competitors or
other actors in your environment in order to disrupt their plans and force
them into reacting to your intervention. It is unusual in that it is a strategy
focused on the structural coupling between at least two of the actors in your
environment and generally not in a structural coupling of your own. In other
words, rather than either changing yourself to change your structural coupling
or changing the relationship directly, you are acting to change the relation-
ship of third parties. It’s an extremely powerful and commanding form of
shaping. It can be about creating an information asymmetry, about disclosing
information that some would rather was kept hidden or about a sudden surge
of power in an unexpected way, place or time.
Typical use
Who? Smaller organisations who can use disruptive action against a larger
stronger organisation.
When? At a time of your choosing, when you can most wrong-foot the
actors you want to undermine.
What do you win? You substantially disrupt the actions of others, causing
them to alter their intent and actions as a result.
Troublemaker example
Wikileaks aims to be “.Â€.Â€. of assistance to peoples of all countries who wish to reveal
unethical behavior in their governments and institutions. We aim for maximum polit-
ical impact.” Using Wikileaks as a forum, Edward Snowden, a former analyst
with the US National Security Agency, revealed the extent to which the US
government collected the phone logs of millions of Americans and user data
from US Internet companies, describing it as “the largest program of suspicion-
less surveillance in human history.” Snowden saw these activities as dangerous
and unconstitutional and chose to blow the whistle by exposing records
demonstrating what was going on. His actions were directed at the structural
coupling between nations and their governments, triggering a global public
discussion about how to balance civil liberties with civil defence – an intrinsic
part of the societal contract and value exchange.
128
Paradigm Attack
Overview
A change in the paradigm in a market drives and requires a change in the
basic assumptions about it, the implicit ‘rule set’ by which it operates. As
such, a change in paradigm can be devastatingly successful for its originator
and devastatingly damaging to others in the same market. The originator
may or may not have the advantages of strength, but it doesn’t matter because
they have simultaneously redefined what fit means in the marketplace and
created an individual organisation of perfect fit through a highly differenti-
ated offering. In addition, the paradigm-shifting organisation is moving
much faster than any competitors, and the paradigm-changing move will, by
definition, have caught them by surprise, with all the implications for their
decision–action cycle.
Some paradigm shifts will fail because they really are ‘before their time’
and there are not enough customers who can see the potential of the new idea.
But those that succeed are highly rewarding to their originators.
Typical use
Who? An organisation with a paradigm-shifting innovation, particularly
for weaker players.
When? To dislocate the working of an existing market where larger
competitors are dominant or to create a new market.
What do you win? Competitive advantage in an existing market, or
creation of a new market in which, for a time anyway, you are the only
player.
Paradigm Attack example

Earl Bakken, founder of Medtronics, started the company in 1949 with his
brother-in-law, working out of a garage. They serviced hospital electrical and
electronic equipment and built new instruments for the researchers and labo-
ratories at the University of Minnesota. In 1957, he developed the first external
battery-powered pacemaker; previous pacemakers relied on being plugged
into the electricity grid, with all the obvious disadvantages. This opened up
an enormous new market in medical electronics, of implantable devices to
improve the lifespan or quality of life of patients. This was almost the stuff of
science fiction at the time (Christian Barnard didn’t perform the first heart
transplant until 1967) – and a massive paradigm shift.
129
Today, an estimated 250,000 people annually have Medtronic pace-

makers implanted and Medtronic has extended its portfolio beyond cardi-
ology into support for neurological and spinal surgery. Despite its evident
success since its foundation (both the financial success of the company and
the health benefits delivered to millions), it still faces the fundamental chal-
lenge of maintaining differentiation and fit. Doctors seek out the most
advanced technologies, constantly decaying the life cycle of their current
products. And Medtronics faces the same challenge as the pharmaceutical
industry: spending years of time and millions of dollars on research and
development for markets that don’t yet exist and without any guarantee that
the product will receive regulatory approval for sale. Still, the company
continues to succeed and remains focused on Bakken’s original mission,
which opened: “To contribute to human welfare by application of biomedical engi-
neering in the research, design, manufacture, and sale of instruments or appliances
that alleviate pain, restore health, and extend life.” Paradigm shift then, and a
blend of disruptive, radical and incremental improvements now.
Streets Ahead
Overview
The Streets Ahead strategy is for organisations with power that hold a posi-
tion at the leading edge of the herd, and it’s a strategy that capitalises on
success by making a step change in the business that will make it even harder
for competitors to catch up.
It can be seen as a variant of the Gorilla, but although it is a natural
option for powerful organisations that are in the lead, it’s not commonly used.
And the reason is that it generally requires courage. Courage is a quality that
is easier to summon up when threatened, and the point of the Streets Ahead
strategy is to not wait for competitors to threaten but to take advantage of a
position of power, prestige and prosperity, while times are easy, to build an
even better position. Most organisations that are in the lead of the herd tend
to cruise; they opt for low-risk changes and incremental stretch. Streets Ahead
is about not doing that, but pushing ahead to leave competitors further
behind.
This strategy creates a clear gap between you and the herd. This may
not go quite as far as making you an individual, but it is about building a
position in the lead so that other herd members will have a much steeper hill
to climb to get back on terms with you. Typically, this is done using higher
orders of stretch – up to paradigm and acting specifically to confound
competitors, in other words making a move they will need to follow but will
find it hard to follow either because you have a technical advantage, or
130
because following is unaffordable, or because you have just created and

dominated a new market.
Typical use
Who? This is a strategy for powerful organisations at the leading edge of
the herd.
When? Whenever there is an opportunity to establish clear blue water
between your offering and competitors.
What do you win? Reputation, premium market position, control of direc-
tion of movement of the herd. Above all, you win time. By stretching the
gap between you and competitors, you give yourself longer before they
can catch up. In some cases, Streets Ahead can so demoralise competi-
tors that they simply give up and find a new area of business or settle for
a distant second place.
Streets Ahead example

In the late 1960s, Boeing was doing well. Following the introduction of the
707, which was the US’s first commercial jet airliner that took the field away
from the British Comet – the world’s first commercial jet airliner – they were
at the front of the field in commercial aircraft. They were bolstered by spending
by the US government on military aircraft for the Vietnam War and also by
NASA for the space programme. At this point, Boeing could have opted just
to grow organically and innovate incrementally with a series of airliners
building on the 707. Instead, they bet the firm.
Boeing decided to invest in a new long-range aircraft with two and a
half times the capacity of the 707. The 747 was anything but an incremental
move. The investment included building a new factory to build the giant
plane since their existing factories weren’t big enough. The 747 was unveiled
in 1968 and entered service two years later.
Looked at from a position of prudence, the 747 was a huge risk. The
investment was enormous. The Vietnam War was coming to an end and, with
it, the glut of defence spending. In addition, Boeing’s rivals were working on
something more technologically advanced – the supersonic Concorde – and
Boeing executives had every reason to doubt whether they were backing the
right horse with their wide-bodied leviathan. Orders dropped and debts rose
during development.
The 747 went on to become a great success. It put a gap of a generation
between Boeing and their competitors. It took competitors 37Â€years to build a
plane that could beat the 747’s passenger capacity record. In the interim, it
changed the market landscape. Several competitors left the scene, either
131
closing for business or moving out of the civil aviation market. Unable to
match Boeing on their own, several merged to become Airbus. The competi-
tion in the form of Airbus finally got back within touching distance of Boeing
in the mid-1990s, and that 25-year gap is a measure of the success of the
extremely high risk Streets Ahead strategy.
Frontal Attack
Frontal Attack is a pure power move on the structural coupling between two
competitors, aiming to win through outright strength. It’s about deploying
enough resource of the required type (money, talent, people, capacity, what-
ever) to literally overpower the competitor. It may be across a whole market
or within a specific segment.
In a fiercely competitive market, Warner Bros. made a series of Â�expensive
blockbusters, including the Harry Potter and Batman franchises, in a nonethe-
less high-risk and resource intensive play. They were up against formidable
competition, including the Lord of the Rings trilogy and Avatar. In fact, Warner
Bros. didn’t produce the biggest-selling individual films but their overall
portfolio eclipsed that of other studios.
Stitch in Time
Many products and services aim to remediate a problem. Stitch in Time
targets an established problem, with a clear market and familiarity with its
offerings, by providing a product or service that prevents that problem ever
happening. It supplants the current provider in the coupling between the
current product and its market.
The UK fire service invested in services specifically targeted at fire
prevention and reduced the number of fires as a result.
132
Figure 10.1
Collaborative strategies landscape
10 C OLLABORATIVE
STRATEGIES
Most traditional strategy is predicated on notions of competition but, as we’ve

pointed out elsewhere in the book, much of the talk around competition is just
that – talk. Whilst competition is always an option for organisations, some
form of collaboration is essential for most and conventional strategy struggles
to deal with that. Since Patterns of Strategy focuses on the structural coupling,
it is equally effective for both collaborative and competitive situations.
There are, of course, many ways to collaborate, and most collaboration
is bilateral, that is between two parties or partners. When initiating collabora-
tion, it can be important to reduce areas of difference between the parties
(matching degree of stretch, as one example) in order to make the relationship
more comfortable; the other party feels more like you. This means it is often
really important to work out precisely which differentials serve the purpose
of the collaboration and so need to be retained or even enhanced and which
differentials should be reduced for comfort and ease of joint working. What
we are mostly looking at in this chapter are larger collaborations, where there
is a structural coupling between an organisation and the group of collabora-
tors, and then between the group as a whole and the rest of the world
(FigureÂ€10.1).
Three of the strategies in this chapter are about creating differentiation
and synergies by bringing together organisations that have complementary
capabilities. Cluster relies on bringing diverse organisations together in
geographic proximity to enhance the rate and range of innovations. Jigsaw
and Go-Between are specialist roles that individual organisations can play in
building collaborations. Here then, the emphasis of the strategy is on the
coupling between a single organisation and the group rather than on the
group and the world. Both of these strategies are based on having a particular
strength – usually very specialised and usually quite narrow in scope. For
both of these, size may not be critical, and these strategies offer a way for
small organisations to punch well above their weight and to play a dispropor-
tionally important role alongside very much bigger partners.
The other three strategies, Cartel, Alliance and Keiretsu, are about
building power through collaboration and use different structural relation-
ships for achieving this. Each offers different ways to collaborate and different
benefits, but for each of them the objective is for all parties in the collaboration
to benefit from the strength of the group. That means that the group’s coupling
to the rest of the world is critical, and it’s key to understand what the combined
strength of the group offers to its members. Sometimes this combined strength
is exercised against competitors, sometimes it is directed towards regulators
or to exercise control over a market. Keiretsu is the tightest coupling of these
three and is a union based on both power and specialism, as each organisation
in the Keiretsu plays a different role, but the overall effect is to build a consoli-
dated, differentiated power base.
136
Collaborative strategies
Jigsaw
Overview
Most organisations need to work with others to create their products and
services, and it’s a blended set of capabilities that enables them to deliver. In
the Jigsaw strategy, a weaker organisation can hold a commanding position
by bringing edge or individual capabilities that complement those already
there. It’s a very high-leverage function because the Jigsaw organisation is
necessary to release the full potential of the existing capabilities. The Jigsaw
strategy requires you to identify where your scarce or highly specialist capa-
bilities can be deployed to create synergies when combined with other organ-
isations, creating a differentiated value stream. You can create an extremely
defensible position if you use ‘signature’ or expert approaches to deliver your
part of the total service because these are much harder to copy than product
features.
While Niche strategies target a particular minority segment of a market
(outside-in), the Jigsaw strategy identifies where its specialist capabilities can
create huge value-add in the offering to a market (inside-out), disproportion-
ately to its size. It can be highly defensible when based on deep expertise that
takes time to build, although the Jigsaw organisation needs to continue to
develop its expertise; if its position is attractive, others will try to break in, so
the Jigsaw needs to keep evolving its offering, staying ahead of competitors.
Typical use
Who? An otherwise weaker edge or individual organisation that has
Â�critical mass in a valuable yet narrow expertise.
When? Opportunistically.
What do you win? AÂ€share in the growth from the combined capabilities.
You will need

The Jigsaw strategy requires:
● Increased concentration.
● Foresight to identify where your deep expertise makes you stronger and
where it can create synergies when combined with other capabilities.
● Critical mass to make your expertise compelling to a potential partner.
● Lower order stretch to renew the value proposition.
● Some areas where you synchronise and co-adapt your processes with
those of the partner organisation(s).
137
The manoeuvres
1
For this strategy to be effective, you need to be willing
and able to bring concentration and focus to a particular
area of your expertise. It’s that single-minded and deep
expertise that will be attractive to a potential partner. Your fore-
sight will be used to explore potential partners for your valuable
and scarce expertise.
Indicators: You have a deep expertise in a narrow area, one that
others don’t have.
2
In discussions with potential partners, you
are likely to be smaller and weaker overall,
but it’s essential that you are stronger than
they are in the relevant area of expertise; otherwise
they have no need of you.
Indicators: You have a clearly defined value propo-
sition for the synergies that can be developed by
blending your expertise with the capabilities of a
partner. Potential partners recognise your expertise
and its value to them, as well as the combined value
proposition that can be developed and offered to
the market.
3
Finalising a deal with a partner is the way you
get recognition for your leading expertise and
for the synergies that can be generated through
combining their capabilities and strength with that
expertise.
Indicators: Deal with partner to create combined value proposition.
4
Once you have formed the value-adding partnership,
both partners need to make it as effective as possible,
to the benefit of both. It’s a collaboration, so you will
all be evolving the value proposition together through time.
But because it’s your depth of expertise that brings the high
leverage to the partnership, you’ll be bringing more of the
innovation. It’s likely to be the lower orders of innovation –
too much, and you risk destabilising the important coupling
you’ve just built.
Indicators: Improvements to the combined value proposition over time.
138
5
Overall, the partnership will be co-Â�
evolutionary, though you will shape the
partnership in the narrow yet deep area
of your expertise. It’s your skill that is driving
this particular area of their work and you
Â�setting the direction for the partnership through
the level and areas of innovation that you bring.
Indicators: The predicted synergies are deliv-
ered, along with increased Â�revenues/margins
for all partners.
6
As the partnership matures, there is likely to be some
process integration, and these process steps will need
to be synchronised. In your area of expertise, you set
the cadence for integrated operations, and so it’s your cycle
time that is the important one.
Indicators: Internally, the partnership works efficiently and
effectively.

You end up competing with others to be the Jigsaw, and the negotiation becomes
highly price sensitive. If this happens, you have lost your differentiation
Figure 10.2
Jigsaw
139
and are no longer seen as value-adding and commanding a premium price in

the way that you originally were.
Jigsaw example
Dunnhumby describe themselves as a ‘customer science company’ that helps
retailers use their data to improve customer experience and build loyalty. In
1994, when they were still a tiny company with around 30 employees, Tesco
asked them to collaborate on trials for a new loyalty card. The card would
provide offers to customers in return for Tesco getting precise data on what
they bought. At that time, retailers weren’t routinely examining and exploiting
their sales data. They knew how much of each product they were selling but
didn’t know the combinations of products that were bought by a typical
customer. Dunnhumby was invited to review the huge quantities of sales data
that Tesco had been struggling to analyse in a meaningful way. Expertise in
statistics and data mining meant that they were able to demonstrate that a
10% sample of data was sufficiently indicative and could give the Tesco board
critical information about what its customers were buying. This in turn
improved product selection, pricing and promotions.
But that’s not the end of the story. Bought out by Tesco, Dunnhumby
packaged up their expertise into a research tool to enable brand owners to
research the behaviours and attitudes amongst existing and past customers: a
new Jigsaw piece in a new context.
140
Go-Between
Overview
This has become an increasingly popular strategy as understanding the
dynamics of networks has spread with use of the Internet, but it’s not a new
strategy, and a classic example was the Rothschild’s international banking
network in the 18th and 19th centuries. The Go-Between strategy consists of
building and owning the infrastructure that enables others to interact as a
network, redesigning the way people, markets or organisations fit and build
structural couplings and helping others build fit. Its power comes from lever-
aging Metcalfe’s Law, which says that the power of a network is proportional
to the square of the number of users of the network. This means that the power
of the network grows exponentially with the number of users and that
momentum can be built extremely fast. Because of this, once the leading
network for any market has been built, it can be hard to attack. Another
advantage of this strategy is that much of the resource you need to execute it
is actually other people’s. Once you get past a level of critical mass of players
in your network, the members of the network start to fuel the momentum
themselves so their muscle becomes your muscle. It’s become more popular
because this is much easier as an Internet strategy than it was when engaging
users meant travelling across the world to find them and contract with them.
Typical use
Who? The Go-Between strategy can be used by a small player to build a
commanding position against a stronger incumbent but is more easily
executed by a player who already has the resources to scale quickly. It is
possible for a follower into a market to employ the Go-Between, but
usually this will involve a battle between the scale quickly achieved by
the First Mover and the power deployed by the follower.
When? It can be used whenever you can spot opportunities to create new
value through networking. It can be seen as a variant of the Market
Maker strategy, since it will often involve redefining market
boundaries.
What do you win? Typically, it is used to build a strong market position
that is difficult for competitors to attack. Successfully executed, it will
often provide a position close to a monopoly within a sector.
141
You will need

The key to its success is a combination of time, power and fit. The Go-Between
strategy requires:
● Foresight, often important and sometimes critical, to enable you to

foresee how players could change themselves once the network is built.
● Disruptive change as you are changing the configuration of the sector.
● A basic minimum of resource/power is essential to build the infrastruc-
ture of the network and to reach out to and attract users.
● For followers playing catch-up, power is much more important. Deep
pockets may also be needed if a war of attrition is triggered between the
First Mover who has become the incumbent and the follower playing
catch up and seeking to take network users away from them.
● Ability to synchronise with the operating cycle of the network.
The manoeuvres
1
The strategy begins with spotting potential in the envi-
ronment for a new type of value that could be created
through networking a set of other players. This is an
act of creation and demands building a model of how things
might work differently if the network is built and what sorts
of value can be created by that. It’s critical that the users of the
network derive value from its use; otherwise they won’t engage, and it’s also
critical that you can develop a business model that allows you to reap benefitÂ€–
a problem that wasn’t addressed by many in the dotcom bubble. Obviously,
those two value demands can be in conflict: if users have to pay, they may be
deterred from entering into the network and, if they don’t, then where do you
get your return from? So model development and specifically design of chan-
nels and value streams are vital. AÂ€useful source of value propositions is to
take a model proven in another sector and transfer it to a new sector.
Indicators: Strength of value proposition in a population of potential users
that is the right size: big enough to make it worthwhile, small enough to be
achievable.
2
The next stage is targeted market entry. At this point, if not before
(preferably before), you need to plan for expansion. If the market
starts to respond, how will you ramp up supply? What resources will
you need, and where will those come from? Because growth can be exponen-
tial, it is incredibly easy to run out of resource, and this can happen very
142
quickly. If it does, the system can crash, and the

virtuous spiral of growth fed by customer
appreciation can just as quickly go into reverse
with a sudden collapse of confidence. When
this happens, users can desert the network just
as fast as they joined and, of course, the effect of
their leaving is also the square of the numbers
leaving.
Indicators: In balancing the growth indicators, it is critical to keep an eye on
resource usage and spare capacity.
3
The next move is the most significant: the reaction of your
intended users. Do they start to use the network as
intended, and do they start to bring in other users? Users
may be more creative than your design team and, if there is scope,
may find new uses for the network. If they do, then this is new
value that is being created, with the possibility to build this into
your business model.
Indicators: The most critical factor is speed of take-up by users and, just as
important as the number of users, their rate of usage. Sleeping users don’t add
their weight to the Metcalfe effect, and whilst it’s better that you have them
than a competitor, the rate of increase of users and usage is critical.
4
As the network builds, the players in the network will
place expectations on you, and these must be delivered
in synch with the operating cycle of the network and
with its rate of growth. As the Go-Between, you consolidate
your position and prove your value by being able to achieve
this matching, and you’ll need to be able to switch resources to
be able to do this.
Indicators: Swift response to network demands on you.

Competitors start to appear. If they do, then you are in a race, and the first to
win a critical mass of users will usually win. If your competitors are winning
a critical mass of users faster than you, and/or are likely to take a critical mass
of users based on your relative rates of network growth (numbers of users
and network usage), then it’s time for you to think again.
143
Figure 10.3
Go-Between
Go-Between examples
Mayer Amschel Rothschild established his banking business in Frankfurt in
the 1760s. The breakthrough the family made was to distribute the next gener-
ation of Rothschilds across Europe to establish the family as an international
bank. Since banks in different countries were managed by brothers, there was
a basis of trust that enabled international transactions to take place much
more easily than had been done before. What this created was a truly interna-
tional finance network that Rothschild’s customers anywhere in Europe could
access and use for international trade. You could deposit cash with Roths-
child’s in London, and your agent could get cash out of Rothschild’s in, say,
Frankfurt without the risk of physically transporting gold across the Â�continent.
In peacetime, this was a massive advantage, but when the French Revolution
threw Europe into chaos and throughout the Napoleonic wars when any
commercial transaction between Britain or the British Empire and the conti-
nent was illegal, then the network provided a secure channel.
By building the network, Rothschild’s bank not only built a new industry
in international financial transactions based on credit, they also became the
financial backers of the British war against Napoleon and in the process are
alleged to have amassed the largest private fortune in modern history. Several
members of the family were also made peers in a number of different Â�countries.
AÂ€by-product of their channel-building strategy was increased resilience;
however unstable any individual country became, the Rothschild family and
their bank could rely on having spread their risk, with assets and family
members in many countries.
144
Their model was copied by other families, who ended up playing the
catch-up game with some success, but it was a long time before the Roths-
child’s banking network lost its pre-eminence.
eBay is a more modern example of the Go-Between strategy. Started in
1995 as a hobby, the growth of traffic forced the founder to start to run it as a
serious business. It flourished because it provided a ‘perfect marketplace,’
allowing people anywhere to buy and sell goods provided they had Internet
access and, critically, it was the first to do that. eBay created its own demand,
people started to sell stuff that once would have just been thrown away, and
a whole support industry grew out of people scouring their environment for
things to sell on eBay. More products brought more buyers, which in turn
brought more sellers with more products. Other players tried to jump on the
bandwagon, but the growth was so fast, they had to compete from a position
of weakness against a market leader who now owned the dominant network.
The growth was – as you’d expect with Metcalfe’s Law – exponential, growing
from a hobby in 1995 to 250,000 auctions in 1996 to 2Â€million in 1997, at which
point it had half a million users, 30 staff and revenue of $4.7Â€million. By 2008,
the company had hundreds of millions of users, over 15,000 staff and reve-
nues of around $7.7Â€billion. It is an easy model to copy, but because of the
scaling of Metcalfe’s Law, it has remained a hard act to follow, and no compet-
itor has come close to displacing eBay’s position.
145
Cluster
Overview
A Cluster is a high-density area of interconnected organisations in a partic-
ular industry or sector, where its power, know-how and level of innovation
give it critical mass, allowing it to punch even above its clustered weight. To
a large extent, it is a natural phenomenon, often triggered by the success of
one organisation creating spin-outs and drawing in partners, or creating
‘gravitational pull’ through market development so that other related
Â�organisations co-locate. A Cluster can be stimulated by national or local
government policy, generally through financial incentive, and this has its
roots in the patronage model of the Medici family, who brought together a
creative ‘philosopher’s stone’ of talented people.
Organisations can Cluster in several ways: by sector (either for market
or for skilled labour), at one horizontal point within a sector, or around supply
chain stages. AÂ€mature cluster is likely to show elements of all three.
It’s important to focus on building the interconnection between the
organisations within the Cluster because it’s at the interfaces where difference
can stimulate innovation. It’s no coincidence that the model for business and
scientific incubators involves individual premises under a shared roof with
common shared services in order to encourage the easy and serendipitous
mixing that can occur within and across disciplines. It’s about bringing
together organisations with an interesting level of difference to create new
value and new types of value. Clusters often comprise unlike members, such
as academia and industry, where difference is valued, and linking to a presti-
gious university with a strong research base can provide leading-edge skills
and multidisciplinary input. AÂ€thriving Cluster will generally have good
infrastructure, sources of investment, an entrepreneurial style and a high
degree of networking.
Typical use
Who? Moving to a Cluster is a shaping option for an innovative organisa-
tion that wants to be on the leading edge, with the ability to work at
higher degrees of stretch and rapid rates of change.
When? This strategy is most likely to be successful in a new or rapidly
growing market.
What do you win? You gain access to organisations with a similar hunger
for change but with differentiated capabilities from yours. Ultimately,
it’s about increasing your range of products and services, along with the
refresh rate of those.
146
You will need

The Cluster strategy requires:
● Agility. The ability to relocate the organisation if necessary and to build

and exploit the potential of the Cluster relationships.
● Varied rates of change and types of stretch. The ability to work effec-
tively with different cluster members to drive innovation.
The manoeuvres
This strategy involves manoeuvres within two distinct structural couplings.
One is with the Cluster (shown in black in the accompanying figures) and the
other is with the market (shown in grey).
1
The first coupling to focus on is that with the Cluster itself.
The strategy starts with at least a qualitative understanding
of the innovation opportunities that the Cluster presents.
But the very nature of a Cluster means that there may well be oth-
ers who are able to step in and seize an opportunity for collaborative develop-
ment. You need to maintain sufficient agility to exploit the potential for
innovation presented by the other Cluster members.
Indicators: AÂ€reservoir of agility to use in creating relationships and driving
innovation.
2
This second manoeuvre is also focused on
your coupling to the Cluster. You can exploit
the diversity of potential partner organisa-
tions and capabilities that are on your doorstep in
order to develop new value propositions. But to do
that, you need to have a wide internal repertoire of
degrees of stretch and rates of change in order to
enable you to be able to match potential partners. In
choosing partners from within the Cluster, it’s impor-
tant for you to find organisations who also want to
deliver innovation at speed. As you collaborate with
partners within the Cluster, you’re able to bring new value propositions to
market. Alongside the core expertise which you bring to collaborative innova-
tion, flexibility in your ways of working will help you gain and maintain a
reputation as an attractive innovation partner.
147
Indicators: Increase in innovation rate and product refresh rate. Your reputa-
tion as an innovation partner within the Cluster and more widely.
3
In the remaining manoeuvres, the focus
shifts to your coupling with the market,
which is the reason why collaborative
innovation is attractive. As you deliver new value
propositions into the market, it strengthens your
position through a wider range of offerings, and
offerings that are new to the market.
Indicators: Take-up of the new offerings by the
market, and ROI on the R&D that was required to
develop them.
4
The market can react to your new offerings in
two ways. Competitively, others get inter-
ested in replicating your value propositions:
a set of Fast Followers appears, trying to muscle in
on what you have created along with your Black
innovation partners. You’ll know that you are
Â�shaping if you can command a premium price for
your offering. Collaboratively, you have created a
hotspot of exciting new value propositions, and all sorts of potential suitors
may appear, wanting to work with you.
Indicators: Maintenance of margin; others in the cluster want to partner with
you on innovative efforts.

The diversity of organisations in the cluster reduces, as this is likely to lead to
stagnation in innovation rates.
Cluster example
The city of Cambridge in the UK has become a world-renowned centre
for biomedical research. Over the years, the University of Cambridge has
developed a strong research base and has been home to many Nobel
prizewinners – a critical indicator of innovative research. It has a huge
strength in life sciences, and the University initially formed the hub of the
cluster. The Sanger Centre opened its doors in South Cambridge in the early
1990s to work on DNA sequencing at a time when this was slow and
148
Figure 10.4
Cluster
difficult. From the outset, they have maintained a policy that “aims to provide
rapid access to data sets of use to the research community” – a key Cluster attri-
bute of openness. With improving technology, there was a surge of interest
and investment in DNA sequencing, with all its potential for addressing
significant issues in human health, and the Sanger Centre (now the Well-
come Trust Sanger Institute) made the largest single contribution to the
gold standard sequence of the human genome.
Addenbrooke’s Hospital is a leading teaching hospital with strong affili-
ations to the University of Cambridge – another key Cluster member, bringing
academic and applied research close to the bedside. Cambridge Biomedical
Campus “combines world-class biomedical research, patient care and education on a
single site. Now undergoing a major expansion which includes the location of compa-
nies alongside the thriving community of academics and healthcare professionals, the
Campus is on track to becoming one of the leading biomedical centres in the world by
2020.” And this has been emphasised by the decision of the biopharmaceu-
tical company AstraZeneca to move its UK-based R&D to the campus, leaving
its 60-year established site in Cheshire, such is the power and draw of the
Cluster.
149
Alliance
Overview
Clownfish and sea anemones have a symbiotic relationship in which each
provides benefits to the other. The clownfish defends the anemone from its
predators, and its waste products provide nutrition for the anemone. In turn,
the anemone protects the clownfish from its predators, provides occasional
leftovers as food and provides a safe nest site for it. Each plays both a watch-
your-back role and a provider role to the other. Each can live on its own, but
does better in partnership.
In an Alliance or partnership, two or more organisations create a
coupling to form a virtual or actual third organisation within which each firm
retains its own resources, control and brand. It’s about increasing muscle and
makes some of the capabilities of each available to the other. Benefits include
access to a greater range of differentiating capabilities than either organisa-
tion has time or money to develop itself (or ability to create differentiating
capabilities through the Alliance), the potential to reduce risk and access to
wider markets. An Alliance partner needs to manage the coupling between
the organisations and focus on shared risk and reward, as well as managing
the effect of the partnership on its own coupling to the market.
Typical use
Who? This is an option for a herd member who wants to be on the leading
edge. It is likely to be initiated by a large herd member who has the
muscle or cash to actually form the Alliance, although there may be an
asymmetry in power terms between the partners if the smaller has
developed specialist capability that the larger partner wants to access.
When? This strategy is most likely to be successful in a market where there
is still scope for growth and market share and where the herd is large
and reasonably diverse. (If the herd is very tight, then the strategy would
be more like one of Horizontal Integration around sameness; this is
about forming an Alliance to access and accentuate difference.)
What do you win? You win access to differentiating capabilities, the poten-
tial for new products and services and potential access to new markets.
You will need

The Alliance strategy requires:
● Agility. The ability to shift resource in the Alliance, both for partner
seeking and then in the formation of the Alliance itself.
150
● Radical change. The Alliance will require reconfiguration of some of the

resource, assets from each partner and a governance model for the part-
nership. The initial change is usually followed by ongoing incremental
change.
● Speed, sometimes important, whether this is an expansionist move to
create advantage, a move to catch up with a competitor or a move to
deprive a competitor of an opportunity.
● An advantage in strength over other members of the herd.
The manoeuvres
One is with your target partner (shown in black), and the other is with the
market (shown in grey).
1
This strategy starts when you recognise the potential for an
Alliance and are able to identify a suitable potential partner
with capabilities that are complementary to your own. The
rationale could be a static or contracting market share or eroding
margins with your existing value propositions. AÂ€partnership is a
way to access differentiated capabilities and so develop new value
propositions.
Initially, you focus on the coupling between you and the herd you
belong to, as it’s here where your potential partner is to be found. Building an
effective partnership requires resource and probably dedicated resource in
order to be able to initiate a deal between you and the target partner and then
to build the required linkages between the organisations.
Indicators: Ability to release resource for transformation activity.
2
Now the focus switches to your coupling
with your target partner. It’s likely that
your preferred partner will be surprised
by your approach. Given that you have done
research on them, their capabilities and current
market positions and have already decided that
an Alliance is appropriate for you, then you
absolutely have the upper hand at this point. But
this is not the way to work in partnership, so it’s
a temporary position simply based on you being
the party which initiated discussions on a poten-
tial Alliance. To be attractive as the initiating
151
partner, you demonstrate your muscle, combining financial clout and depth
of expertise.
Indicators: Recognised by your target partner as strong, and with a clear busi-
ness model and rationale for the partnership.
3
Assuming that your target partner accepts your
proposal to form a partnership and the legal formali-
ties are completed, then the next step is to jointly
develop new value propositions which you can bring to
market. Each organisation can exploit the capacity and
capability it now has access to, to develop new products
and services, and acquire new customers in new markets.
Generally a partnership needs a mature and experienced
management team, which can cope with the tensions of
managing the boundary between the rest of your organisa-
tion (the non-partnership part) and the Alliance, between the value proposi-
tions which are developed jointly and those which are developed by
each partner alone. Matching the levels of innovation can be tricky in a
Â�partnership – some herd members may have had a relatively long period of
stability utilising only incremental stretch – part of the reason why they have
stayed in the herd, and so delivering higher orders of innovation may feel
pretty challenging, initially at least.
Indicators: Emerging new value propositions and/or plans for new customer
acquisition.
4
For you and your partner to work together effec-
tively, some operational activities will need to be
synchronised. In addition, the partnership needs to
deliver its benefits swiftly, to capture and consolidate the
gains before a competitor steps in, so matching the speed of
the two organisations is important, and the slower needs to
accelerate. AÂ€key area of synchronisation is the allocation of
resource to joint activities by each partner.
Indicators: AÂ€clear governance model which is working
well. Efficiency of interacting operations.
5
Through time, you and your partner move to co-evolution. Utilising
change rates is a way for each partner to be able to restructure itself (or
part of itself) to be able to exploit the opportunities that the Alliance
presents. Ideally, this transformation should be integrated, so that the
152
combined set of capabilities formed by the

partnership is developed to meet joint goals.
And as the partnership matures, each partner
is comfortable that the other should take a
leading position some of the time and in some
areas of capability or expertise.
Indicators: Trust. An agreed programme of
capability development.
6
You have built integrated capability with your partner
and used that to develop new value propositions and/or
access to new markets. Now your attention switches
from the coupling between you and your partner back to your
coupling with the market. As you bring new value propositions
from the Alliance to market, particularly where those have
synergies with the value propositions you have developed
Â�
alone, your position in the market is consolidated.
Indicators: Achievement of joint goals for both partners, likely
to include market share and profit growth.

Often, one Alliance in a sector can lead to another, so that the nature of the
herd itself changes, moving to a smaller number of larger herd members. It
will be important to look out for a further round of consolidation or other
moves that could weaken or destroy your power advantage.
Alliance example
In the 1990s and early 2000s, the biopharmaceutical sector was a high-growth,
high-margin business, with a dominant model of seeking so-called block-
buster products, each generating more than $1Â€billion per year in revenues.
But low R&D productivity, combined with a wave of patent expiries, created
a huge challenge. The ‘old’ model in biopharmaceuticals of using internal
assets to populate the pipeline has been falling away in terms of productivity.
In addition, governments globally have a growing focus on clearly demon-
strable and differentiated health economics for pharmaceuticals, especially
for expensive new drugs. Companies hunkered down, focused on their
153
Figure 10.5
Alliance
pipelines and showed a trend from diversification to specialisation, turning to

products that address relatively niche patient populations.
It’s impossible for any single organisation to have the best people, the
best science, the best insights, so they have been turning to Alliances to boost
their research capability. BioPharmas have used Alliances for years, of course,
but what’s new is the scale with which they’re now happening. Insight comes
from sufficient R&D practice and expertise internally to be able to recognise
novel and excellent practice and expertise externally. Agility is often deliv-
ered by an Alliance management function that can identify potential partners
who fit the strategy and transact the Alliance. And the business model is as
important as the science and technology; there are new ways of sharing risk
and reward, and being attractive to the external pool of candidate partners is
critical. Effective Alliance working requires each partner to have a range of
different internal capabilities, able to work at different degrees of stretch and
able to synchronise key activities.
GlaxoSmithKline has reshaped many times: its major moves include the
change from Glaxo to Glaxo Wellcome (through a merger with Burroughs
Wellcome) and from Glaxo Wellcome to GlaxoSmithKline (following a merger
with SmithKline Beecham). Small wonder, then, that GSK, with its sustained
external focus, was an early mover in the shift to externalisation of research,
with (as of NovemberÂ€2012) 41 small teams of GSK scientists working on
154
research and Alliances with more than 50 external innovation partners,

including industry–academia partnerships, use of open innovation and flex-
ible partnerships.
In another strategic move, announced in 2014, GSK bought Novartis’s
vaccine portfolio, giving it a world-leading position. This is a really unusual
move; both companies were individually weak in the marketplace, but the
combined vaccine portfolio puts GSK in a position of strength. Alongside
that, GSK sold its portfolio of oncology (cancer) drugs to Novartis. Against
some metrics, this could appear to be a surprising move, as the business was
creating top-line growth of more than 20%. But it would have been chal-
lenging and resource-hungry to build a top-five oncology presence and, in
pharma, strength matters. In parallel, GSK and Novartis formed an Alliance
to combine their over-the-counter products worldwide, creating the world’s
largest consumer healthcare product portfolio. This kind of asset swap deal is
very interesting, showing that there are ways to build market presence and
product lines that don’t require the cost, risk and disruption of full-on M&A
to generate shareholder value.
155
Cartel
Overview
A Cartel is an aggregation of organisations or countries agreeing to act in
concert to influence pricing and restrict competition. The strategy focuses on
the coupling between the Cartel and its market, as well as the collaborative
couplings within the Cartel itself. It’s a pure power move, using strength to
dominate a market and create a highly defensible stream of revenue; the very
essence of a Cartel is that membership is by invitation only. Cartels are intrin-
sically unstable because each member of the Cartel has something to gain by
covertly breaking the agreement, but where the Cartel membership is small
and based on similar products, then it is much harder for any one member to
undercut on price or overproduce because their actions become quickly
evident in the marketplace. This internal scrutiny keeps the herd synchro-
nised in its actions and prevents any one herd member from becoming too
strong.
Typical use
Who? Large organisations, often in commodities, with non-differentiated
products.
When? Ongoing.
What do you win? Stability of price and market share.
Cartel example
The Organization of the Petroleum Exporting Countries (OPEC) is an interna-
tional Cartel that coordinates the policies of its member states and supports
member states with technical and economic aid. It aims to influence world oil
prices by managing supply through production quotas and to avoid price
volatility which would be damaging to both producers and consumers. As it
is an organisation of countries, normal competition law does not apply. It
applies its strength through concerted and coordinated action; when all
members agree to reduce production, reducing supply, then prices rise, and it
has exerted power over world energy markets for decades.
But even a global Cartel can be challenged, and so it is here, with three
factors in play. With the world economy still struggling after the financial
crisis, demand remains weak. Governments are seeking non-carbon-based
energy sources. And with OPEC countries representing a reducing propor-
tion of overall oil pumped (with the US in particular growing fast as an oil
producer), their influence is diminishing. Extreme tensions within the Cartel
156
over production quotas are damaging its ability to meet its aims, and some of
the OPEC countries have maintained high supply in a time of weak demand
to destroy the US-based shale oil producers, which have a higher cost of oil
extraction.
Keiretsu
The Keiretsu – literally, ‘headless combine’ – is a predominantly Japanese
business structure based on a distinctive set of structural couplings. Unlike a
conglomerate, the companies within a Keiretsu are not owned by any single
entity but instead typically have interlocking shareholding with each having
shares in the others. At the core of the Keiretsu is a bank that recycles money
from the constituent companies around the Keiretsu to support investment
for expansion and to prop up the finances of companies under attack. So
companies boost each other’s power for defence and expansion: all for one
and one for all.
Around the turn of the millennium, the photo film industry based on the
chemical processing of actual film was facing a serious threat from digital
photography. Fuji film, a member of the Mitsui Keiretsu, had become aware
of the threat earlier than most and had started to plan back in the 1980s.
Supported by the Keiretsu, it planned a three-pronged strategy: to squeeze as
much money out of the film business as possible, to Long Tail in order to
prepare for the switch to digital and to develop new business lines with
investment from the Keiretsu.
157
Figure 11.1
Small players strategy landscape
11
S TRATEGIES
FOR SMALL
ORGANISATIONS
It is easy to believe that, when it comes to strategy, bigger is better. If you are
a small organisation competing with a bigger one or a small organisation
trying to collaborate with a bigger one, there is no doubt that their size is a
significant factor that you have to deal with. But there are compensatory
benefits to being small: it’s easier to be agile, it can be easier to be innovative,
and in some areas it can be easier to be faster if you are small. But these advan-
tages are all potential; they do not come automatically. If you want them, you
have to build them as capabilities and then work out how to employ them in
your strategy to your advantage.
So, whilst it is inevitable that you have to deal with their size if you are
going to be successful, it isn’t inevitable that they are going to have to deal
with your nimbleness. That is a matter of choice. But as the small player, it’s
your choice, so there is one advantage straight away, you have the initiative
over whether or not to be a pushover (FigureÂ€11.1).
Several of the strategies in this chapter are not exclusively strategies for
small players, but four of them, First Mover, Independent, Autolycus and
Piggyback, are based on exploiting a freedom of movement and/or nimble-
ness that is much easier for small organisations than for large ones. These
strategies, where smallness is easily converted into an advantage, favour the
small over the large rather than being the exclusive preserve of small
operators.
The other two strategies, Frigate Bird and Mouse, are less about utilising
the agility that comes with smallness and more about smallness itself. The
Frigate Bird strategy is a way to compensate for smallness: the stacked heels
of the strategy world. Mouse exploits smallness as a virtue in its own right as
a protection in a world of much larger beasts.
Autolycus
Overview
In Shakespeare’s A Winter’s Tale, the character of Autolycus is described as “A
snapper-up of unconsidered trifles.” The Autolycus strategy consists of making a
business from value propositions that other, usually bigger players have
neglected. Shakespeare’s character is a cutpurse, a pickpocket, who steals or
swindles. We’re not implying that the business Autolycus is doing anything
illegal, merely appropriating a value proposition and market that might be
considered naturally, rather than legally, as belonging to another player. In
some ways, it’s similar to the Rumpelstiltskin strategy, but whereas that
involves the creation of a value from something previously thought of as
waste or having negative value, here it’s the taking of market share that is
seen as intrinsically of value but is being neglected, usually because the
‘natural’ owner is busy dealing with bigger propositions. It is then a classic
strategy for small players, especially where they can make a business around
the value propositions of larger players.
Well executed, the Autolycus strategy moves from being just the
opportunistic seizing of valuable market share to one that builds a symbiotic
relationship with the larger player. Autolycus can end up filling in the gaps
for the bigger player’s value proposition and making the big player’s offering
more valuable. Autolycus can become a genuinely synergistic strategy that
is recognised and valued by the bigger player. With less luck, Autolycus is
seen as a nuisance by the bigger player and eradicated as soon as conve-
nient, often by bundling their value proposition into the big player’s main
offering. Daring to openly raise the prospect of a symbiotic relationship can
draw attention to value being missed and precipitate an attack by the bigger
player. Not for nothing was Autolycus cast as a wily character with good
foresight, great skill and above all agility to get into and out of situations
fast.
Typical use
Who? Normally a small player with a keen eye for an opportunity and the
agility to pounce on one when they see it.
When? Opportunistically but particularly where a large player has built a
market opportunity that is incomplete and so provides an environment
with other value niches.
What do you win? AÂ€market niche that can grow on the back of the bigger
player’s business development.
160
Strategies for small organisations
You will need

An Autolycus strategy requires:
● Foresight, specifically to spot the opportunity.

● Change rate, speed to develop an offering that fills the gap in the value
proposition.
● Higher order rates of stretch, to develop that offering.
● Ability to concentrate effort.
The manoeuvres
1
The first move is having the foresight to spot an
Â�opportunity. Mostly, Autolycus is opportunistic, and
opportunities are chance finds, so they cannot be
predicted, but it’s important to see the hidden potential in
Â�
opportunities since there will be many apparent opportunities
that actually have no real future. The ideal target will enable you to ride the
success of a much bigger player and will consist of a gap in their value propo-
sition that you have the capability to fill.
Indicators: The opportunity matches your capabilities; it is currently small
enough for you to seize now but has potential to grow significantly; the
opportunity is, and is likely to stay, neglected for long enough for you to
extract value from it.
2
The next move is to seize the opportunity. Speed is
essential. You have to move on the opportunity faster
than the major player you are exploiting, which isn’t
hard if they are focused elsewhere and if they aren’t, then
you’ve picked the wrong target, so get out fast. More Â�critically,
you have to be able to move faster than other opportunists.
Less obviously, you have to move faster than the current rate
of growth of the opportunity.
Indicators: The relative speed of your decision-action cycle
compared to others and compared to the rate of growth of the
opportunity.
3
Pouncing isn’t enough, you have to be able to fill the hole in the value
proposition, and that means at least a level of innovation that we’d
count as radical, but preferably a higher level of innovation than that.
161
The higher the innovation, the less vulnerable your part of

the total value proposition is to attack by other would-be
opportunists.
Indicators: Ability to plug the hole in the value proposition.
4
It also means concentrating your resources and a fast
transition from wide-scope opportunity spotting to
focused attention on this particular opportunity. As the
opportunity grows, you may have to grow fast as well, and in a
really well chosen Autolycus target, there will be demand that has been
dammed up by the incompleteness of the value proposition, which means
that, as you fill in the gaps, you may accelerate the natural growth of the
market.
Indicators: Ability to scale your offering in line with market growth whilst
still staying under the radar of Black. This strategy has been well executed if
Black doesn’t act and ideally doesn’t even notice.

Usually, the stability of the Autolycus strategy depends on the main actor not
spotting how much value they are missing out on. If you become too
successful, then the main player is likely to react by filling in ‘your’ bit of the
value proposition themselves. Typically, the main actor will counter with an
Augmentation strategy. When that happens, there are several options, but
one of them is simply to find another opportunistic target.
In rare cases, the strategy has been so lucrative that the Autolycus can
become strong enough to defend its patch, but that is very rare (think Micro-
soft providing the ‘insignificant’ operating system for IBM machines then
moving to supplant IBM as the industry giant). You’re aiming for growth
followed by the maintenance of market share whilst staying under the radar:
watch for signals that your offering has started to attract the attention of the
main actor.
Autolycus example
When Henry Ford developed the Model T, the challenge was to develop the
capacity to build cars by the thousands, and this in turn meant standardising
design and production. The identical Model Ts rolled out of the factory in
“any colour you like as long as it’s black” and were bought by a wide range of
consumers from farmers in the Midwest to doctors in big cities. And of course,
their needs were as diverse as they were. Manufacturers sprang up to provide
162
Figure 11.2
Autolycus
a huge range of accessories to customise the Model T for different uses. These
manufacturers built their businesses on the back of Ford’s success and filled
in the holes in the Model T’s value proposition. As Ford developed and the
problem of mass production had been overcome, then Ford started to fill in
the gaps in their offering for themselves, but in the early days of Ford’s mass
production strategy, the opportunists using the Autolycus strategy not only
did well for themselves but were also a huge asset to Ford.
163
First Mover
Overview
First Mover advantage is simply a strategy based on being there first. It can be
based on innovation – having a higher rate of change, so bringing a new idea
to market first – or it can be based on simply moving faster in an existing
market – having a faster operating rhythm. And the speed differential doesn’t
have to be that great to provide a critical advantage. In the example below, the
time differential that made the difference between winning and losing through
a faster operating cycle was 0.06%.
First Mover is unashamedly a competitive strategy. It is usually used to
expand market share, but it can also be used defensively to hold market share.
When used defensively, the line with Rapid Refresh tends to become a bit
blurred. If we’re moving to take new market share by getting there first, that’s
First Mover, whereas if we already have an established market position and
are seeking to hold onto it by moving faster than competitors to refresh the
offering, we’d class that as defensive and a Rapid Refresh or Augmentation
strategy. It is one of the most well-known time-based strategies. It doesn’t
necessarily require that you sit at the bleeding edge of innovation, but it does
mean getting to market first.
Typical use
Who? Because it depends on time rather than power, First Mover is often a
strategy of choice for small firms wishing to compete with larger rivals,
since size can often actually reduce speed, and only a few firms manage
to translate power into a time advantage.
When? First Mover can be used at any time but is often used to gain advan-
tage in a stable market dominated by a herd that has settled into a
comfortable routine. When used against a herd, the tendency of herd
members to reference one another rather than outsiders can critically
slow down their ability to follow quickly and so provides even more
advantage.
What do you win? Usually what is won is market position. AÂ€proportion of
customers will always prefer the First Mover, and you win that market
share. There is usually a premium that can be charged for this, providing
enhanced revenue, though not always higher profit due to the invest-
ment needed to win. With it also comes a reputational gain to you and a
loss of prestige for your competitors. This can have multiple benefits:
political, investment, and the like.
164
You will need

The First Mover Strategy requires:
● A definite advantage in either rate of change, or cycle time, or both.

● Usually, an advantage in agility helps, and sometimes it is essential as
resources need to be switched into new initiatives.
● There is no need for an advantage in power overall, although an advan-
tage in development and marketing capabilities can be important.
The manoeuvres
There are two normal starting points for this strategy. One is to decide
where you want to play for competitive advantage and then work out what
time advantage will give you an edge there. The second is to start with
your existing time-based capabilities and work out where these could be
used to give First Mover advantage. If you have an advantage in, say,
operating cycle time or in development cycle time, how can this be used to
deliver significantly different value? It’s easy to be First Mover and not
actually derive any advantage from it, so understanding the value that
being first will mean to the market is vital; the advantage cannot be
assumed.
1
There are two main formulations for
First Mover based on either innova-
tion or operating cycle. Whichever
you choose, the first step is to develop the
capability to move more quickly than
competitors. For innovation, there isn’t
Â�
Â�necessarily a need to be more innovative than
competitors, so it isn’t essential, for example,
to do radical to beat incremental. What is
essential is to do at least the same level of
innovation but to do it faster. For an advan-
tage based on faster operating cycle, it’s important to work out how much
faster you need to be to win an advantage.
Indicators: Time to market and differential time advantage over competition.
To achieve that (other than by accident), you need to know your time relative
to the competition, whether that’s operating cycle time or development cycle
time.
165
2
Being first to market isn’t enough. Having won first
place, the risk is then for that advantage to be eroded
by a slower stronger competitor – the threat posed
by the Fast Follower. The ability to quickly ramp up
resources to increase delivery is usually key, and this in
turn is usually dependent on agility – either the ability to
switch resources from other lines of business or turning
financial assets into usable delivery capability quickly. This
can be done using a previously prepared war chest, or by
leveraging the revenues or predicted revenues that your
market position gives you.
Indicators: Competitors gearing up to catch you. Ability to
mobilise resources to ramp up supply at least as fast as the
market is growing.
3
If you can move faster
than the competition and
the market, while scaling
up operations to boost your
market presence, then you are
Â�
shaping the market and Â�propelling
yourself to a leading-edge posi-
tion. The difficulty for First Mov-
ers is usually staying in the lead as
competitors pile into the market. There are two main counterattacks against this:
either ensure that you can keep ahead long enough to win a critical mass in the
market so that you can match your competitors on power or, alternatively,
repeat the strategy to ensure that your slower competitor continues to lag behind
and beat them again on speed. For the first of these – getting ahead and staying
ahead with the same offering, as opposed to being first with a replacement –
planning how to ramp up supply to defeat the competition’s riposte is critical. If
your supply lags demand, then your initial time advantage can be lost very
quickly.
Indicators: Margin of power plus time against competitor: is your margin
increasing/stable/decreasing?

The cut-off point for this strategy is usually when your time advantage is
unsustainable, and you are aware of eroding time advantage due to action by
competitors. Then you either need to switch to a combination of power and
166
time or change up the innovation gears – from incremental to radical to

disruptive or paradigm. If that isn’t possible, it’s time to look for a different
strategy.
Figure 11.3
First Mover
First Mover example

I’m writing this on a tall ship sailing eastwards around Cape Horn, a route
that was pioneered for the clippers sailing the wool and grain races from
Australia to the UK. Clipper races started with the tea races, sailing from
China to the UK. Why race? Because the merchant who could get that year’s
crop of China tea to market first could command significantly higher prices. It
started in 1849 with the American clipper Oriental that landed her cargo in
London 97 days out of Hong Kong, roughly a third of the time taken by British
ships of the day. Any advantage was important, and following Oriental there
was huge investment in R&D to make tea clippers like Cutty Sark and Thermo-
pylae the fastest ships of their day. Clippers raced over thousands of miles
across four oceans for an advantage sometimes of only a few minutes and,
commercially, the investment in R&D and the best crews was worth it. Then
as now, First Mover advantage could be a game winner.
The most famous and closest fought race was in 1866 when four ships
set off from Fouchow within a day of one another and raced neck and neck
across the Pacific and Indian Oceans, round the Cape of Good Hope
touching the Southern Ocean at the bottom of Africa and then up the South
and North Atlantic. After 99 days and 14,000 miles of hard sailing, Taeping
and Ariel picked up tugboats at Gravesend at the same time, Serica an hour
167
and 15Â€minutes later and Fiery Cross the next day. Between them, these four
ships landed 45Â€million pounds of tea – enough to fill the teacups of Britain
for six months. As a consequence, the price of tea halved for later cargos.
Speed paid.
The tea clipper’s story illustrates both of the two classic variants of First
Mover. One is based on being the first through innovation, and the other is
based on being first through cycle time. The shipowners and designers who
had the highest rate of change – innovating first and fastest – seized an advan-
tage over their competitors by having faster ships. The second approach
depends on the sheer speed of the operating cycle, from loading the tea in
China to docking at East India Dock in the heart of what is now London’s
second financial centre, Canary Wharf. The faster cycle time was engineered
at every level, even down to having double-strength crews to ensure faster
sail handling at sea.
Being First Mover through innovation could provide an advantage
lasting a few years. Being First Mover through faster operating cycle provided
an advantage only for that season.
168
Independent
Overview
Independent is the epitome of differentiation strategies. Most organisations
choose not to differentiate much because there is safety in the herd. Indepen-
dents set themselves apart; their differentiation is enough for them to be
clearly identifiable as distinct from the herd.
Given that they adopt an exposed position outside the cover of the herd,
it’s worth asking what the benefit of an Independent strategy is. The level of
difference means that they enjoy relatively little immediate and direct compe-
tition; their customers tend to make a conscious decision to buy from them
and are less likely to switch. This means that, though their market may be
very hard won, it tends to stay relatively stable, and Independents often enjoy
extremely high levels of customer loyalty. In addition, since their differentia-
tion is profound rather than superficial, they need less effort to make their
value proposition clear.
In some ways, the Independent strategy may appear to be similar to the
Leader strategy, and understanding the relationship between the two is
instructive since Independent can flip into Leader either by intention or by
accident. The limiting factor on being an Independent is market support; this
has to be enough to support the Independent at a size they are comfortable
with. If there is too much support, then the probability is that the herd will
move to adopt or pretend to adopt the position occupied by the Indepen-
dent, their differentiation will be eroded or destroyed and they will no
longer be an Independent. That’s fine if it is what you want, but being a
successful Independent and being a successful member of the herd that you
have led are two very different things, requiring very different capabilities.
Getting the level of market response right is critical for an Independent:
enough to sustain you in your difference, but not popular enough to incite
jealousy.
Typical use
Who? This is a strategy for players who are able and willing to differentiate
and who are comfortable with being seen as different and who are confi-
dent in navigating their own course.
When? Whenever there is an opportunity to establish a clearly differenti-
ated position to your advantage.
What do you win? Reputation, possibly a premium market position and/
or a stable and loyal market.
169
Independent example
The film industry is often characterised with glitz and glamour, box office
blockbusters, highly paid stars and lots of red carpets. In that world, only an
individual organisation could win with plasticine models of a man and his
dog. Enter Aardman Animations, who delighted with stories of Wallace, an
enthusiastic but error-prone inventor, and his dog Gromit, the brains of the
duo. They made movies using their plasticine models using stop-motion, in
which the models are photographed, adjusted slightly, re-photographed,
again and again until sufficient images are generated for a moving film. The
films are all charming and quirky, appeal to audiences of all ages – and are
utterly different from other movies.
At one point, Aardman signed a deal with DreamWorks, to gain access
to finance and distribution capabilities for their next stop-motion film, the
feature-length Chicken Run (and this had a different cast: plasticine chickens
this time). But they later split, citing creative differences. It seems likely that
the tensions between individual and herd were at the heart of these
differences.
Mouse
Overview
The Mouse strategy is the strategy where smallness becomes a virtue not
because it’s easier to be agile and fast when you are small but just smallness
for its own sake. Smallness is a relative term, and here we’re talking about
being small relative to the ‘big beasts’ that inhabit your particular piece of the
business jungle. So in ecosystems where the big beasts are extremely big,
‘small’ can still be pretty big by normal standards.
The Mouse strategy consists simply of being too small and inconspic-
uous to notice or at least for a Gorilla to notice or bother with. This enables the
Mouse to operate around the Gorilla without being unduly bothered or
targeted as a nuisance to be removed.
Being able to operate in the ecosystem around a Gorilla with relative
impunity can have several benefits. Firstly, such an ecosystem can provide
rich pickings either directly from value propositions the Gorilla ignores
(similar to Autolycus) or in needs created by second-order effects in the
ecosystem. Secondly, the ecosystem is dominated and protected by the
Gorilla; in other words, your world is protected from other big beasts by
your neighbourhood big beast: stay under their radar, and you are relatively
safe.
170
Typical use
Who? This is a strategy for small organisations operating in an environ-
ment dominated by one or more large players.
When? You are in an environment dominated by larger players who might
see you as a potential threat and where the differential in size means
there is no real chance of defending yourself in other ways.
What do you win? Relative security and freedom to operate. In a well-
executed strategy, the Mouse can use the Gorilla as a means of defence
against attack from other organisations.
Mouse example
A software company operating within the Microsoft ecosystem had devel-
oped to become what was, by the normal classification standards of
company size, a large company. They had grown to be the market leader
within their particular part of the ecosystem, both in terms of the excellence
of their products, their standards of service and market share. All this had
happened without them appearing on the Microsoft radar. Although their
product range directly competed with some of Microsoft’s own applica-
tions, Microsoft had not recognised them as a significant player. This was
partly because of the niche they had selected within the ecosystem – one
that wasn’t seen as a strategic focus for Microsoft – but it was also partly
due to the disparity in size: they were still small enough not to be seen as a
threat.
Frigate Bird
Overview
Frigate Birds use elaborate displays to get a mate. The males inflate a pouch
on their throat into a bright red balloon during the courtship rituals, and the
bigger and brighter the balloon, the more attractive the male.
The Frigate Bird strategy consists of attracting a partner organisation –
or a customer – by puffing yourself up to look bigger and more impressive
than you really are. This will normally be to allow you to play outside your
league, and it’s the classic fake-it-till-you-make-it strategy. The advantage is
that, well executed, it can create a step change in growth. There are two risks,
one of failure and one of success. If the deception is detected, then the intended
partner can reject you. If the strategy succeeds, then you need to grow dramat-
ically fast to be able to deliver on your promise.
171
Typical use
Who? Typically used by small players with a weak track record or reputa-
tion or who lack the resources to appeal to their target market. Often
used by opportunists in mature markets where upscaling operations is
reasonably easy as resources are commoditised.
When? Usually when trying to jump to engage with a much bigger
customer than they are used to, or with one that would normally over-
look them, usually in situations where differentiation on the basis of
specialisation or brand position is difficult to achieve or is likely to be
too slow.
What do you win? An engagement (relationship, contract or partnership)
that would otherwise be unachievable and accelerated growth that
comes with that engagement.
Frigate Bird example

One of the biggest construction companies in the UK started life, as many
building companies do, with a couple of guys and a handful of contractors
that could be called in on a job-by-job basis. They operated out of a portacabin
in a yard located behind a much bigger and longer established builders. One
day, the postman accidently delivered to them an invitation to tender that had
been addressed to the neighbouring firm, so they took it round to their neigh-
bours. The big firm said they were already overcommitted and didn’t want to
tender, so the small firm asked if it would be OK if they tendered instead –
and the reply was, “Go ahead.” The tender was for a much, much bigger project
than anything they had tackled before, but they went ahead and sent off the
quotation.
They were surprised to hear they’d got through to the shortlist, both
pleasantly surprised and a bit worried, not least because the next round
involved a visit by the customer to see their operations and specifically their
‘offices.’ The offices, consisting as they did of a yard full of leftover materials
and a single portacabin with a phone line, two desks and a kettle, were not
likely to win any confidence. AÂ€major revamp was called for. More porta-
cabins were hastily borrowed, phone lines run in, and friends and family
recruited to play the roles of the management team of a busy construction
company. When the customer team arrived, the place was a buzz of activity,
phones were ringing, people with clipboards were ordering off bills of mate-
rials from suppliers, doing negotiations with suppliers, poring over Â�blueprints
for big construction projects and driving in and out to do site visits on their
multiple imaginary projects. The tender was won, the company grew dramat-
ically to meet it, delivered on time and budget and went on from there.
172
After their first Frigate Bird strategy, the company had taken such a big
step up in size that it was able to bid for bigger contracts on a straightforward
basis. From this initial step change, growth was steadier, the company grew
organically, with a couple of acquisitions to achieve geographic growth.
Twelve years later, it was one of Britain’s biggest construction companies,
building and selling 1,000 houses per year and 20Â€years later was floated on
the stock exchange. This rate of growth may seem slow compared to a dotcom
business, but in the world of construction where competition is cutthroat and
differentiation is hard for main market players, this was a spectacular rise.
Piggyback
Piggyback builds a structural coupling with the market for an established
product to exploit the market and market growth of established players with
a secure market presence. It provides a product that is matched and comple-
mentary to an existing product. Like Remora, it grows with what it’s coupled
to, and like Autolycus it picks up an unexploited area.
Fever Tree is a luxury brand of tonic water, intended to be mixed with
subtle blends of premium gin whose flavour can be lost when combined with
a lower-quality tonic. The gin market is well established globally and has had
a recent renaissance, so Fever Tree builds on the gin market and its growth.
173
Figure 12.1
Supplier strategies landscape
12 SUPPLIER
STRATEGIES
If you are a supplier to a wide and fairly atomistic market, then you are really
coupling to a market – a self-referencing and self-similar group of customers.
This chapter is about something more focused, strategies for managing one-
to-one customer–supplier relationships and the strategies for moving those in
the direction we want (Figure 12.1). Since we’re typically talking here about
long-term customer–supplier relationships, or at least relationships we’d like
to be long term, many of these strategies are about establishing relationships
of continuing mutual benefit to both parties, but there are a couple of excep-
tions to the mutual benefit rule. Also, in practice these are predominantly
strategies used by smaller suppliers to larger customers, but there is nothing
inherent in them about size differentials, and at least one bucks the trend in
being predominantly run as large supplier to smaller customer.
Four of the strategies, Remora, Parasite, Strategic Partner and Jeeves,
are based on building and then using an intimate relationship with the
customer. Within that group, they are largely differentiated by the degree of
stretch and the direction of drive in the relationship, in other words whether
the supplier is shaping the customer or the customer shaping the supplier,
and how that is managed.
For most of the strategies in this chapter, the nature of the relationship is
overt, but in Jeeves and Parasite, the true nature is hidden. In the case of
Jeeves, this deception is benign, but for Parasite it is because it is subversive.
Parasite is the dark side of supplier relationships.
Expert and Troubleshooter are strategies based on the positional
strength afforded by being the leading provider in a field but are different in
their use of time. Troubleshooter’s relationship with a customer is inherently
sporadic at best and may be a complete one-off. Strategic Partner and
Outsource are also based on technical strength but demand a lower-level
capability than the other two; you don’t have to be the leading provider in a
field for either. These strategies, based on positional strength gained through
specialist skills, knowledge or experience, all act as a knowledge and skills
‘watershed,’ feeding all other suppliers as their expertise trickles down to
lower-lying strategies. Outsource is the strategy that feeds most directly and
immediately off this flow of expertise and is often the position that profits the
most from it.
176
Supplier strategies
Remora
Overview
A remora is a fish that holds onto a larger marine host using a sucker and that
benefits from protection and dropped food from the host. The Remora strategy
is the ultimate in collaboration strategies. It’s based on making a structural
coupling with a larger ‘host’ that is so tight that the relationship is truly
symbiotic. Normally, this is done by becoming a critical part of the host’s
supply chain. The power of the strategy is that, as the host’s needs change or
grow, so the Remora is pulled along by that host and also grows. The strategy
works by providing the Remora, or supplier company, with a steadily
increasing level of demand from the host, supported by at least the impres-
sion of a secure long-term relationship. The reliability of the relationship and
its increasing intimacy provide the security needed to invest in the growth
that is tied to the needs of the host.
Although this is primarily a collaborative strategy, it can also involve
competition with other companies in the supply chain, and this is done on the
basis of tightness of fit – commitment to supplying host’s needs and providing
capabilities they need.
Typical use
Who? Remora is a favourite strategy for small or medium-sized enterprises
that wish to grow significantly and fast. This is often an unconscious
strategy driven by structural coupling, and because it offers such an
attractive and powerful route to growth, it takes a strong management
team to resist its pull. It should be picked as a conscious strategy rather
than just one that a company falls into because the risks are consider-
able. The host can demand total commitment, making this an all-or-
nothing bet where any attempt to hedge the risk by diversification is
frowned upon, and Remoras can be deselected at the host’s whim.
When? This is a default strategy when a small or medium-sized enterprise
has a long-term relationship with a large customer.
What do you win? The Remora strategy is used to grow quickly and
reasonably securely. It is the most reliable strategy to quickly build a
medium-sized firm through the medium-sized stage (50–250 staff) and
into a smallish large firm. Remora can also be used defensively. AÂ€symbi-
otic relationship with a larger host can provide a lot of protection against
market turbulence.
177
You will need

The Remora strategy requires:
● That you are weaker than the host.

● Most critically, that you react to the host.
● Synchronisation of cycle times is often critically important.
● Ideally, being capable of a faster rate of change, since you need to follow
the host’s lead and catch up as soon as possible.
● Ideally, foresight so that you can anticipate the host’s needs.
● Agility, the ability to redeploy resource to meet the host’s changing
needs.
● Ability to match the host in terms of concentration of power.
The manoeuvres
1
In theory, the strategy should start with the selection of a
suitable host – one that has a set of needs that you can
meet and that offers significant growth potential. In prac-
tice, though, it usually starts with an existing relationship and is
initiated by the larger host who consistently increases the
demands on the smaller supplier. The start of the Remora process may not be
apparent to either party, and the tightening of the relationship may be so
gradual that symbiosis may be fully established without either side con-
sciously realising it’s happened or what its implications are.
Indicators: Feasibility of this as a strategy. How close is the fit between
you and the host? What is the growth potential with this host? Do you trust
them – have they dealt well with other suppliers?
2
From there, the development of the Â�strategy
follows a natural path, focusing on getting
the fit between you and the host as tight as
possible, in terms of both doing what the host
needs and responding to those needs as fast as
possible. The key attribute is tightness of fit, and
this is achieved through matching your concentra-
tion of resources exactly to the host’s needs and
through synchronization – of operating cycle,
development cycle, and sometimes investment
cycle. The clearest expression of this is in Just
In Time operations where Remoras time their
operating and specifically their delivery cycles to the minute to fit in with
their host’s needs.
178
Supplier strategies
Indicators: Ability to synchronise operations and development cycles to meet

the host’s needs.
3
As you get closer and closer to the host, this will
often involve adopting technology and processes at
the instigation of the host, such as quality manage-
ment systems or specific IT programmes and platforms, so
relevant parts of the businesses can be integrated as tightly
as possible. Because you react to the host (rather than leading, as with a
Â�Strategic Partner), this means you have to be able to redeploy resources to
react to the host’s demand or have the foresight to predict the host’s needs and
prepare for them in advance (same amount of change but with longer to plan
and execute it). The tightness of coupling may also affect investment deci-
sions, typically Remoras will invest in the host’s interests and may be required
to do so rather than diversifying, which could hedge their exposure.
Indicators: Ability to change to meet host’s changing demands, through
either foresight, agility or rate of change.
4
Once a tight fit has been achieved, then providing you
with more business becomes an easy option for the host,
so more business flows to you, and you grow and extend
your areas of fit with the host. As the host’s needs change –
either because of growth or changes to products/services, you
react to be able to deliver against the changing needs. With each change, the
relationship becomes more extensive and tighter with each additional
Â�commitment to the host.
Indicators: Growth rate. Stability of relationship. Trust.

The risk of the Remora strategy is that it restricts your freedom of manoeuvre
in a situation where the host may choose to unilaterally end the relationship.
In particular, any attempt to mitigate exposure through diversification can
be seen by the host as a lack of commitment – even as disloyalty – and can
result in the host seeking alternative suppliers and ending the relationship.
Once in a Remora strategy, it is very difficult to extricate yourself, especially
since by the time the level of exposure becomes apparent, the Remora is
almost certainly overcommitted. It can also become a toxic relationship
where both parties are inextricably reliant on each other in a relationship
that works well for neither. When this happens, a spiral of blame usually
ensues with attempts by the host to test the relationship with ever escalating
demands.
179
Figure 12.2
Remora
Remora example
A large automotive manufacturer was slimming down its supplier base in an
attempt to improve quality by deselecting the weakest two-thirds of its
suppliers and focusing its attention on strengthening and developing the
remaining third. For the automotive components companies that were
earmarked as possible candidates for the winning third, there was a choice but
more of a theoretical choice than a real one. Each of them was already
committed to this main supplier for at least half of their revenue. So opting out
or losing out meant there was a good chance of ruin. Conversely, winning a
place as one of the chosen third would mean growth opportunities and greater
stability. Not a difficult decision for the suppliers then, but one that committed
the companies to transform themselves to perfect their fit with the car maker.
This involved redesigning their production to meet changes in the
manufacturer’s new Just In Time delivery schedules, so operating and delivery
cycle times went from months to hours. Quality had to improve dramatically
to fit the car maker’s increased use of robots, since these demand much tighter
tolerances. And investment had to be switched. The car maker scrutinised its
suppliers’ investment plans, looking for evidence of their commitment to
investment in supporting them and watching out for any attempt to diversify
to reduce their dependence. What was demanded was total commitment.
The companies that made the grade made that commitment and, as the
deselected companies were shed, the selected ones took over their work and
grew. The Remora strategy worked.
It worked right up to the point where the car manufacturer collapsed,
and the components suppliers that had been successful in tying themselves to
its fortunes suddenly found they had lost a customer that they were now
totally dependent on.
180
Supplier strategies
Strategic Partner
Overview
As a strategy, Strategic Partner makes an interesting contrast with Remora.
Both are collaboration strategies based on making a structural coupling with
another (usually larger) organisation that is so tight that the relationship is
truly symbiotic. There are two salient differences. Remora involves reacting
to the host and is a strategy used to grow fast. In contrast, Strategic Partner
involves leading the relationship and driving change in the other (partnered)
organisation to the mutual advantage of both and is usually defensive in
nature, providing security by building a stable long-term relationship. The
Strategic Partner provides specialist expertise or resource that the partnering
organisation doesn’t have internally, and the most successful Strategic
Partner strategies are based around offering unique value developed specifi-
cally for the needs of the partnered organisation. That way, the Strategic
Partner is hard to replace and the partnered organisation gets exactly what it
needs to differentiate itself rather than off-the-shelf solutions that can be
shared by its competitors.
Typical use
Who? Typically, Strategic Partner is used defensively by a specialist organ-
isation. Often it is a strategy used by a small organisation to build a
relationship with a larger client organisation.
When? Both sides in a relationship can benefit from a partnership where
the supplier can provide more strategic and guiding input than just
doing what they’ve been told.
What do you win? Building a long-term symbiotic relationship with
another, often larger organisation can provide a lot of protection against
market turbulence and ensure continuity of income.
You will need

The Strategic Partner strategy requires:
● Agility so that you can quickly redeploy resource to meet changing

needs.
● An advantage in a critical area of strength.
● Foresight to anticipate future needs and direction. Essentially you are
acting as the pathfinder for the partnered organisation, so you need to be
able to look forwards for both of you.
181
80 Patterns of Strategy
● Rate of change is not always critical as long as you can maintain your
position ahead of the partnered organisation, but it will always be an
advantage.
● An advantage in speed – you have to be faster.
● Concentration of power can be either matched to the partnered organ-
isation or more concentrated.
● Ability to shape the partnered organisation, though periods of co-Â�evolution
are also possible.
The manoeuvres
1
In theory, the strategy should start with the selection
of a suitable organisation to partner – one that has a
set of needs that you can meet. In practice, it often
grows out of an existing relationship. It evolves from a
Â�normal customer–supplier relationship where the supplier
reacts to the customer’s needs and gradually becomes one
where the supplier is not merely predicting future needs but actually helping
to guide the customer organisation. The start of this evolution may not be
apparent to either party, and the tightening of the relationship may be so
gradual that symbiosis may be fully established without either side Â�consciously
realising it’s happened or what its implications are. The strategy is fully
evolved when both parties are conscious that it is and should be truly strate-
gic, but often the evolution will progress through stages when either one or
both sides have adopted the position unconsciously. This can be a dangerous
transition.
The first step on the evolutionary path is usually when you recognise an
opportunity to add extra value beyond answering the customer’s currently
stated needs. This can be spotting an unmet/unseen need, an opportunity
that the customer has seen or a way to solve a problem that the customer
hasn’t seen. You need to show initiative, to bring an idea and a plan to the
customer, and to prepare that plan, you need resource.
Indicators: Resource to identify and develop (in outline terms, at least)
Â�additional value you can bring to the customer.
2
The next step can be the critical one, moving from
passive supplier to active adviser, and this is often
deeply political and requires either a high level of
trust on the part of the customer or some degree of stealth on
your part. Often, both parties will get through this difficult
role reversal by pretending it hasn’t happened and only
182
Supplier strategies
acknowledging that the relationship has changed sometime later once the
new relationship has been shown to work.
Indicators: The successful introduction of a strategically important move that
has been initiated by you and adopted by the client (and not one that has been
initiated by the client and responded to by you).
3
It’s important to extend foresight. Within your
area, you are now doing environmental scan-
ning for both parties in the relationship and, in
effect, foresight has become part of the value
Â�proposition between you. There will often be a need
to Â�significantly increase the rate of change to first put
yourself at the leading edge of your sector – and then
stay there.
Indicators: Closeness of fit and difference. Ability to anticipate needs. Can
you exceed their needs, rate of operation, and rate of change? Can you provide
something they don’t have in-house and will find difficult to develop
in-house?
4
Alongside that and as the role develops, you need to
invest in developing your strength in the key areas
where you deliver. This is about a demonstrable depth
and richness in the expertise that you bring to the partner-
ship, and it’s likely to involve investment to make that
Â�happen. The client recognises and encourages this develop-
ment of expertise. At the same time, it allows you to further
develop your specialism, so this strategy can lead to increased
specialisation and a narrowing of the range of opportunities.
Being a Strategic Partner with more than one organisation
can reduce this potential weakness of the strategy.
Indicators: Recognised and valued for your expertise.
5
As the relation-
ship matures, it
becomes a cycle
of searching out new
solutions and opportu-
nities, bringing those
to the customer, taking
them through adop-
tion, searching for the
183
next solution .Â€.Â€. and so on. Once this is happening repeatedly and clearly
bringing value to the client, then you are shaping the client, within your area
of expertise. When fully developed and mature, the level of trust is such that
the relationship is not just called a Strategic Partnership but is actively
Â�managed by both sides as one.
Indicators: Level of trust. Percentage of recommendations accepted.
Percentage of issues in your area of expertise that you address. In other words,
how useful are you, compared to how useful they need you to be? Percentage
of suggestions that you didn’t feel able to make for political reasons; this is an
indicator of the strength of the relationship. And it should be visible to all key
players within the customer organisation that you are now a Strategic Partner.

This is no longer working if there are signs of resistance to being shaped on
the part of your partner. You need to be particularly attentive if there are
changes in personnel amongst your key contacts in the partner; if they haven’t
been involved in the long-term relationship and partnership building, they
may see you in a different way than their predecessors.
Figure 12.3
Strategic Partner
Strategic Partner example

A local authority had contractual agreements with two civil engineering firms.
One did the actual spadework – filling potholes, resurfacing, putting in new
184
Supplier strategies
traffic management schemes, building roundabouts – literally spadework in

some cases. The second firm was at the other end of the engineering spectrum
and did the surveying, design, and commissioning work. Both were long-term
contractual relationships, but the two provide a clear example of the differ-
ence between a strategic and a non-strategic partnership.
For the pothole fillers, the relationship worked on a we-tell-you-what-to-
do-and-how-to-do-it basis. Jobs and projects – whether these were routine main-
tenance or new developments – were contracted within a framework
agreement, which set down performance measures and prices.
For the design engineers, the relationship was completely different. This
was very much more like a relationship of equals and ran on a mutual trust
basis. There was still a framework agreement, but that was largely ignored by
both sides. The consultant engineers regularly went beyond their contractual
obligations to support the interests of their client, the authority. More signifi-
cantly, they gained a position of trust that allowed them to help steer road and
wider transportation policy within the local authority. They regularly led on
the development and introduction of new practices for the authority, and at
times it was hard to distinguish client from consultant in their working
relationship.
The benefits were several. Not only did it provide the client with the best
advice available, but the strength of the relationship helped the consultant bid
for greater depth of resources from their company HQ. This in turn meant
they could provide better support over a wider range of technical specialisms.
In addition, when times got tough and the client had to rein in massively on
discretionary spending, they went out of their way to find their Strategic
Partner an additional source of income that could help them maintain a full
presence in the area. Both sides played for their mutual advantage.
185
Jeeves
Overview
The Jeeves strategy is a variant on both the Remora and the Strategic Partner
strategies. Essentially, it consists of pursuing a Strategic Partner strategy
whilst pretending to follow a Remora strategy. It’s a ‘servant turned master’
strategy.
Jeeves is adopted to address some of the risks of either of the other two
strategies or to exploit some of the opportunities that may not be possible
with one of the purer strategies. Remora holds out the promise of growth, as
the Remora grows to be able to provide for more of the host’s needs. But as
the ultimate in follower strategies, it limits the Remora to a passive role and
one where the Remora may not be able to get the host to capitalise on oppor-
tunities or address strategic risks that only the Remora can see. A Strategic
Partner may be able to do either or both of these things, but many hosts are
uncomfortable with the change of fit from Remora to Strategic Partner since
this requires too great an investment of trust. The solution to the dilemma can
be the Jeeves strategy.
Whilst Jeeves is a guile or deception strategy, it is essentially benign to
the host. It’s in Jeeves’ interest that the host organisation prospers, stays out of
trouble and seizes opportunities. Often the deception will be partial when
Jeeves has allies within the host who recognise the value of the Strategic Part-
nership but who also are acutely sensitive to maintaining the pretence of this
being a purely passive relationship. Jeeves can also be used to transition from
Remora to Strategic Partner as, gradually, more and more staff within the
host become aware of and accept the true nature of the relationship.
Typical use
Who? It’s a strategy for those in long-term relationships with a larger client
who would adopt a Strategic Partner strategy if they could but are
unable to play that role overtly, usually because the client will not accept
them in that role. This is often the case when the relationship is very
asymmetric – when the client is very much bigger than the supplier and
the supplier in question is small even compared to other suppliers
within the supply chain.
When? The Jeeves strategy is an option when you see opportunities for
your client or for the relationship that are not available to you by being
open, or where you can see risks to the client that they cannot see them-
selves and that they may be unwilling to hear from you – or indeed from
anyone else.
186
Supplier strategies
What do you win? Jeeves offers most of the advantages of Strategic Part-
nership – trusted advisor in a long-term and valued relationship – but
without the accolades that go with this being overt. It offers the growth
potential of Remora but with an added level of value being provided
and rewarded.
You will need

Jeeves is a sophisticated strategy that requires the ability to maintain two
positions at the same time – and often these will be diametrically opposed.
The Jeeves strategy requires:
● Agility is essential, in particular the ability to switch between Strategic

Partner and Remora in the blink of an eye. Both Remora and Strategic
Partner require higher levels of agility than the host, so Jeeves requires
even higher levels of agility. Agility is needed to react to the host’s needs
and to move beyond these as a Strategic Partner and to switch between
roles.
● Shape and react are both essential, and these must both be genuine;
unless the Jeeves organisation genuinely meets the host’s needs, it will
never develop the levels of trust necessary to execute the strategy.
● Individual or edge, and herd, are often essential – herd for Remora and
either edge or individual for Strategic Partner – but the real identity of
Jeeves (as opposed to the appearance) is individual.
● Foresight is key to be able to anticipate needs before the host does.
● Faster cycle time and generally rate of change are usually also both
necessary.
The manoeuvres
The Jeeves strategy will start with a genuine Remora relationship and develop
from there, but given that the real identity of Jeeves is individual, it will often
start with a deception, a pretence to be a Remora whilst always intending to
become a Strategic Partner. It’s a prerequisite for the Jeeves organisation to be
an individual organisation; a herd player can’t pull this off.
1
The first maneouvre is for you to use superior foresight
to detect opportunities and risks to the partner, focusing
on those opportunities and risks for which you are ide-
ally placed and skilled to provide support.
187
Indicators: Being asked to respond to the host’s own perceived needs, as a

Remora.
2
Since the Jeeves strategy relies on trust,
you generally develop this early on,
reacting to the host’s needs (whether
spoken or unspoken) as fast as possible and
Â�
thereby building the closeness of the coupling.
You’re aiming to be thinking one step ahead but
acting just a half step behind the host or partner.
That may require you to alter your cycle time for
delivery of core services to the partner, and you may need to change some of
your organisation too.
Indicators: You can perfectly match your partner’s requirements for delivery
times.
3
An additional aspect of trust building is to
be superb at reacting to the host’s needs,
matching all their articulated requirements
and as many unspoken requirements as you can
confidently identify and deliver. That involves
over-delivering to build up your credibility with
the host.
Indicators: Successfully responding to the host’s own perceived needs as a
Remora.
4
Once trust has been established, the next
stage is to work out the elasticity of the
relationship – all structural coupling rela-
tionships drive change, so the key question here
is how much change you can drive in the partner
without scaring them into thinking that you have
turned into a Strategic Partner. As you deliver
your services to the partner, you use strength of
expertise and intelligence to add extra value to
your delivery or to proactively alert part of the
partner organisation to a risk or opportunity.
Critically, the partner should still feel in charge
and so slides into co-evolution without realising that you are starting to take
over the reins in your area of expertise.
188
Supplier strategies
Indicators: You know you’re starting to be more influential when a risk or

opportunity that you’ve highlighted to the partner comes back to you as a
requirement that the partner thinks they have identified and initiated
themselves.
5
As the strategy unfolds, the partner
becomes increasingly reliant on you not
just to respond but to anticipate needs
and problems. In the process, the partner
becomes increasingly open to influence – and on
more important issues. The partner moves from
shaping, through co-evolving to reacting but
critically never sees they have moved. The heart
of the Jeeves strategy is to be able to shape the host whilst appearing not to do
so, so that the number or proportion of relevant issues where you can first
bring it to the host’s attention and then exert influence effectively is
important.
Indicators: Number or percentage of issues within your area of expertise
where you are able to influence outcomes. AÂ€suitable or amenable part of the
host chooses to follow where you want them to go.
6
As you deliver significant additional wins for the host,
over and above the overt value proposition, it builds
strength. If the purpose of the strategy is migration
towards an overt Strategic Partner, then this is accomplished by
gradually bringing more and more of the host’s staff into relating
as a Strategic Partner rather than as a Remora, and this generally
involves careful selection of key staff to engage with.
Indicators: The differential between how visible the shift to weaker and react
is to the host, compared to how visible it is to you.

Where the intention is to use the Jeeves strategy to migrate towards becoming
an accepted Strategic Partner, then it’s important to monitor the proportion
of contacts within the host that have started to use the relationship as a Stra-
tegic Partnership. But if those contacts become isolated within the partner
organisation, or if you fail to gain traction with the opportunities and risks
you’ve offered to the partner, then you have slipped back into Remora.
189
Figure 12.4
Jeeves
Jeeves example
Tandem was a small consultancy business asked in to advise a large public
sector organisation on a specific problem area. In the process of doing this
work, it became clear that the organisation needed help with many poten-
tially critical issues that were within Tandem’s skillset. There were, however,
two major barriers to playing the Strategic Partner role that the organisation
needed. First was the size differential. The organisation numbered several
tens of thousands of staff and was happier thinking of the big consultancies as
potential partners. Second was an understandable aversion to and mistrust of
consultancy advice from any source large or small. Both of these meant that
there was a credibility issue, which could be overcome at an individual level
but not at an organisational level. A Jeeves strategy was the obvious
solution.
A series of consultancy interventions followed and, in each, a need iden-
tified by the client was addressed by Tandem and, during each, strategic
advice about other issues was seeded with particular individuals. Some of
these messages were so difficult for the organisation to hear that it took several
years before they could be discussed openly in management meetings. The
advice was limited to just a few people, and the control and dissemination of
messages was carefully managed by both consultant and ‘insiders’ within the
client.
190
Supplier strategies
There were a number of critical moments. Some came from trying to

keep the balance between Remora-like behaviour – doing what was asked in
the way it had been asked for – and Strategic Partner behaviour – challenging
the thinking and asking, “Is this even the right question?” Some came when
Tandem was becoming more openly accepted as a Strategic Partner, and here
the issue was people beyond the insider group suddenly facing a Strategic
Partner rather than a purely reactive and compliant supplier.
191
Expert
Overview
Like Authority, Expert is a strategy based on expertise. Authority is based
on a coupling between a supplier (the Authority) and the sector, shaping its
direction but not necessarily leading. The Expert is the sector leader, and its
position is based on strong, deep and rich expertise. It’s generally in a high-
tech market; otherwise, the levels of expertise required are lower and less
differentiating. The Expert may or may not be First Mover, but will defi-
nitely be acknowledged as best-in-class. The Expert will seek to protect their
technical excellence through patents and, to retain their position as market
leader, they will need a constant pipeline of innovation and to deliver inno-
vation faster than the competition. Once that leading position has been
established, it is hard for the rest of the herd to catch up as there is an
inherent delay in building the mature capabilities needed. In terms of
Treacy-Wiersema’s value disciplines, the products have special features or
advanced product performance, and the organisation has sufficient agility
that it can adjust to or shape market conditions and exploit entrepreneurial
initiatives. It actively enables collaboration between R&D, marketing and
production.
Typical use
Who? This is a strategy for a player with deep technical capabilities and
expertise in a sector.
When? In a high-tech environment, where there are rewards for sustained
investment over a long period.
What do you win? Market share and premium margin based on the tech-
nical quality of your offerings.
You will need

The Expert strategy requires:
● A leading edge or individual organisation.

● Foresight of emerging high-tech market.
● Investment to develop strength in the crucial area of expertise.
● A range of stretch to sustain a continuous focus on innovation.
● Product or service development cycle time faster than that of your
competitors.
192
Supplier strategies
The manoeuvres
1
Success with the Expert strategy requires the identifica-
tion of a growing high-tech market, where deep exper-
tise offers the potential for differentiation.
Indicators: Growing market identified.
2
Spotting trends early allows you to start
investing significantly in building that
deep expertise in a technology and
developing a field of application for that tech-
nology. This expertise will be at the heart of
your success for a long time, so it’s important
that you plan for both near- and longer-term
capabilities that can be used to build new value
propositions.
Indicators: Your investment levels will be
appreciably higher than those of your competitors in order to enable you to
build strength.
3
As part of developing and maintaining
your strength, you will need strong
R&D and the skill to commercialise that
R&D. It’s also crucial to be able to bring back
learning from the customer’s use of the prod-
ucts and services into your R&D processes. You will be most successful if you
can deliver a steady flow of innovations, both product based and internal
‘signature’ capability based, that are generally harder for competitors to copy.
Indicators: Regular development and commercialisation of innovation, as
well as a base of patents in target markets.
4
The depth of expertise generates innovation,
and the process of innovation and its
commercialisation further develops the
Â�
expertise. You become the go-to place and are seen
as a beacon by your peers and lead the sector.
Indicators: Competitors are playing catch-up and
start to develop similar products and technologies for
the niches and segments that you have developed.
193
5
You are the target in the sector, both in terms of your
quality and in a competitive way. Although it’s diffi-
cult to displace an entrenched Expert (unless you put
a foot wrong), the competitors will be trying to do just that.
You need to ensure that your product development cycle
time remains faster than that of the competitors, registering
patents for features that the market values. The rate of market
penetration is also likely to be important.
Indicators: Relative product development cycle time.
6
As you accelerate your innovation,
you achieve an effect similar to
Streets Ahead, in which you rein-
force your leading-edge position relative to
the herd with your speed and drive.
Indicators: As well as the market and
competitor reaction, you will now be extremely attractive to high-calibre
recruits and you will be recognised and sought-after experts on the confer-
ence circuit.

Your flow of innovation slows up or dries up. This is the leading metric of
decay in your Expert status.
Figure 12.5
Expert
194
Supplier strategies
Expert example
Enercon is a leading designer and manufacturer of wind turbines, which has
seen rapid growth with a high interest in renewable energy sources in the
developed world. It’s in an industry with high capital expense, so it favours
the larger organisation. Enercon is a technology-led company and a tech-
nology leader, performing its own R&D in-house, including its own foundry
and a specialist structural steel capability. It has very high-quality manufac-
turing, which underpins its post-installation service agreements covering
servicing and repairs. The major driver of its success has been the develop-
ment of a highly innovative wind turbine that has no gears between the rotor
and the generator. This provides near friction-free energy flow, with corre-
spondingly high levels of performance and reliability.
Unsurprisingly, as more and more turbines are installed worldwide,
there has been a strong correlation between the growth in wind-generated
power and the number of related patents filed. There has also been a strong
link between those installing turbines and those creating new innovation in
the wind turbine sector. Enercon has invested heavily in R&D and has contrib-
uted a stream of innovations in the sector, developing and maintaining a
Â�portfolio of patents in most of the major geographies in the world. As compe-
tition increases, revenues and margins have been eroded, increasing the
importance of robust IP defence to maintain market share. Enercon has been
engaged in litigation in both the US and India.
195
Troubleshooter
Overview
Troubleshooter is one of the ‘positional’ supplier strategies. It’s based on a
coupling between a supplier and a sector, rather than just with an individual
customer. It has similarities to the Strategic Partner strategy in terms of the
nature of the power relationship but is different in terms of time. Like Stra-
tegic Partners, Troubleshooters are seen as having particular expertise in
their field. But for the Troubleshooter, that deep expertise tends to be very
narrow but is acknowledged not just by an individual customer but across the
sector. To be a Troubleshooter, you have to be seen to be as significantly better
than the normal run of experts. In terms of the time dimension, the Trouble-
shooter’s relationship with the sector is fairly constant, but the relationship
with any organisation within the sector is temporary, unplanned and sporadic
because the Troubleshooter is only asked in to deal with some sort of crisis
that can’t be dealt with by normal means, and herein lies a critical difference
with Strategic Partners. Strategic Partners are long-term partners that are
proactive and shaping, Troubleshooters are occasional partners that react to a
situation and, once asked in, often take control for the duration of the crisis
and within their domain of expertise.
As a strategy, it is a hard position to achieve which normally requires
huge investment to build the depth of resource within the chosen area and the
ability to switch from dormant, whilst waiting for a crisis, to full-on activity
when summoned. Once achieved, it can provide a degree of security, provided
the market need is sufficiently regular to sustain you and to keep your exper-
tise up to date.
Typical use
Who? This is a strategy for players whose expertise and reputation are
widely valued.
When? Entry can be in any sector where crises happen sufficiently often to
sustain a business but not often enough that the skills to deal with them
will be developed and held within most organisations in the sector.
What do you win? AÂ€relatively easily defensible position of sporadic
power, where your specialist ability allows you to name your price and
enjoy a sector-wide reputation.
Troubleshooter example
Red Adair Inc. became known to the public internationally with the call to
deal with some extremely high-profile oil well fires. Capping burning wells is
196
Supplier strategies
dangerous work with high stakes, and the risks go beyond those that indi-
vidual workers are exposed to. There are significant risks to the business and
the environment, and both corporate and national reputations can be on the
line. As BP found out in the Gulf of Mexico, a well leak can quickly escalate
into an international diplomatic crisis in which national governments start to
exert their considerable muscle. This is, then, a very high-stakes game and one
where the costs of getting the job done fast and safely can pale into insignifi-
cance compared to the costs of failing to deal with it quickly and cleanly.
To the non-industry observer, the appearance of Red Adair seemed
somehow miraculous; suddenly, this team that was expert in capping burning
wells appeared as if from nowhere and vanished as soon as the job was done,
like some sort of grimy superheroes. But of course, the reality was slightly
different. Adair’s position was not built on occasional and dramatic entrances
every few years. Adair Inc. had capped over 2,000 well fires by the time Red
Adair retired. Over 34Â€years, that’s more than one a week. The reputation and
the position as industry Troubleshooter was hard-won and founded on
decades of constant experience and continual learning.
Outsource
Overview
In the Outsource strategy, some of the organisation’s capabilities are deliv-
ered by a third party. It requires the creation of a structural coupling between
the organisation and the third party. Generally, outsourcing is used only for
activities that are commodity for the organisation and that are core for the
third party. So the organisation holds onto capabilities that are differentiating
for it, while gaining from the expertise of the third party and a reduced cost
for the outsourced activities. As Drucker had it, “Do what you do best and
outsource the rest.” Managing Outsource relationships can be difficult and
works best when the activities to be outsourced are reasonably well managed
and well understood. The Outsource relationship needs to provide stability
for the organisation, with low stretch and careful synchronisation across the
interfaces. And those outsourced activities – now being delivered out of sight
and one step removed – still form part of the organisation’s value proposition,
reputation and risk.
Typical use
Who? This strategy suits an organisation with a bounded set of non-
differentiating capabilities that it can deliver more cheaply and reliably
through a third party.
197
When? The internal operations to be outsourced are stable and mature,

and the destabilisation of set-up can be handled by the organisation.
What do you win? Reduced cost of operations.
Outsource example
All mobile telephony companies have very similar core operations: they run
networks, they have transmission towers and they have IT systems. And
because the operations are very similar, and once good geographical coverage
has been achieved, they are non-differentiating. Since its foundation in 1995,
Bharti Airtel has become the second largest provider of mobile technology in
Asia Pacific and outsources all its technical operations. Its in-house capabili-
ties are solely sales, marketing and finance.
Cisco supports its mobile telephony partners in developing sales, tech-
nical and life cycle service skills, and the partner skill level is then assessed
through audit from a third party. Despite this wholesale outsourcing, Bharti
Airtel was the first Indian telecom operator to achieve the Cisco Gold certifi-
cation for good competency, service, support and customer satisfaction
standards.
Parasite
The Parasite strategy is a corrupt variant of Strategic Partner, focused on the
coupling between two organisations. The relationship is not benign to the
client and works primarily to the advantage of the supplier. There may be
value delivered to the client, but it may be just enough to keep them on the
hook. Typical Parasite behaviours are to provide addictive support and to
make the client increasingly dependent rather than independent and capable.
Frequently, the supplier and client collude in the deception; the Parasite rela-
tionship can be extremely comfortable and reassuring for both parties.
Some consulting organisations appear to develop very ‘needy’ clients,
who keep coming back for more of the same intervention.
198
Figure 13.1
Defensive strategies landscape
13 DEFENSIVE
STRATEGIES
We tend to think of business strategy as naturally being about competition but

possibly even more so as being about business growth. It came as a bit of a
surprise to us, when compiling this list, that so many of the strategies that we
had seen were actually about defence rather than growth, and although the
need for defence could arise from competition, other situations also call for a
defensive response. Viewed from a Patterns of Strategy perspective, this seems
appropriate and indeed obvious; in most situations, most organisations are
surrounded by other players, all doing their own thing, and the need to defend
your position against encroachment has to be common. Some of these strategies
can also be classed as competitive, but we’ve put them here because their
predominant use or their intrinsic nature is, as we see it, defensive (Figure 13.1).
Several of these defensive strategies, Dragonfly, Long Tail, Lock In and
Wait Out, are based on the use of time and specifically on slowing time down.
Easy Entry bucks that trend and relies on speeding up and shortening the
contract cycle time to retain market share. Most of the rest are power-based
strategies. Scorched Earth also uses time but is a pre-emptive strike against
competitors.
The power-based defensive strategies fall into two types: defence
through building strength to make your position harder to attack and defence
through allowing the attrition of power when attacked. The strategies that
defend through increasing strength include Musk Ox, Gorilla, Horizontal
Integration, Mergers and Acquisitions (M&A) for Economies of Scale, Brand
Reputation and Keeping up with the Joneses. The attritional ones are closely
related: Downsizing, Core and Divestment, all of which involve a retreat from
an expansionist high water mark back to the business’s ‘home turf.’
The last defensive strategy – in all senses of the word because it is usually
a last-ditch strategy of desperation to be used – is Change the Game. When all
else fails and the odds are stacked against you, find a way to knock the chess-
board over, disrupt your competitors’ strategies and start a different game.
Musk Ox
Overview
The Japanese have a saying: “The nail that stands up will be hammered down.”
This holds the key to the enduring appeal of herd strategies. The herd offers a
measure of protection to all its members: the closer to the middle you are, the
less likely you are to be picked on, to be hammered down, or to head off in the
‘wrong’ direction. Of course, the entire herd can end up moving in the wrong
direction, and business herds are far more likely to follow one another over a
cliff than actual herds of lemmings are, but the herd has the power to dictate
what ‘normal’ is and so impose their view on their environment. This means
that, in the absence of a business cliff (disruptive competitive event), if you
are with the herd, by definition that is safer most of the time. Similarly, preda-
tors and regulators alike tend to focus on those outside the main body of the
herd. Predators will often pick off leaders to buy advantage whilst regulators
tend to focus on the laggards to chivvy them back into conformance with the
accepted standards.
This is a defensive strategy based primarily on fit, but there are also
strong elements of both power and time. Power, because part of what the
herd offers is the power of the group over the relative weakness of the indi-
vidual. Time comes in when we consider the Musk Ox variant. When attacked
(say, by a disruptive new entrant to our market), herds can scatter and form
subgroups, or they can all charge off in one direction, but the most ‘herdy’
reaction is the strategy musk oxen adopt when attacked by wolves – they
form a circle with their horns facing out, presenting an impregnable defence,
and they wait for the danger to pass; they play for time. It keeps you coupled
to the herd and, in turn, coupled to the market.
Typical use
Who? This strategy is not size dependent and can be used by organisations
from multinationals to sole traders. It’s applicable in any sector provided
there is a minimum of three players.
When? Whenever there are players similar to you, preferably in stable
environments. In disruptive or turbulent environments, the herd
strategy can be fatal as herds tend to respond unthinkingly to change.
What do you win? Its primary function is defensive, but there are other
advantages as well. It can provide easier access for partners since
working with one member of the herd is very like working with another;
the language, standards, cultures, markets and working practices tend
to be very similar to one another, so transferring between them is simple.
202
Defensive strategies
The structural coupling between a herd and its environment is extremely

strong, so if you sit in the middle of the herd, then most of the time the
environment will adapt to maintain its fit with the herd. The herd
strategy demands that you conform to the herd but offers the promise
that the environment will adapt to suit. That way, your fit with the envi-
ronment will be maintained, and you will stay in business. In other
words, the world of the herd is usually extremely stable – until some-
thing really disruptive comes along. This is a massive saving of energy
for the herd member; they don’t have to be agile, they don’t have to be
fast and they don’t have to look too far ahead.
You will need

The Musk Ox strategy requires:
● Co-evolve and synchronise ensure alignment with the rest of the herd.
● Incremental change and learning from other herd members. Radical
change disrupts the herd, so it is shunned by the core and practiced only
by those at the edge of the herd – those leading it.
● Power isn’t a critical factor but will have an impact on where you sit
within the herd, and many herds will have an inner core of the biggest
beasts with concentric rings of smaller but essentially similar players.
● Fit. The strategy is fundamentally based on the tightness of the fit
between you and the rest of the herd.
The manoeuvres
1
This is less a series of concerted manoeu-
vres than a set of separate plays that
herd members use to first become a
member and then stay a member. Becoming a
member involves conforming: you do what the rest do when they do; you
adopt the same practices, the same technologies, move at the same pace,
serve the same market segments and put similar offerings into those m Â� arkets;
you behave like the herd, dress like them, talk like them and think like them.
Herds focus more on signals from within the herd than on signals from the
environment and rely on the herd’s ability to force change on the environ-
ment rather than having to adapt to it. Herd members are usually exqui-
sitely sensitive to the signals coming from other herd members and check
where they stand relative to one another, their slight differences
and their direction of travel. Commonality includes attributes such as
203
“We all doÂ€x” and extends to time factors – the degree of synchronisation –
and to co-evolution – the degree to which the herd drives you vs. the degree
to which you drive the herd. For a really central player, the co-evolution
balance will be roughly proportional to relative size; in other words, your
size as a proportion of the aggregate size of the herd should determine the
degree to which you drive and are driven.
Indicators: The degree of commonality vs. degree of difference. This deter-
mines where you sit, whether you are central or peripheral.
2
Herds tend to move together. When
there is a disturbance to their stable
environment, they tend to react
together, but the reaction can be unpredict-
able and will often be instinctive rather than
thought through. An external shock can
tÂ�rigger a stampede, and the direction and
duration of that can depend on the direction
taken by the first herd member to react. The
opposite herd reaction is the Musk Ox, the
defensive ring to face out and wait out
Â�disruption. The success or not of this strat-
egy will depend on ‘food’ – how long the income will hold up coming from
the market that you are refusing to move off and whether it will last long
enough for the threat to dissipate.
Indicators: The cohesiveness of the herd and the degree to which it supports
you rather than you having to support it.
3
As the herd comes together in mutual
defence, their collective strength restores
the balance of power between the herd
and the external threat. If the herd splits into
groups, then there is a choosing issue: where to
stand relative to the different groups or whether
to hover between several possible subgroups.
There is a dynamic to this, as your choices and
the choices of others will feed off one another, so
choosing one subgroup over another makes it more likely that others will too.
The internal structure of the herd is often fluid within the confines of the herd
boundary, with members forming subgroups and choosing their alignment
to them.
204
Indicators: The herd’s fit with its environment, focusing on its size and how
concentrated or dispersed it is relative to other herds in adjacent environ-
mental sectors or markets.

As herds struggle to support themselves in a given market area (in other
words, as the fit starts to break down), the herd tends to spread out and at
some point, the integrity of the herd breaks down – it becomes increasingly
difficult to recognise the herd as a unit.
Figure 13.2
Musk Ox
Musk Ox examples
In the 2007 financial crash, UK banks were attacked from several directions;
their competence, probity/recklessness and financial stability all came
under pressure from regulators, the government, the media and the public.
Their response was the Musk Ox: they banded together and presented a
unified defence against their critics. This extended to propping one another
up, as the weaker banks were supported by the stronger ones. Part of the
impetus for this mutuality was that they had seen what could happen if
they failed to act together. In the UK, Northern Rock had collapsed, and
whilst this was one of the most vulnerable and exposed members of the
herd, Lehman’s in the US was an example that had been allowed to fail. The
herd realised that this could cause a domino effect in which any of them
205
could be brought down, so collective defence was seen as the only effective
defence.
Periodically, pharmaceutical companies come under attack over the
price of new drugs. Once again, their defence is the Musk Ox. No company
points the finger at another to deflect the attack onto a competitor; they stand
together and present a concerted joint defence.
206
Scorched Earth
Overview
Scorched Earth is a strategy based on denying opportunities to competitors.
Usually this is done by identifying and then pre-emptively acquiring owner-
ship or exclusive rights to key external assets. Often this will be key raw mate-
rials but the strategy can also be based around identifying key skills or people,
or key suppliers, or critical time slots. In short, Scorched Earth involves iden-
tifying any critically important resource that competitors will need and
denying it to them. One of the ways to determine what will be critical for your
competitors is to create a new need that they will try to match and for which
you hold all the key resources. So one variant, or one way of executing the
strategy, is through using time as well as power to pre-empt competitors’
needs. To some extent, there can be a pay-off here: if you can identify need
and act before anyone else, you can usually acquire key resources more
cheaply, so you need less resource to dominate. If the need is well recognised,
executing Scorched Earth is simply a power play, blocking a competitor from
coupling to key resources that they need.
Where there is a time component, there is a similarity with First Mover,
and often in these cases, Scorched Earth will also confer some of the advan-
tages of First Mover.
Typical use
Who? Scorched Earth can be used by small or large players. When used by
small players against larger competitors, it requires even more concen-
tration on key resources.
When? Usually in situations where there is a long-standing competitive
structure and the range of growth strategies is relatively constrained,
either by regulation or by conservative market expectations, so usually
in mature markets where options may be limited.
What do you win? Scorched Earth can provide a way to wrong-foot
competitors and destroy their credibility. Executed well, it can have a
serious impact on market share.
You will need

The Scorched Earth strategy requires:
● Foresight, to be able to work out what resources will be key for your
sector (for both you and your competitors) but haven’t yet been recog-
nised as important by others in the sector.
207
● Agility. Rather than raw power, what we’re really talking about here is
free energy, sufficient to buy up the key resource you want to deny to
your competitors, and you may need to be able to free up that energy for
a long time.
● Advantage in speed. Typically you need to be able to move faster than
competitors to secure your chosen resource; otherwise, competitors may
get to hear of your interest and move to capture it before you can.
● Critical mass of the chosen scarce resource.
● Stretch, to create clear water between your value proposition and that of
your competitors.
The manoeuvres
1
The first move is to identify resources that are – or may
become – important enough to offer a strategic advan-
tage but that could also be acquired and corralled.
Â�Typically, this means resources that are scarce or from a concen-
trated source of supply. (Trying to tie down hundreds of suppliers takes time
and has a high probability of failure unless there are concentration points
somewhere in the supply chain, for example, where diffuse suppliers work
through a smaller number of brokers or dealers). Critically, the chosen resource
has to be capable of providing you with a differential advantage over your
competitors. Ideally, it will be a relatively small, relatively neglected, critically
important resource where there isn’t an easy substitution available. Foresight
allows you to better predict how long you need to operate Scorched Earth for
and to anticipate how the rest of the sector may react. The less stable the sector,
the faster the stocks of any resource become obsolete, and so the less time
Scorched Earth may work for. The shorter the time scale, the less enduring the
strategy is but, correspondingly, the cheaper (less power intensive) it may be.
Be careful about trying Scorched Earth on products heading towards their
end of life, since the counter to it is to develop new products, and competitors
may already have an alternative under development. Plan how long you will
need to control supply for, in order to give you an advantage. Any more than
this means you are probably tying down resource for little or no benefit, and if
you get this wrong, the whole strategy can backfire – tying you into a source
that your competitors have rendered obsolete by their response. In parallel, you
need to work out what will be a critical mass of supply that you need to capture.
In relatively stable sectors, a really high level of foresight isn’t necessary, as long
as you have an intimate knowledge of how the sector works now.
208
Indicators: Feasibility of this as a strategy: can we identify key resource that

can be secured?
2
Having decided what supply you want to control, as well as
how much of it you need to control to achieve critical mass
and how long you need to control it for, you then need to
free up the resource needed to control supply, and typically this
will be in the form of financial resources – a war chest, in other words. Also
needed will be access to the supply market, and if this is diffuse, your access
to resources needs to be similarly diffuse.
Indicators: Availability of free resource to carry out the strategy.
3
Once you start to move and corral the sources of
the critical supply, others will be alerted to your
intentions and may attempt to secure at least some
of the resource themselves. It’s important that you Â�e xecute
at speed, otherwise you won’t secure a critical mass of the
key resource but will have deployed an amount of your
resource, reducing your flexibility and range of options.
Indicators: Speed of the coup. It should always include
measures of the speed of execution of the strategy relative to
the cycle time of the industry, as well as the absolute time it
will take you to secure the critical supply.
4
Where you are controlling an existing source
of supply in your and, critically, your
competitors’ supply chain, then the first
Â�
phase is complete. It’s at this point that your
Â�competitors realise – if they haven’t already – that
you have conducted a resource coup. What’s impor-
tant is that any sources of supply that you’ve not
secured are insufficient for them to meet their goals.
Indicators: The percentage of critical mass in your
chosen resource that you have managed to capture.
This may naturally include the percentage of key
suppliers controlled as well as percentage of actual
supply.
209
5
When the strategy involves creating new demand in
the existing market for a feature where you control
supply, there is an additional element of redesigning
the product or service around the controlled element. In
these cases, it’s important that the component you have
secured the supply of makes a critical and perceived differ-
ence to the value; this can be more perceived than real, but the less this is
grounded in reality, the less effective the Scorched Earth strategy will be since
both customers and competitors are likely to see this as just a marketing
Â�gimmick. Once you know what you need, how much of it and for how long,
and you’ve got the means, then secure it.
Indicators: Revenue from the new demand.
6
Having secured supply and having
relaunched the product where neces-
sary, the next moves should be from
the market and/or competitors. If the strat-
egy is going to be successful, then customers
will react by migrating to you as their
Â�supplier of choice, and competitors will also
react. The reactions of competitors can range
from helpless protest, to incoherent product
counteroffers, through to substitution strategies. Substitution can focus on
finding substitutes for the resource you have taken control of, either finding
new sources of supply or a replacement, or it can take the form of finding a
replacement for the whole product or service offering, one that doesn’t require
the key resource.
Indicators: Percentage migration of your chosen market segment away from
your competitors to your offering. Subsequently, how long this advantage
can be maintained, so while customer choice indicators stay critical, also look
for the coherence and speed of response from competitors.

If competitors can find a replacement resource, and if the market responds
favourably to their substitution strategy, then the Scorched Earth has run its
course, and you need a new strategy. Where competitors manage to do the
substitution fast, Scorched Earth can backfire, leaving you with now obsolete
stock and them with a new and superior product offering.
210
Figure 13.3
Scorched Earth
Scorched Earth examples

The America’s Cup is one of the premier events in the yacht racing calendar.
It’s an international race where the competition is not just among the teams in
the race but between the boat designers of the competing teams. Famously,
the rules of the America’s Cup allow teams to use any design they like as long
as the boat’s vital statistics come to a given number when fed into a prescribed
formula:
L + 1.25 × √S −9.8 × 3√DSP
≤ 24.00 metres
0.686
For the 2013 series, the US team sponsored by Oracle started their design
campaign early by recruiting the top multihull designers in the world. The
New Zealand team realised immediately that they would be competing
against a multihull – probably a catamaran – and moved to recruit all of the
second-tier multihull designers left in the world. This effectively put all other
syndicates out of the running as no more experienced designers of racing
multihulls were available. At a stroke, New Zealand had reduced the odds
dramatically and reduced it to a straight race between them and the US team.
Russell Coutts from the Oracle team said it was a shame that more teams
weren’t competing and put it down to the cost, but cost wasn’t the issue:
they’d lost the chance to compete.
211
As well as doing Scorched Earth on the available talent, the two teams
effectively lengthened the time available for the design process by moving
early and, by finishing design earlier than normal, they were also able to
lengthen the time available for the build.
Sainsbury’s, the UK supermarket giant, was in fierce competition for
lead position in their market. Key to this battle was positioning as the super-
market of choice for high-value, high-volume, middle-class buyers, and
Â�celebrity chefs were at the centre of this high-stakes battle. Celebrity chef
Delia Smith had the leading food programme on TV and did a recipe using an
ingredient that at the time was very little known in the UK – mascarpone
cheese. Before this happened, Sainsbury had bought up virtually the whole
available supply of mascarpone cheese. Delia’s recipe became the must-have
dessert for dinner parties and of course, the only place you could buy the
ingredients wasÂ€.Â€.Â€. Sainsbury’s. Competitors were seen as deficient and
unfashionable in not being able to supply this key ingredient, and consumers
deserted them in favour of Sainsbury’s to do their shopping.
212
Dragonfly
Overview
Dragonflies are an ancient design. They’ve been around for between
200–300Â€million years – well before the end of the dinosaurs – and apart from
getting smaller, they appear to be pretty much the same. They have in fact
evolved, but they’ve done it very slowly. And they are still perfect at what
they do: they can hover, fly upside down, forwards, backwards, and they are
extremely fast.
It’s tempting to assume that in a turbulent world, faster adaptation will
always win out, but the Dragonfly – in nature and in business – shows that
this isn’t always the case. Ancient design can still be a perfect fit. In business,
the Dragonfly strategy consists of changing as slowly as possible and concen-
trating on perfecting the existing design rather than major change. It relies on
part of the environment opting to evolve as slowly as the Dragonfly, and in
practice, this in turn relies on maintaining a value proposition that is suffi-
ciently attractive for part of the market to be happy to accept a glacially slow
rate of change.
Typical use
Who? Dragonfly is an option for the laggard on the edge of a herd or an
individual. Critically, they are players who get separated from the herd
by sticking with a traditional value. Normally it is used by smaller
players, very rarely by larger herd members.
When? At the point where the herd moves off in a particular direction that
you don’t want to follow, there comes a time to decide whether to move
with them or to stay with your existing value proposition. This is an
option for some Long Tailers to shift strategy from merely milking a
declining market to building a more enduring value proposition.
What do you win? The Dragonfly strategy becomes increasingly a niche
play. You define the niche and are tightly coupled to it, and so as long as
the market values what you have to offer, this is a safe strategy. The
longer it can be maintained, the more difficult it becomes for anyone else
to compete in the same niche, so it becomes easier and easier to defend.
You will need

The Dragonfly strategy requires:
● Paradigm – not a paradigm shift but an ability to uphold and maintain a

different paradigm, a different value proposition from the herd’s.
213
● Low rate of change. Change is slowed to a minimum to ensure that the

traditional value proposition is maintained intact for as long as possible.
● Individual. The Dragonfly may start off as attached to the herd, but this
is one way to become and be seen as a truly individual player.
The manoeuvres
1
The strategy begins when the herd moves away
from where it has been to provide a different value
proposition to a changing market, and a player
either fails to follow or refuses to follow. Like the Long
Tail, Dragonfly can be a deliberate strategy, or an accidental strategy fallen
into by laggards too slow to notice that the herd has moved off until it is too
late to catch them up. You change only where you need to in order to meet
standards imposed by the market.
Indicators: The herd moving away from a value proposition that has market
longevity for a smaller number of players (preferably one).
2
Dragonfly starts as a strategy proper when the lack
of movement becomes sufficiently marked to consti-
tute a different value proposition and is attractive to
a large enough segment of the market. This is a response
determined by the market rather than by the player. Dragonfly really
becomes a strategy only once the market decides it’s of value. The manoeu-
vre here is when a subset of the market starts to coalesce around the value
proposition. This can be an extremely tight coupling, with quite tribal behav-
iour and loyalties being created.
Indicators: AÂ€niche forming around you and your offer, with customers
demanding greater intimacy. Level of persistent demand is key.
3
Once your distinctive value proposition has been
recognised and welcomed and a market has formed
around it, then the next phase is to carry on changing
as little as possible. You then resolutely keep your change
rate to virtually zero, and so the market is automatically
moving faster than you are.
Indicators: Persistence of your value proposition through
time and evolution in the value proposition of the market.
214
4
It’s also important to continually build the fit
with the market. This will typically involve a
mix of customer intimacy and high product
or service quality. Although there is a similar
emphasis on slow change as in Long Tail, there is a
marked difference in cost saving; in Dragonfly, this
is often a premium product, only rarely a value proposition based on price.
As time progresses, the market position you occupy becomes more and
more distinctive and harder to copy. Since part of the value proposition is
maintaining unchanged or ‘traditional’ values then, after a time, it becomes
increasingly difficult for any new entrant to come in. You can’t retrofit
Â�history. After a time, the position becomes unassailable, and any would-be
entrant is detectable as just an imitator.
Indicators: Levels of customer intimacy and longevity of customer relation-
ships. Stability of demand. Attempts by new entrants (indicating renewed
interest in your market) are rejected by the market, confirming the power of
your brand and value proposition.

The end point for the strategy comes when the market no longer values the
Dragonfly’s value proposition. At this point, there may be a tailing off, but it
is unlikely to be a Long Tail. You’ll know this because demand levels fall rela-
tive to any generalised market trends and drop to levels that no longer provide
you with a viable business.
Figure 13.4
Dragonfly
215
Dragonfly example
Morgan Motor Company still hand-build cars that look as if they’ve just
driven out of the 1930s, complete with leather strap to keep the side-opening
bonnet closed. In fact the Plus 4 design dates from the 1950s, and the 4/4 is the
world’s longest running production car, first developed in 1955 and still being
built today but, even then, the design was antiquated and owed a lot to
Morgan’s 3-wheelers from the 1930s. Cars are handcrafted with aluminium
bodywork built onto timber (ash) body frames.
Morgan left the herd of car manufacturers in the post−World War II era
when other automotive companies went through a structural, technological
and styling revolution. Since then, Morgan have persistently gone their own
way. They have introduced changes, mostly to cope with the changing avail-
ability of components and changes to safety legislation. But their small army
of passionate customers has valued them for their adherence to a traditional
design ethic, craftsmanship and heroic endurance. Buying a Morgan means
buying a piece of motoring history and an instant image.
The stability of Morgan’s value proposition has traditionally been
measured in the length of the waiting list for their cars. This has been as long
as ten years but has typically been around two years. The attractiveness of the
niche they have built has occasionally attracted new market entrant competi-
tors seeking to cash in. As new entrants, all of these have been unable to
Â�replicate Morgan’s heritage. You can imitate design and engineering, but you
can’t imitate history, and the harder you try, the falser it seems.
216
Long Tail
Overview
The Long Tail is a strategy that is the direct opposite of the First Mover
strategy. Where First Mover is about being the first into a market, Long Tail is
about being the last out. As with all the defensive strategies that are based on
time, it relies on working to slow down the natural pace of change. It’s a
strategy based on managing declining markets and understanding that end-
of-life markets have particular advantages if you know how to harness them.
We tend to measure markets in terms of size, but as they decline in size, three
things can happen: the number of competitors can decline even faster, so the
market share of Long Tail players can increase; the actual volume of sales can
go up; and, in addition, margins sometimes also increase as supply drops.
Often, the tail of a Long Tail is much longer and much fatter than most people
expect. Skilled Long Tail players work to keep the market alive as long as
possible, and a really successful Long Tail execution stabilises the market and
makes it easier for laggard customers to stay rather than switch.
The strategy relies on understanding how to milk as much revenue and
profit from a declining market for as long as possible. Assets and sunk costs
are sweated to the maximum; investment, particularly in R&D, is cut to the
bare minimum except for streamlining.
Typical use
Who? It’s a strategy most often practiced by those who were simply too
slow, too unaware to get out of a market as it declined, so it’s often seen
as a loser’s strategy – a strategy for those too incompetent to do strategy.
But Long Tail is seriously underestimated. When done deliberately and
well, Long Tail can be extremely successful and is particularly good for
organisations running a mixed portfolio of offerings.
When? This should be a serious choice for anyone in a market that is in
terminal decline.
What do you win? Focusing on those deliberately using Long Tail rather
on than those getting stuck there by accident, it is typically used defen-
sively to maximise revenue and profits with a minimum of further
investment. The advantages are generally: decreasing competitive pres-
sures, minimal investment, high liquidity, low uncertainty and low risk
(the eventual end of the market is a certainty, not a risk). This profit
maximisation can be done in its own right or the profits reinvested in
another market area with a longer life expectancy. Long Tail can be used
repeatedly on a succession of declining markets to fuel growth in another
217
part of the business. In other words, Long Tail can be used as an engine
to fund innovation elsewhere in the business in a managed renewal
cycle.
You will need

The Long Tail strategy requires:
● Being stronger than the rest of the market.

● Low levels of incremental change.
● Co-evolution with the market.
● Foresight is critical to anticipate the rate of decline of the market and the
dropout rate of competitors and customers.
● Agility, the ability to scale up or down as demand goes up and down
unpredictably.
● Concentration of power on the market, a ruthless focus on value within
that and very tight management.
● Very low change rate.
The manoeuvres
1
The strategy usually starts with the realisation that a
market you are in is shifting from mainstream to a
laggards’ market, that you are changing more slowly
than the market and that the endgame has started. It’s usually
something that happens to you. More proactive Long Tail
players may actually look for opportunities to buy into declin-
ing markets so that they can exploit the dynamics of the
endgame.
Indicators: Market decline rate, percentage drop in sales,
customers and competitors.
2
Build or maintain customer intimacy. It’s
critically important that you know what
will keep key customers in your market and
when they plan to switch to the offering that is
Â�displacing yours. You need to use your resource
thinly and for maximum customer retention. Watch
competitors to see whether they are planning to
bail out of the market and prepare to actively market to their remaining cus-
tomers. In some cases, it may be possible and desirable for both the exiting
218
competitor and you to actively negotiate a handover of their order book/Â�

customer base. For the competitor, being seen to arrange an orderly handover
can avoid reputational damage. Occasionally, it’s possible to accelerate their
exit to advantage.
You need to match your offerings to the needs of existing customers.
Ruthlessly cut all investment in development unless it either has a short
payback, or will address customer issues that might keep that customer group
from switching, or will streamline your delivery. Do the calculations carefully
on the investment needed to keep clients on board against the time that it is
likely to work for, and against their value to you. Skilled Long Tail players
can sustain a market very much longer than most expect. You need to decide:
how much resource should you cut, and how fast? How much longer and/or
fatter can you make the tail if you invest in improving the X that customers
say they want?
Indicators: Projected decline profile. In terms of effects on others, it is some-
times possible to chart the effectiveness of your interventions on customer
intentions: has this change increased the time they are intending to stay in this
market?
3
This is a strategy of being at the trail-
ing edge of the herd. But it does require
staying in contact with the herd for as
long as possible, and once you lose contact,
the strategy is over. Plan for fluctuations in
demand as both competitors and customers leave the market, so you have to
have contingency plans for scaling up as well as scaling down. Usually,
Â�scaling up is easier since in a falling market you will normally have surplus
capacity, but it does mean that your downsizing approach has to take into
account the possibility of having to temporarily reverse the process if that
looks likely. Often this means being careful about the retention of key
skills and capabilities.
Indicators: Accuracy of projections. Ability to meet demand.

Have a cut-off point planned. Even for those pursuing Long Tail deliberately,
there comes a point when the economics stop making sense and it’s time to
move on. The ultimate measure of success of the strategy is profit through
time, and all the decisions that need to be taken are really payoffs between the
level of profit and the length of time it can be maintained.
219
Figure 13.5
Long Tail
Long Tail example

We used the tea clippers as an example of First Mover. Long Tail is the opposite
strategy to First Mover, and we’re going to use clippers as an example here too.
The age of the tea clippers started in 1849 with the Oriental’s record-
breaking run from Hong Kong with a cargo of China tea for the London
market. Soon after that, clippers dominated the tea trade and raced every year
to win the bounty for being the first to bring that year’s crop back. The most
famous race was in 1866 when four clippers raced neck and neck the whole
way. After 99 days’ sailing, two picked up tugs at the same time at Gravesend,
and by the time they’d reached East India Dock in London, only 20 minutes
lapsed between their actually docking.
Three years later in 1869, the Suez Canal opened, making the passage
from the East practicable for the first time for steamships. Steamships using
the canal could avoid sailing around Africa, and so, despite being slower,
they could do the trip faster and more safely than the clippers; they could be
bigger and carry more cargo.
And that should have been the end of the clippers; 20Â€years should have
seen them come and go. But for the Long Tail. In fact, clippers and the wind-
jammers that were derived from clippers continued in service and were still
being used commercially right up to the start of World War II. As shipping
companies moved from sail to steam, a few lines kept running sailing ships.
Perfecting their design, making them easier and cheaper to sail, making bigger
ships with smaller crews and moving from tea to wool and eventually to
grain. The last grain race bringing wheat from Australia to Britain was run in
1949 – exactly 100Â€years after Oriental started it all. The Long Tail was around
for 80Â€years, four times as long as the 20-year pre-Suez heyday period that
clippers were originally conceived for.
220
Lock In
Overview
It used to be the case in the UK that you were far more likely to change your
spouse than your bank. When a bank won you as a customer, then that was
generally that, for life. Since the process of switching banks has been commod-
itised, this is no longer true, but banks are a prime example of organisations
that benefit from Lock In.
Lock In is a defensive strategy used to hold onto market share by making
it hard for customers to move away and/or for competitors to enter a market.
It’s often seen in conjunction with Augmentation. It is a strategy that can be
used at any size, but it’s generally used by large organisations in slow-moving
environments where there is a lot of competition.
There are several ways of going about Lock In. The crudest method is
contractual; contracts are written in such a way that they are hard to escape
from, and the small type includes clauses binding across a huge range of
circumstances. Another approach is both more insidious and more effective
and involves integrating yourself inside the customers’ processes so that
extrication becomes painful, expensive and risky. If you are enmeshed well
enough, then the customer cannot be sure what loose ends will be left if you
are removed and therefore what damage might be done to critical business
processes in removing you, and so they stick with you rather than switching.
AÂ€more benign approach is through quality of service, simply by being easy
enough and rewarding enough to deal with that customers recognise they are
unlikely to get equivalent value elsewhere – a golden handcuffs approach.
Perhaps counterintuitively, the cost of exit from a relationship is often corre-
lated with the cost of entry; the more it costs and the more painful it is to get
into a relationship, the less willing we are to admit that the pain and cost
might have been a mistake or to go through that again with an alternative
provider. So high entry barriers can also act as a Lock In mechanism. Which-
ever approach is used, the effect is to increase the cost and pain of exit from
the relationship.
Typical use
Who? Normally a large player in a herd operating in a mature competitive
environment.
When? If threatened by competition or market instability.
What do you win? Stabilisation of your market by reducing churn, by
retention of customers and thereby market share.
221
Lock In example
SAP and Oracle are the two big players in the Enterprise Resource Planning
(ERP) market. ERP software by its nature extends its tentacles deep into the
very fabric of organisations that use it, penetrating into the business process
architecture, the data architecture, the information architecture and the tech-
nical architecture of the business. So pervasive is it that many ‘customers’ find
themselves having to change their processes to suit the software rather than
getting the software to support their processes.
The process of adoption is long, high risk, expensive and painful. Things
have improved, but it used to be that if we just mentioned ERP in a consultancy
or training workshop, you could see immediately who had been ERP’d because
they were the ones who had just turned grey. If we asked the simple question:
“When did the system go live?” they would all be able to reel off the precise date
even if it had been years earlier because the date was etched into their memory.
These ERP organisations benefit from two of the Lock In mechanisms;
they are deeply enmeshed into the customer’s organisation, so it’s hard and
dangerous to extract yourself, and the entry barriers are high, expensive and
painful. As a result, switching between suppliers is rare. This means that,
once contracted, customers are stuck with their choice, and the only thing
stopping the IT firms from abusing the power that Lock In gives them over
their customers is that the customers are big players in their own right. When
SAP tried to increase charges on maintenance in 2008, customers resisted, and
two years later SAP backed down.
The real strategic benefit, then, has not been the ability to fleece
Â�customers that cannot afford to defect, since this would be ultimately self-
defeating. Instead, it is the stability of the customer base that Lock In provides,
the stability of the market and the insulation against the worst of competitive
pressures. These get focused on the point of purchase rather than through the
life of the relationship.
Gorilla
Overview
The silverback gorilla is the dominant adult male in a troop. He is at the centre
of the group, making its decisions and determining when and where it should
move. Gorilla follows on from Tornado, when a number of organisations may
be competing for market share, and is executed when one organisation pulls
ahead of the others and their offering becomes adopted as the standard, the
one that herd buyers will choose. It is defined as a Gorilla because its actions
will shape the market from there on. Becoming the standard is partly about the
222
sheer volume of sales and level of market penetration during the Tornado and
partly about knowing who the influencers in the market are. If you can sell to
them, they will help you become the standard because it’s in their interest that
they don’t have to change if a competitor should become the standard.
And so, just as in the jungle, the pecking order developed during
Tornado is very firmly established. The Gorilla will have substantially more
market share than any of the other players; following Lanchester, a 42% share
will make market dominance easier to defend: this is out-and-out strength at
work. The Gorilla has built a positive feedback loop: as it wins sales simply
by being the Gorilla, and the more sales it gets, the more dominant it becomes.
In addition, its attractiveness means it can command premium price, and its
sales volumes mean that it can drive down costs. Others may need to offer
discounted prices simply because they aren’t the Gorilla. Anyone else in the
market can only become dominant in defined niches. In terms of value disci-
plines, Gorilla depends on being the default standard – product leadership –
and operational excellence.
It is possible to be too big, though. Excessive dominance tends to attract
the attention of regulators who want to ensure healthy competition for the
benefit of consumers and also for the wider economy, though market segmen-
tation may make this less likely.
Typical use
Who? This strategy requires you to become or be the strongest player in
your market − and stronger by a substantial margin.
When? Prepare for this during the Tornado phase of a new market or new
market segment, as the leader during Tornado stands the best chance of
becoming the Gorilla.
What do you win? Utter dominance in that sector, shaping the market,
garnering hefty sales volumes, and high margins through high pricing.
Gorilla example
Going on holiday somewhere sunny? If you choose a pair of branded
sunglasses, the chances are they will have been made by Luxottica, an Italian
eyewear company, the world’s largest manufacturer of frames and sunglasses.
They initially built their Gorilla status by driving Vertical Integration through
all processes from design to inventory, delivering efficiencies. They set the
standard through high-quality manufacturing capacity that was attractive for
major brands. They subsequently boosted their market presence by cutting
out the middleman, becoming one of the world’s leading optical retailers and
223
moving into eye care. As a true Gorilla, it manufactures for around 80% of the
brands in the eyeglasses market, and with such an influence in the market, it
can set prices high.
They have been criticised for those high prices, with concerns over
whether their market position was keeping prices unduly high. Despite these
concerns, in 2014 Luxottica formed partnership with another Gorilla, Google,
working together to design, develop and distribute Google Glass, creating a
pool of expertise that can blend fashion, glass engineering and highly innova-
tive technology.
Brand Reputation
Brands are an expression of an organisation’s identity; they build fit and
attract the customers you want. Although it’s an intangible asset, brand drives
loyalty and, at the luxury end, prices. This strategy focuses on the soft elements
of the structural coupling between the organisation and its market, aligning
the values of the organisation with those of its customers. Because brand is an
intangible asset, it’s hard to copy so, once established, this is a hard strategy
to outflank.
Louis Vuitton is one of the most valuable luxury brands in the world,
with high status and cachet – and prices to match. It acts strongly against
counterfeits, a serious threat to its reputation, given that its customers are
buying prestige along with their goods.
Change the Game

As a high-risk/high-reward play, this is usually a strategy of last resort. It’s
about changing the nature of the competitive landscape by offering a new
value proposition. To do that, it requires at least a disruptive and preferably
paradigm stretch in the structural coupling to the market.
When Xerox invented the photocopier, they thought they had a way to
dispense with carbon copies, and there was insufficient demand for this to be
viable. But, in financial difficulties and facing a damned-if-we-do/damned-if-
we-don’t strategic situation, the Xerox senior management went ahead and
launched the new machine. The ease and convenience of being able to make
unlimited copies created an entirely new market for copies and therefore for
copiers.
Core
This strategy is about maintaining the structural couplings built on core capa-
bilities, staying with the business you know and sustaining your essential
224
value proposition. It builds fit from the inside out, looking for market oppor-
tunities that match its capabilities and seeking to shape the market through
what it provides.
Honda blends innovation capabilities with a focus on small engines and
retains this as their heartland. “The Power of Dreams” is at the core of the Honda
brand, and some of their TV commercials had small engines in the starring
role.
Divestment
Divestment has some similarities to Downsizing in that it reduces business
operations to cut costs. Divestment involves actually selling off a part of the
business, and the structural coupling is eliminated from the organisation and
reinstated between the purchaser and the market. Divestment can result from
difficult market conditions. It can also result from the downstream conse-
quences of previous takeovers and acquisitions, where the organisation
acquired a line of business that didn’t ultimately create either synergies or
economies of scale with the other lines of business.
Quorn is a vegetarian protein with a texture similar to that of meat
produced by chemicals company ICI and food business Rank Hovis McDou-
gall. Through demerger and merger, ICI changed into AstraZeneca, with a
focus on ethical pharmaceuticals and biologics. Quorn no longer fitted with
AstraZeneca and was sold.
Downsizing
Downsizing is the reduction of some or all of current business operations to cut
costs. It’s a reduction in the strength of the structural coupling by cutting across
the board or by concentrating on fewer areas of business, but it’s less selective
than Divestment. It’s usually a reactive response to changes in demand or to
other changes in the operating environment but can be proactive.
Downsizing is often applied bluntly and indiscriminately, almost as a
panic reaction, ‘salami-slicing’ across the board. But it can be done well and
thoughtfully. In 2001, Boeing were pre-emptively restructuring, anticipating
an economic slowdown with a knock-on effect on the cyclical airline sector,
and they were determined to avoid the costly swings in employment seen in
past cycles. In an industry that requires a highly experienced workforce, with
deep technical expertise developed over years, getting capacity right is a real
challenge. The costs of overcapacity are easy to see, of course. The costs and
impacts of laying off staff in a downturn and then having to rebuild that
skilful workforce, with all its rich R&D capability, are harder to assess, but
225
cutting too close to the bone can damage the viability of the organisation.
Boeing brought a focus on lean principles to reduce their cost base, and since
then raised production rates only slowly despite a full order book to avoid
creating overcapacity yet again.
Easy Entry
In many ways, Easy Entry is a counterpart to the Lock In strategy. Both are
time-based strategies for managing the coupling to a market in order to retain
customers and market share. Where Lock In slows down the contract period
making exit harder, Easy Entry does the opposite and shortens the contract
period to make defecting too small a decision to bother about. The widespread
move to providing value through a service rather than through an owned
product shows how popular Easy Entry is. Its major advantage over Lock In
is that Lock In makes the entry barrier for new customers higher, as well as
the exit barrier, whereas Easy Entry lowers both so that entry is a painless
decision for new customers.
An example of the strengths and weaknesses of Easy Entry can be seen
in the choice between pay-as-you-go or a contract for mobile phones.
Horizontal Integration
This strategy builds capacity at the key point of coupling to the market.
Organisations integrate with others at the same part of the value chain,
allowing them to share resources and thus reducing costs through efficient
production with the potential to create new products and services. It creates a
very high-density footprint at a single point of the value chain and increased
market share. The consolidation itself reduces the number of competitors and
so the intensity of competition.
Virgin Active bought a chain of health clubs, Holmes Place, in 2006, and
then bought rival fitness chain Esporta in 2011. This delivered a wider spread
of clubs around the UK (increased market share) and also a wider range of
activities (richer service offer).
Keeping up with the Joneses

‘Keeping up with the Joneses’ is an English idiom about matching the lifestyle
of your neighbours. It’s about the structural coupling between you and the
herd and how you match product ranges as part of herd membership. If your
competitor introduces a particular type of product or service, then so do you
226
and vice versa; therefore, it’s an unashamed herd strategy that keeps the herd
very homogeneous.
In the automotive sector, all the major manufacturers have very similar
models. One manufacturer produces a supermini or a sports utility vehicle?
They all do.
Mergers and Acquisitions for Economies of Scale

This is a defensive consolidation strategy intended to cut costs and do the
same with less. The couplings to the markets of the two former organisations
are preserved, and the internal activities are integrated to create and deliver
products and services more cheaply.
Orange and T-Mobile, two major players in the UK telecoms sector,
merged in 2010 to form EE (and subsequently bought by BT). The merged
organisation maintained the brand names and brand identity of the former
competitors and shares the physical telecoms network itself, reducing the
cost-to-serve and enabling EE customers to use both networks without addi-
tional cost.
Wait Out
Wait Out is a time-based strategy in a coupling with another party threat-
ening your position and is typically used to defeat pressure from them. Rather
than manoeuvring or responding to moves against your position, the strategy
is simply to sit still and wait for conditions to change. The Wait Out strategy
depends for success on an intervention from a third party, or the nature of the
situation changing, or the counterparty giving up.
A classic example is the nuclear industry which, rather than bowing to
pressure from the anti-nuclear lobby to address the problem of nuclear waste,
simply waited till energy economics changed in their favour.
227
Figure 14.1
Growth strategies landscape
14 GROWTH
STRATEGIES
Like competition, business growth is one of those, “Well, of course, how could
our strategy not be about growth?” assumptions. But, as with competitive
Â�strategies, we’re looking at a relatively small subset of our 80 that are unam-
biguously about achieving growth. And also like the competitive ones, a lot of
strategies in other chapters can be used for growth but are less clear-cut. So if
you need a growth strategy, do look outside this chapter as well; this is just
the set of those that are primarily growth orientated. AÂ€cautionary note: some
businesses in difficulty try to grow themselves out of trouble. The strategies in
this chapter are appropriate for organisations that are intrinsically healthy
and viable; less healthy ones may struggle (Figure 14.1).
We can split the growth strategies into two main types: ones that work
from the outside in and ones that work from the inside out. The outside-in
ones − Organic Growth, Broadcast, Settlers and Tornado − are built around
growing the market and, with that, yourself. The inside-out ones − Time
Bandits, Vertical Integration, Diversification and Mergers and Acquisitions
for Synergy (M&A for Synergy) − are built around growing your capabilities
in order to grow your market. Bowling Alley involves doing both at the same
time.
Within each of those groups, there are easy and hard options. Settlers,
Broadcast, Organic Growth, Diversification, Vertical Integration and Time
Bandits are strategies based on growth through extension. In their different
ways, each of these takes what you already do and moves one step into adja-
cent territory or capability. For each of them, the territory you move to already
exists and can be seen from where you are – less an act of creation and more
an act of appropriation. But within that basic theme, there are big differences.
Diversification and Vertical Integration are based on extending your range of
capabilities and then from that extending market reach. Vertical Integration
is an extension to include more of the capabilities needed to serve your
existing market. Diversification is an extension of your capabilities to serve a

wider range of customers. Broadcast and Organic Growth take existing capa-
bilities and project those into adjacent market areas, and the difference
between them is the spread of market covered and the degree of uncertainty.
Settlers and Time Bandits are both time-based strategies, Settlers involves
moving into a market that someone else has already pioneered and started to
develop, and Time Bandits involves moving to a value proposition that is
adjacent to your current one but upstream or downstream in terms of the
customer’s journey.
The other three strategies in this chapter, Bowling Alley, M&A for
Synergy and Tornado, are all harder and are strategies based on growth
through doing something new and different. They are strategies that use
innovation – stretch – to build new business, and the emphasis in each case is
on ‘new.’ These are all about doing something that we don’t currently do.
Bowling Alley is about expanding into new market segments, whereas
Tornado is about scaling up at speed to dominate a market segment. M&A for
Synergy works in a slightly different way by combining two or more existing
capabilities to create something new – a more structural approach. All these
three are acts of creation, but the level of creativity and imagination needed
varies considerably and, because they require creativity and imagination,
these three strategies are not for everyone.
230
Growth strategies
Bowling Alley
Overview
In a market maturity model that goes from innovators via visionaries to mass
market, the most critical stage is the transition from visionaries to mass
market. Moore named this The Chasm, which exists because of a disconti-
nuity in value types between visionaries and the mass market. Visionaries
need to be first, so they want new world-changing innovations and accept the
risk that this unproven idea may fail. The mass market hates risk and being
first and demands evidence that the innovation has worked for people just
like them. The value types are direct opposites.
Bowling Alley is a strategy for crossing the chasm. Visualise a bowling
lane, with the pins configured at the far end with a lead pin at the front. The
chasm-crossing marketing focuses first on the lead pin – this is the visionary.
The evidence from this first application is then used to make the first sale into
the early majority. This group needs a compelling reason to buy, a mission-
critical process that is broken and that can be enabled by the innovation.
Moving on from that, the subsequent pins in the Bowling Alley build on this
first part of the evidence base by deploying the same innovation for a different
purpose in the same sector or for the same purpose in a different sector. This
creates depth and breadth of credibility of the innovation.
There are a couple of particular challenges for the Bowling Alley
strategy. Once it starts, your strategy is visible to your competitors, so it’s
important that you cycle through the evidence generation at speed in order to
avoid a Fast Follower learning from your first early adoptions and stealing
opportunities from you. You want to be the de facto leader in this new segment
or market, ready to exploit the Tornado. Secondly, building effective struc-
tural couplings is hard, and this strategy requires you to do that repeatedly
and with very varied customers.
Typical use
Who? This strategy requires an edge organisation in a new or evolving
market, which can operate effectively with other edge organisations and
individuals.
When? At the point where an innovation moves from a concept to a sale-
able (and scalable) product.
What do you win? Entry to a high-growth, high-margin market or market
segment.
231
You will need

The Bowling Alley strategy requires:
● Edge or individual organisation.

● Foresight to match an innovation with a potential market opportunity.
● A range of types of stretch to be able to forge structural couplings with a
range of customers with very different characteristics.
● A single concentrated effort on a customer at a time.
● Speed, a short cycle time to build and develop each customer relation-
ship, stabilise it – and move on to the next.
The manoeuvres
This strategy involves manoeuvres with three distinct structural couplings.
One is between you and the visionary (shown in black), the next is between
you and the early adopters (shown in grey) and the third is between you and
the market (shown in grey with white dots).
1
The Bowling Alley starts with a significant
Â�innovation, and a critical element of the strategy
is to see how the innovation could be used in a
Â�market to do something very differently or to create a
new market. It’s about customer intimacy – a rich and
deep understanding of potential customers and their
needs and issues – and being able to match this with
the highly differentiated features and benefits of your
offering or product leadership.
Indicators: Target market (segment) defined. Identification of target visionary
customers.
2
The first use of this innova-
tion will be high risk and at
least disruptive and poten-
tially game-changing (paradigm
shift) for the visionary adopter,
and this is the first coupling in
focus. Because this is about some-
thing new, the visionary adopter
will by definition be an individual
in the market you want to target
because you want their adoption
232
Growth strategies
to start shaping the market to be ready for your product or service to sell at
scale. Your ideal partner here will be willing to take on disruptive change to
access a window of competitive advantage. You’re looking to build a struc-
tural coupling with that ‘lead pin’ visionary. Your visionary adopter will be
engaged in a range of activities, but you are – literally – very single-minded at
this point.
Indicators: Acquisition of target visionary customer. Delivery of strategic
opportunity for the visionary, using your innovation.
3
Having knocked down the lead pin in the Bowling
Alley, the next manoeuvre shifts focus to the early
adopters and the coupling to them, progressively
moving from disruptive to radical stretch. You will actively
seek new structural couplings with a range of different
Â�customers with different characteristics. You are looking for organisations
that can complete your ‘matrixed’ evidence base of innovation in the same
sector and a different purpose to the visionary or a different sector but with
the same purpose as the lead pin.
Indicators: Identification of target early majority customers.
4
Herd members won’t buy yet, so you
want to work with edge organisa-
tions, those who have a demonstrably
broken mission-critical problem. They will
need evidence that your solution works for
their problem and in their sector and will be
looking for clear performance improvement from the innovation. As with the
visionary, you work with those organisations one at a time.
Indicators: Acquisition of target customers. Measurable performance
improvement for them and evidence for you to provide to future customers.
Learning about how best to introduce the innovation to future customers.
Dominance in share of your target segments.
5
Looking now at your coupling to the overall market,
you need to be attentive to potential new entrants,
and it will serve you to be fast in identifying and
Â�capturing candidate edge customers in order to avoid new
entrants getting a foothold in this area while prices are still
high. As you reduce your cycle time for gaining each new
customer, the rest of the market gets slower. And as you gain
each new customer, market growth rate goes up.
233
Indicators: Short cycle time in capturing and consolidating each customer

relationship. Upswing in rate of growth of market.
6
The overall win from this strategy is a
positional one of shaping a market to fit
your offering, which should make it easy
for you to grow. The level of innovation you have
offered the market, together with the speed at
which you have delivered it, gives you that
Â�shaping opportunity. Success breeds competition
though, and as the market grows, others will join
you there.
Indicators: Presence of new entrants in the market or segment and their rate
of growth.

Performance improvement isn’t delivered on adoption (the innovation isn’t
delivering its potential), or you’re not ready to deliver at scale when the rate
of market growth accelerates rapidly – when it goes Tornado. Worse still, new
entrants may threaten profitability by being better prepared to deliver at scale
than you are.
Figure 14.2
Bowling Alley
Bowling Alley example

Back in the early 1990s, Lean was just starting in the UK. It had been around
for 40Â€years or so in Japan, but despite the proselytising of Deming and his
234
Growth strategies
band of dedicated acolytes, it was relatively little known in the UK. At that
time it wasn’t called Lean, it was generally known as ‘continuous improve-
ment’ or ‘kaizen’ or ‘Deming.’
Japanese car makers building plants in the UK demanded that suppliers
adopt this way of working in order to guarantee the much higher standards
of quality and reliability that the Japanese manufacturing model needed. And
so Lean entered the UK in one sector and for one application: improving
automotive manufacturing operations. At this stage, a small number of
Â�
consultants sprang up to support change in the sector, approaches became
slightly more standardised and people started referring to the approach as
Total Quality Management (TQM). The standardisation was partial, and there
was a lot of bickering among consultants and schools of thought as to what
was and wasn’t in the approach. In reality, many TQM initiatives were quite
eclectic and seized on different parts of the whole Lean package.
The next move was with different applications in the automotive sector,
so the approach was applied to areas of business beyond manufacturing oper-
ations. This was the migration down one leg of the Bowling Alley. It was built
from the direct experience of managers using the techniques, who applied
them to other activities within their businesses.
Only slightly behind this came the start of transfer to different sectors.
Initially this was other manufacturing sectors. Again, this move was supported
by evidence of the applicability of the techniques to solve the same sorts of
problems but in another sector. Consultants, academics, books and confer-
ences spread the word of why and how to do Lean.
Then came the jump to the service sector. This came from the application
of Lean to non-manufacturing operations within manufacturing companies,
taking the lessons learnt there and transferring those to similar activities in
non-manufacturing firms. By this stage, approaches were being standardised.
ISO introduced a new quality standard based on continuous improvement
principles, and a whole industry was spawned of consultants selling and
managing the standard. The level of skill had gone down from a few special-
ists, who knew the theory and practice of Lean inside out, to an army of
consultants following a standard.
The last move in the Bowling Alley was the move from the private sector
to the public sector. With a raft of application examples already built of
different types of service operations, the adoption of Lean became a no-brainer,
the default solution for any manager needing to save money, to improve
quality or just to be shown to be making a difference.
During its passage through the Bowling Alley, Lean had gone from a
genuine paradigm shift in management thinking to an approach that was part
of management’s collective unconscious. It had gone from a very hard sell to
the default solution. The process took around 15–20Â€years.
235
M&A for Synergy

Overview
This is one of two very different strategic uses of mergers and acquisitions
(M&A), and both traditional theory and practice in M&A tend to confuse the
two. M&As are supposed to increase shareholder value, and there are two
ways to do this. The first is to cut costs whilst still delivering equivalent
value, and the second is to deliver more value from combining the merged
Â�companies than they had whilst apart. This 1 + 1Â€=Â€3 effect is synergy – the
ability to do something together that the two companies couldn’t do apart.
Strategically, these approaches are diametrically opposed. Synergy is about
doing something extra, something new, something different: “If we take your
product X and run that through our channels into these markets, we’ll have a value
proposition that neither of us had alone.” That’s synergy, and strategically it’s a
growth strategy. Cost-cutting, on the other hand, is simply about doing
what you were already doing but doing it more cheaply through economies
of scale. Strategically, cost-cutting is a defensive move; it doesn’t propel you
into new markets, it doesn’t offer any new value proposition. The two
approaches represent very different strategies, and it’s extremely important
to understand the difference and what you want from the M&A strategically
because cost-cutting in M&A is very much easier than designing and devel-
oping synergy (58% of M&As actually result in a reduction in overall value).
Without real clarity, an M&A that was conceived for growth can turn into a
defensive cost-cutting M&A. It requires a good management team with
particular skills in organisation and business design and the ability to inte-
grate two organisations whilst maintaining their difference.
Typical use
Who? Typically a synergistic M&A is used to expand into a new area of
business, a new geography, or to build a new value proposition. M&A
usually involves a larger organisation taking over a smaller one.
When? This is essentially a power play and in many cases is a strategy used
to swap power for time: the purchaser spends money (power) to buy
advantage rather than taking the time to develop it in-house. It is
commonly used by large organisations to move more quickly than
Organic Growth will permit.
What do you win? When executed well, what you get is synergy – a value
proposition that neither party could have delivered on its own. This can
propel you into a new market, create a new market or give you an
advantage in the market you are already in.
236
Growth strategies
You will need

An M&A for Synergy strategy requires:
● Foresight, spotting a potential new value proposition.

● Disruptive change. The creation of synergy, by definition, means
working in a new way to create new value so that may involve a
Â�paradigm shift but will involve at least disruptive change.
● Agility, the ability to shift resource into new areas of business, specifi-
cally a war chest to fund the M&A.
● Less concentration of power. Synergistic moves almost always involve
doing more things or doing things in more places or doing things for
more customers than you were doing before.
● Stronger, an advantage in power over the target company (the one being
acquired). But it doesn’t necessarily require more power than your
competitors – although that helps.
● Speed can sometimes be important, whether this is a growth move to
create advantage, catch up with a competitor or deprive a competitor of
an opportunity.
The manoeuvres
1
Before the strategy is put into action,
there is a vital phase of preparation;
organisational resourÂ�ces, both skilled
staff and cash, need to be freed up from busi-
ness as usual and mobilised for action. The
strategy begins with spotting potential in the
market for a new value proposition that can be delivered by the M&A, using
the combined capabilities of the merged organisation. If this isn’t present or
hasn’t been built, then you must assume that the M&A you are about to
engage in is defensive in nature, one based on economies of scale and cost-
cutting because, without a clear new value proposition including duration of
the advantage, that is almost certainly what it will turn into.
Choice of target essentially comes down to the accessibility for competi-
tors wishing to follow your lead. If there are two targets, the one that is more
difficult to enter may actually be preferable to the easier target if merging
with the harder target will make it all the harder for competitors to catch up
once you’ve done the M&A. Obviously, this puts a premium on opportunities
where the entry ticket involves acquiring the only existing, or best, player in a
technically difficult or rare field. This would be a combination of M&A for
Synergy with the Scorched Earth strategy.
237
Indicators: Potential return against the cost and difficulty of realising that
potential. Length of time that advantage can be maintained. Mobilisation of
resource necessary (not merely to make the acquisition but to make it work
synergistically) in the timeframe available.
2
The next step is to build a new
model of the combined business
as it will operate post M&A. This
should include all aspects of designing
and testing a new business model, from
market position through channel design
right down to numbers of staff and
reconfiguration of operations or logis-
tics. Time spent here will pay dividends later. It’s important to do this work
– in draft at least – prior to engaging with the target because it forms the basis
of a business case, and that will help immensely in the negotiation. AÂ€draft
plan can be developed from the statement of market opportunity to help iden-
tify possible targets, or it can be developed in parallel with target selection.
Indicators: Assessment of the difficulty of integration, a function of the size
and number of business components that need to be realigned and specifi-
cally the difficulty of building key connections and interfaces and cauterising
those that have been severed. Typically, these integration costs are signifi-
cantly underestimated – particularly the costs of IT integration.
3
Once this preparatory work
has been done, the prepared
resource is mobilised using
agility and critical mass to bring
overwhelming strength to the M&A,
focusing on the coupling between
you and your target. Assuming the
acquisition goes through, elements
of the two organisations will need to
be integrated, and it’s vital that this is based around the proposed synergy,
whether that’s a different value proposition, or geographic market, or Â�customer
segment, or channel exploitation, or .Â€.Â€.
Indicators: Successful integration within the window of opportunity. Ability
of the merged organisation to deliver the planned synergy. New value propo-
sitions making a measurable contribution to revenues and profits.
238
Growth strategies

Internally, the organisation may head back towards driving economies of
scale through standardisation, and that tells you that there isn’t the appe-
tite for a competitive growth move. Externally, it may be that synergy isn’t
being delivered through new products that have good take-up from the
market.
Figure 14.3
Mergers and Acquisitions for Synergy
M&A for Synergy example

In 2004, the prospect for telecoms companies trying to establish a position as
global providers was less than optimistic following WorldCom’s collapse and
bankruptcy years earlier in their quest for world telecoms domination. At the
same time, moving from a national to a genuinely global player in the sector
offered huge potential benefits, both in terms of medium-term returns and a
much longer-term position of strength, and growing to that position by
Organic Growth was likely to be too slow. M&A was the only realistic
strategy. The big prize was not just contracts to support communications for
global companies but being trusted by rafts of nationally based companies
across the world.
239
For British Telecom to make the jump from a predominantly national

provider to a truly global player, they needed to acquire someone with a
wider footprint. BT could bring strength in both finance and technology, but
their global presence, though wide, lacked depth. BT’s chosen acquisition
target was Infonet, which had a presence in 180 countries, operations in 70
countries and a customer base of more than 1,800 large and medium-sized
companies.
As usual with M&As, the devil was in the integration, and in this case,
BT needed to standardise their approaches before these could be safely rolled
out across a large number of countries where they would need to connect to a
wide range of local infrastructures, as well as local regulatory frameworks. BT
took their time with the integration to ensure they didn’t make the same
mistakes that WorldCom had made with their series of M&As.
The synergy was provided by the combination of global market position
coupled to technological strength in depth, and financial muscle and stability
gave them the edge over their rivals, particularly in the US and Pacific markets
where Infonet were strongest.
240
Growth strategies
Diversification
Overview
Diversification is about reducing total organisation risk and smoothing
revenue flows by acting in multiple herds simultaneously, each in different
markets or with very different products. However, risks to individual busi-
ness units may be high; the diversified business enters new markets and
launches new products, and these are inherently risky actions. It’s the apothe-
osis of the proverb, “Don’t put all your eggs in one basket,” a way of achieving
growth without full exposure to a single sector or market. Being in multiple
herds can be a complex business; the very nature of herdiness is about same-
ness and staying close to other herd members for safety. To exist in multiple
herds, the organisation needs to be able to work and behave according to the
tacit rules in play in each herd, creating organisation units that operate very
differently and have very different cultures. Joining multiple herds requires
spending power because moves into new markets or new product lines are
usually achieved through acquisition.
There’s a spectrum of Diversification, from lines of business in related
companies through to lines of business with very little connection (here the
organisation form is a conglomerate). Where there is linkage across business
units, the challenge for each unit is to balance corporate membership
(belonging to the organisation’s herd) with the differentiation needed in its
marketplace – its herd competitors.
Typical use
Who? This is a potential strategy for a strong, cash-rich player that can seri-
ally acquire and then manage a highly diffuse set of businesses, identi-
fying clearly when to constrain for sameness across businesses and
where difference across businesses creates value.
When? Where the existing business is in mature or declining markets, this
strategy provides the opportunity for renewal through new markets
with growth potential.
What do you win? You win access to new markets and sources of
growth – and a spread bet on risk.
You will need

A Diversification strategy requires:
● Agility, to redeploy resource to each new opportunity.
241
● Critical mass, the ability to identify and execute shifts into new markets
and new product development.
● Ability to manage repeated radical changes followed by consolidation
using incremental change.
● An advantage in strength over other members of the herd in each market.
You need resource for each new coupling to ensure that sufficient market
share can be achieved.
● Ability to manage different lines of business in different markets.
The manoeuvres
1
In a mature or declining market, you see an opportu-
nity to grow in areas loosely related or unrelated to
your current business. Buying or growing capability
in new markets and products requires the ability to redirect
substantial resources, particularly cash and management strength for any
acquisition.
Indicators: Cash reserves and ability to deliver management resource to new
lines of business.
2
Using the available resources, exploit the capacity you
now have to develop new products and services, and
acquire new customers in new markets. This requires
adapting your ways of working to suit conditions in each
market – quite a challenge. And you probably want to maintain the intrinsic
characteristics of your brand reputation while tailoring your value proposi-
tions for the different markets.
Indicators: Growth in market share.
3
As a new entrant into a market, it’s important to build and
sustain a credible presence over time, so that the revenues
recoup the costs of product development and market entry.
As you further build your offerings, you are likely to use market-
ing muscle, as well as your brand reputation from other markets, to
consolidate your position in this market. If you can achieve market
dominance, your return will be higher, and there are real choices
about whether you are aiming for presence or dominance.
Indicators: Profitable market share and overall profit growth.
242
Growth strategies
4
You are now operating in more markets than
you were before. So your activities are more
diffuse, and it will be important to ensure
appropriate control over all of these and to distrib-
ute resource across the different markets in a way
that drives revenues and profits over both the short and longer terms. The key
focus is managing the tension between diffusion (which reduces risk) and
dominance in specific markets (which increases profit).
Indicators: Continued profitability. Maintenance of market share in newly
entered markets.

Movement into new markets or products fails to deliver the promise; this
could be an indication of the organisation travelling too far from its strengths
into new herds. And in some of the markets for the organisation, you may be
unable to reach a profitable market position, or you may lose one due to
competitor activity. Then it’s an organisation level decision on whether the
resources currently deployed in a lagging-edge position or declining herd
would be better redeployed in a new herd with better growth prospects. If so,
exit the market through Divestment.
Figure 14.4
Diversification
243
Diversification examples
In the 1980s, ICI (Imperial Chemicals Industry) used a Diversification approach.
It had a number of divisions that focused on high-volume, low-margin
commodity chemicals. As a hedge against the cyclical and price-sensitive
nature of these businesses, it also had very specialised chemical businesses,
such as pharmaceuticals and agrochemicals, operating in completely different
sectors and on very different cycle times.
General Electric has a massive and wide-ranging portfolio of businesses.
Unlike a conglomerate, where the lines of business are run completely sepa-
rately, GE has common systems, resources and processes, allowing some
economies of scale and synergies to be created across business units. Although
it started life in products for the generation, transmission, distribution, control
and utilisation of electricity, its portfolio today ranges from industrial prod-
ucts to healthcare and aviation. The common thread is a focus on exploiting
core competencies in advanced technologies.
UK and Dutch firm Unilever focuses on consumer products in three
main sectors: food and drink, home care and personal care. There is potential
for linkage and cost efficiencies across businesses, with home and personal
care businesses sharing similar production technologies, distribution chan-
nels and customers, and products within the food and drink businesses share
suppliers.
244
Growth strategies
Settlers
Overview
A Settler develops and positions a low-cost offering ready for the time when
premium prices begin to collapse. It exploits the success of another organisa-
tion’s coupling to the market. This strategy is particularly prevalent in
knowledge-intensive industries where patent protection confers high price,
but lingering brand loyalty is swayed by equivalent yet lower-cost products
once available, massively reducing market share, revenues and profits for the
initial innovator.
Typical use
Who? Organisations that can monitor and prepare for end-of-life (patent
expiry) of a product with a large market and revenue.
When? Ongoing.
What do you win? Access to established market with minimum R&D costs.
Settlers example
Pharmaceuticals are risky and expensive to develop, and have only 20Â€years
of patent protection. AÂ€generic drug is one with comparable characteristics to
a branded one, and the generic manufacturer can exploit the R&D effort of the
original pharmaceutical company, massively reducing the regulatory chal-
lenge and resource requirement for them to produce an equivalent generic
drug. Dates of patent expiry are known, so the generic manufacturer can be
prepared with their low-cost offering.
Broadcast
Overview
Broadcast involves scattering seed across a large area. And in the nature of
seeds and of growing, some seeds will fall in a fertile patch of soil and some
will not, and some will germinate and some will not, and it is hard to know in
advance which will be which. And all the statistics for new product introduc-
tions show that the majority fail and that this failure rate is highest for new
and unknown organisations. So the Broadcast strategy is one used where the
predictability of success is unclear at the outset, and a portfolio approach is
used to cover a number of different areas, putting investment into a variety of
options in the hopes that a handful of them will turn out really well. The focus
of the structural coupling is between the organisation and the market.
245
Typical use
Who? Organisations operating in markets with high uncertainty and high
product failure rates.
When? Ongoing.
What do you win? Access to multiple niches within your chosen market,
increasing the probability that you will deliver in one or more highly
profitable niches.
Broadcast example
Does any other industry have as many new product introductions as book
publishing? The book market is pretty saturated, and digital channels and
devices appear to be replacing rather than supplementing paper books. While
some books by an established author (JK Rowling’s Harry Potter books, for
example) are guaranteed high sales, the majority of titles remain a punt on
behalf of the publisher, with failure rather than meteoric sales being the most
likely result. In such a hit-and-missÂ€market, it makes no sense for the publisher
to put all their eggs in one basket, and so the Broadcast strategy is deployed.
Tornado
Overview
This strategy follows on from Bowling Alley. It takes the evidence base devel-
oped during Bowling Alley, when the innovative, often high-tech offering is
sold to visionaries and early adopters and now moves on to the early majority.
Here there is a bounded period of incredibly rapid growth in product sales.
These disruptive innovations are so, well, disruptive because the feature and
benefits of the new product can displace long-standing incumbents – including
large incumbents – suddenly and rapidly, a failure of foresight on their part.
The IT sector sees frequent Tornados because of the rate of change in
computing technology. AÂ€new crop of technology offerings renders the
previous batch obsolescent or unsupported. Tornados come through in other
sectors too, though nothing like as often as in IT.
In Bowling Alley, there was a relatively small number of high-value
customers, and the value disciplines of product leadership and customer inti-
macy are critical. In Tornado, there is a much higher number of lower-value
customers, requiring a different value proposition and delivery model. Again, it
is a strategy that involves building structural couplings, many of them in a short
time. Success requires the value disciplines of product leadership (maintaining
the highly differentiated products and features that are reshaping the market)
246
Growth strategies
and operational excellence (ability to deliver efficiently and Â�repeatably – at

scale). Attempting to achieve customer intimacy during Tornado is extremely
damaging; this strategy is all about speed of market penetration and massive
customer acquisition. This requires the standardisation and repeatability of
operational excellence.
The early majority are inherently pragmatist. They will adopt tech-
nology if they have a demonstrably broken mission-critical problem that they
need to solve, but it’s always a ‘grudge purchase.’ They need reassurance that
the innovation is durable and credible, hence the need for broad and deep
evidence, and they are likely to look for a ‘whole’ offering or a product that
has a clear support model, and this may need a Strategic Partner or two.
Being the market leader is actually part of the evidencing to these herd buyers,
as well as being commercially advantageous to you, and as the herd scram-
bles to buy, the Tornado builds. The stampede of pragmatist buyers towards
a herd purchase creates a de facto standard. And having established your
offering as the standard, the herd will work to keep that market leader in
place because they like standards, predictability and a strong network of
suppliers to keep the product and its infrastructure well supported. The last
thing they want is more change.
It’s really important to focus on the massive changes in your organisa-
tion that are required to shift from Bowling Alley to Tornado. You will need
to shift from niche markets and evangelist visionaries to a mass market with
a much more generalised and supported offering that you increasingly
commoditise through time. It’s a tough thing for any leadership team to
change the nature of delivery in this way, and not all organisations can do it.
Typical use
Who? This strategy requires an edge organisation in an evolving and
growing market, which can operate effectively with herds as customers
and with other edge organisations as Strategic Partners.
When? At the point where an innovative product moves from initial sales
to rapid scaling.
What do you win? Leadership in a very high-growth market with good
margins.
Tornado example
Through the 1980s and 1990s, there was a generous scattering of failed
attempts to bring a car navigation system to the market. But until 2000 and
beyond, no product was sufficiently user-friendly to achieve any real market
247
interest, and it took until the middle of the 2000s for satellite navigation
systems to show the phenomenal growth typical of a product going Tornado.
Sat nav units grew 40% in one year (2005–2006) in Germany and, in the UK,
went from £5Â€million in sales in 2002 to £340Â€million in 2007. Their features
tapped into both practical needs (trying to navigate while driving on your
own) and emotional challenges (two people travelling together and
disagreeing about which route to take). Early on, there were some news-
worthy errors in sat nav directions, with trucks ending up in backstreets and
unable to turn around, for example. There was no time for the customer inti-
macy of sorting these out; the market soared on upwards.
As the market became saturated towards the end of the decade and
reached maturity, competition became more intense, pushing prices down.
Organic Growth
A very common way to grow a business is to generate growth organically,
increasing your customer base to grow revenue and profit and reinvesting to
improve efficiency and to develop new products, services and channels.
Organic Growth requires that you control the resources, that you have a port-
folio of offerings at different stages of maturity, and that you have a pipeline
of new products to replace declining ones. It builds a coupling to the market
from within the safety of the herd.
SAB Miller is an international brewing and beverage company. Their
typical growth path in a new country starts with an acquisition or partnership
in order to develop a foothold and brand presence. The Organic Growth
phase includes the development of beers to suit the palate of the country. All
of this is based on SAB Miller’s key strengths in brewing and distribution,
with incremental innovation focused on core markets and core consumers.
Vertical Integration
This strategy is about out-muscling the competitors, by controlling cost,
quality and delivery times through an integrated supply chain. When done
well, it reduces fluctuations from those elements, reducing business risk and
cost, taking an organisation to the leading edge of a herd in terms of price. It’s
based on a carefully synchronised set of couplings with different suppliers.
Shifts in the defence sector globally have led to a substantial slowdown
in the replenishment cycle times for core platforms, such as aircraft or ships,
with significant rebalancing from design and development towards mainte-
nance, support and extension in the useable lifespan of these platforms. The
companies that became Vertically Integrated in these support capabilities
248
Growth strategies
early on are now on the leading edge of the herd compared to those that did
not. Their competitive advantage now comes from the ability to deliver
through-life services, based on rich platform knowledge.
Time Bandits
This strategy is about strengthening an existing structural coupling by shifting
forwards or backwards in relation to your customer’s time experience to offer
complementary services either before or after your existing offering. Time
Bandits either provide a prequel service – a service that the customer would
access and use before the existing offering – or a sequel service – a service that
the customer would access after using the existing offering.
Waterstones bookstores adopted a different model and bookshop layout
based on a prequel strategy. AÂ€majority of customers wanted to browse before
making a choice. Waterstones shops were designed to service this pre-
purchase experience, with much larger shops, display tables as well as shelves
and comfy seats where you could sit and flick through a range of possible
purchases over a cup of coffee.
249
Figure 15.1
Market strategies landscape
15
M ARKET-
CHANGING
STRATEGIES
A lot of conventional strategy is about the market and specifically about how
we position ourselves within the market. The strategies in this chapter have
been picked on a slightly different basis, though. These are strategies based on
changing our coupling to the market (Figure 15.1). So they are explicitly about
how we can change the nature of the market and how it can change us – and
that is an altogether different question to the standard one of: “Where do we sit
on a Porter value curve?” It’s about using the coupling between our organisa-
tion and the market in an active way, shaping the market in a way that helps
to further our goals.
Some of the strategies in this chapter work by changing the market
structure: Market Maker, Marketect, Niche, Disintermediation, Intermedi-
ation and Rumpelstiltskin. Mostly this is done by making distinctions in
the market in a new way, so that the structural divisions of the market are
changed.
Three of the strategies, Market Maker, Rumpelstiltskin and Crusader,
are based around creating new value propositions that sit outside the existing
market. The first two of these aim to create a new market where none had
been before, whereas the Crusader strategy is about moving the market
towards a different value proposition.
There is also a set of time-based market strategies: Augmentation, Rapid
Refresh and Bubble. These rely on managing the pace of the market to your
advantage. Augmentation and Rapid Refresh are long-term strategies about
controlling or at least influencing the cycle time of changes to the offer. This in
turn does two things: it regulates market expectation, and it maintains a
manageable level of renewal of the offer, which drives a need in the market to
periodically recontract. In most cases, the objective is steady and regular
renewal of the market’s re-engagement with you, and these are strategies for
long-term relationships. Bubble is rather different and is about accelerating a

frenzy of interest and therefore engagement by the market, riding that wave
and then exiting at the peak. Bubble is almost the ultimate in short-term
engagement strategies creating, as it does, an unsustainable future.
The effectiveness of all these strategies is measured in terms of their
ability to affect the market, either to restructure it, or to create new markets,
or to speed it up or maintain a nice steady pace.
252
Market-changing strategies
Market Maker
Overview
The Market Maker works by building a new market segment to suit our
offering. Typically, this is done using Say’s Law of supply and demand,
creating a supply of something that is new to the market, which in turn creates
a demand that did not exist before. In the process, the structure of the market
is changed so that the new demand can supplant existing demand, or it can
create new niches or segments or even a whole new sector. This might frag-
ment existing market boundaries, or it can simply create a new market
segment that sits alongside existing segments without disrupting them
significantly.
It differs from the Marketect strategy in that it concentrates on building
a new market rather than on reshaping an existing one. Where reshaping
happens, it’s a by-product rather than the main aim. Market Maker can be
seen as a competitive strategy, one that can outflank a competitor in the
market, but in essence it’s neither collaborative nor competitive; it’s a simple
act of creation. It is possible to do a Market Maker strategy using an old idea
that has failed in the past either because there wasn’t sufficient strength to
make it happen or because it was too big a stretch for the market at that time.
There is such a thing as being too early!
Conducted well, Market Maker is a difficult strategy for competitors to
beat, but it is also a difficult strategy to execute, requiring a relatively sophis-
ticated management team with a wide range of strategic capabilities, and the
range listed under You will need gives some indication of why this is a strategy
that usually needs a mature management team to execute well. Occasionally,
though, some organisations pull it off almost by accident when they manage
to design a new product concept that just happens to fit an unmet and unrec-
ognised need in the market.
When it goes wrong, it’s generally either because the new value proposi-
tion doesn’t actually offer real value so the market doesn’t respond. Or,
because the follow-through hasn’t been planned well enough and there is a
failure to ramp up supply to match an increase in demand, either the initiative
runs out of steam or is overtaken by competitors.
Typical use
Who? The Market Maker strategy can be used by either large or small
players but typically is used by those who are medium-sized within a
market sector – strong enough to have the resources to carry out the
strategy yet small and agile enough to innovate and move quickly.
253
When? Often used to expand business when bigger competitors dominate

the existing market and direct competition is likely to be costly and
risky, so building a new market is attractive. Also used to take advan-
tage of innovative capability.
What do you win? AÂ€new market free from competition. This is a Blue
Ocean Strategy.
You will need

The Market Maker strategy requires:
● Individual – you have to be comfortable being highly differentiated.

● A paradigm shift or disruptive change.
● A superiority in strength. This doesn’t have to be absolute, as long as
there is strength in depth in product/service design, market under-
standing and market development.
● High levels of agility, specifically the ability to reconfigure and scale as
the market responds.
● Shape. The market must react to your moves for the strategy to work.
● It helps to be first, so speed is important.
● High rate of change is usually needed as befits a paradigm shift.
● Foresight, especially on predicting and tracking market response to your
initiative.
The manoeuvres
1
The strategy can start from either end of the coupling
between the organisation and its environment. If you
start from the organisation end, you first formulate a
breakthrough idea and its development as a product or
service that can be rolled out. Normally this involves
Â�
disruptive or paradigm change; other types of change –
Â�
incremental or even radical – usually aren’t enough to cause the market to
reshape itself; it needs a stronger stimulus to drive that sort of reaction. Next
is the modelling of the existing market structure: who buys what, in what
numbers, what the value proposition is. From this, identify alternative market
segments that could form around your new product idea.
When starting from the environment of this structural coupling, this
order reverses, so you start with the identification of a potential market
segment that doesn’t currently exist and identify the likely demographic,
tastes, value system, potential size and buying patterns of your prospective
254
customers. You then move to design your new service or product around
their needs. This is obviously tricky; as Henry Ford said of the Model-T’s
customers: “If I’d asked them what they wanted, they’d have said: faster horses.”
Creativity and imagination are essential.
In practice, the design process cycles through both ends of this struc-
tural coupling.
Indicators: Feasibility of this as a strategy: how plausible is the new value
proposition? How differentiated is it and how hard to copy – does this iden-
tify you as an individual? How big is the potential market?
2
The next stage is targeted market entry, focused as spe-
cifically as possible on the most characteristic niche of the
target market. At this point, if not before (and preferably
before), you need to plan for expansion. If the market starts to
respond, how will you ramp up supply? What resources will you
need to be able to switch? Where will those come from? What
must you change in your normal business to accommodate this?
As demand increases, it will be essential to switch resources into
this newly made market segment.
Indicators: Confirmation of the indicators from manoeuvre 1.
Is the potential market actually ‘right-sized’ – not too big and
not too small? Ability to match emerging demand with your
supply.
3
The next move is the most
significant – the reaction of
the market. Without this, the
strategy fails. If the strategy is
Â�succeeding, the market will start to
redefine itself around your product,
and a self-referencing group of
Â�buyers will form to fit your product.
As the market starts to take up the offering and to redefineÂ€itself, the next
move is to reinforce that. This can be done through messaging, thereby
Â�reinforcing the idea of the difference that your proposition is based on.
Indicators: The market starting to redefine itself around your value
Â�proposition. Groups starting to form or to identify themselves with your
offer, sÂ�ometimes almost in a tribal way. Early indicators of this may be media
reviews and comments. For small or diffuse markets, social media may be
key. For industrial markets, the established industry press may be the one to
watch. These will often give early warning that a trend is developing, but of
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course, the proof is in buying patterns: are your target customers moving to
buy from you?
4
Where this is a strategy to take share away from
Â�competitors, the next move may be from them, either
to try to reinforce their existing offering to bring
Â�customers back or to launch a directly competitive product. If
they do the former, then the success of your strategy will
depend on whether your paradigm shift is sufficiently
Â�compelling for sufficient numbers of your target customers
for them to shift and if you’ve designed your offering well,
then it will win. If competitors react with a me-too offering,
then you are in a straight race, how fast you can build share,
as well as consolidate market leadership and, critically, repu-
tation as the player in this area, compared to how fast they
can build their credibility. Typically, it will take most large
firms a number of years to first notice the threat, actually be prepared to
admit that the threat is real and then organise themselves to respond. Usually
their reaction is too late.
Indicators: Competitors entering your market. Rate of growth of your market
share relative to theirs and relative to latent demand.

This strategy can fail in three main ways. One is if the market doesn’t accept
your offering, in other words, if supply does not create any or enough demand.
Second is if the market growth is too slow or too small to meet your needs;
because there is a time element to this, this is hard to spot, and we naturally
tend to reinforce failure rather than cut our losses. Third is if competitors are
moving in faster than you can bolster up your leading position.
Market Maker example

The book Blue Ocean Strategy is mostly an approach to doing Market Maker
and full of good examples of this strategy, particularly ones that work from
the market end, such as the paradigm shift development of budget airlines.
Budget airlines involved no technological innovation but started with a
perception of latent market demand that could be created and the service
designed from there, mainly through the introduction of a new business
model, and it was hugely successful in creating a new market. Because such
examples are so well known, we thought instead we’d focus on one that
256
Figure 15.2
Market Maker
worked the Market Maker strategy from the other end: starting with an inno-
vation and working towards building a new market.
Vacuum cleaners were first invented in 1901 and worked on the prin-
ciple of sucking air through a filter to trap the dirt. At first, they were big
machines on horse-drawn wagons and operated from outside the house.
Within a few years, smaller versions were developed that were used inside
the house. AÂ€variety of power sources were used, from hand-powered to
petrol engines, until electricity became the power source of choice. Still the
basic technology – sucking air through filters and catching the dust in a bag –
remained the same.
In the 1970s, prolific inventor/designer James Dyson developed a
vacuum cleaner based on cyclone technology instead of filters. Cyclones
weren’t new; they were in common use for dust extraction in industrial plants,
but they were new in domestic cleaners. Dyson was new to the vacuum
cleaner market, however, and his position as an industry outsider made it
easier to stand outside the industry and to be seen as quite different – an indi-
vidual player. After early market entry in Japan, Dyson introduced his
cyclone-based vacuum cleaner design to the UK in the early 1990s. Although
this was a paradigm shift in the technology of vacuums, it wasn’t obvious that
this was a sufficiently strong value proposition to work. It was different –
yesÂ€– but did that make it better? Sharp design helped, but more so that Dyson
capitalised on the lack of a bag to catch the dust, using instead a transparent
cylinder. This meant that consumers could see how much dirt they were
257
sweeping up as they were doing it. Even so, this was a market that was utili-
tarian rather than glamorous; vacuums were hidden away when not in use
(hardly a status symbol), so how much difference could differentiation make
in this sort of market?
Despite the fact that the Dyson cost twice as much as a conventional
vacuum, it quickly became the market leader and has since managed to stay
ahead of its competitors. Other vacuum manufacturers took a long time to
react, bringing out competitive offerings, some based on copying the distinc-
tive styling of the Dyson, some based on copying the technology. By the time
they reacted, Dyson had already built a major market share and an unparal-
leled brand position. Dyson has kept ahead of competitors with a constant
stream of innovations.
258
Marketect
Overview
Marketect is a strategic move based around changing the structure of the
market so that it suits your offerings, and/or makes competitors’ offerings
redundant. This strategy is indirect; it depends on getting the market to
change, to change its segmentation, values and expectations. And because it
is indirect, it is harder to execute, requiring greater levels of skill and insight
than some of the strategies that are more direct and where you can control
things more easily. Although it takes considerable skill, Marketect is difficult
to counter, and competitors or would-be competitors are often forced into
copycat approaches; inevitably these cede market leadership to the Marke-
tect, at least for a time.
There are several ways of executing a Marketect strategy, but all depend
on setting out a product or service mix that causes the market to redefine its
own boundaries. In other words, the market restructures itself around your
products and the value set that they represent. AÂ€very strong and clearly
different value proposition is the key. Redrawing the market structure can be
done either by splitting an existing segment or by joining two or more
currently distinct segments. The differentiation that is the basis for redrawing
boundaries can be achieved by changing the concentration of power, or
agility, or the speed of operation, or rate of change.
Typical use
Who? An option for sophisticated strategists in any size organisation but
particularly weaker players.
When? Typically it’s used in situations where competitors dominate the
existing market.
What do you win? It creates competitive advantage within a market or
creates a new market.
You will need

The Marketect strategy requires:
● Foresight, to understand the potential for restructuring value

propositions.
● The ability to change the paradigm or value set of the market.
● One or more of: different concentration of power, advantage in agility,
faster development cycle times, and faster rate of change.
259
The manoeuvres
1
The strategy starts with a detailed market segmentation
that aims to identify the structure of the market. In
this context, we’re defining market segments as self-
referencing groups, and generally the basis of self-reference is
shared values as applied to the products or services being offered. Having
identified the current value structure that supports the market structure, the
next task is to work out options for providing a set of offerings based on a
significantly different value structure. The differentiation has to be significant
enough for the market to need to restructure itself in order to fit your new
proposition and attractive enough for the market to want to do it. In choosing
a new value proposition, if the objective is to secure competitive advantage,
then priority has to be given to options that are significantly easier for you
than for the competition. The differential between ease of transformation for
you compared to ease of transformation for the competition will determine
the competitive advantage period – the time you can enjoy advantage before
they catch you up.
Indicators: Your ability to clearly identify existing market boundaries and the
basis of value that supports that. Clarity about how those boundaries could be
redrawn using a different value proposition.
2
The next stage is to decide the approach to changÂ�ing
the market structure. There are two basic approaches:
splitting and lumping. Splitting works by taking an
existing market segment and splitting that into smaller niches
with a differentiated product offering designed to appeal to different and
typically currently unmet needs. Lumping changes the market by taking two
currently separate market segments and providing an offering that appeals to
both, effectively dissolving the boundary between them. This is what bundled
products beloved of the IT industry do. The effect here is to redefine the
Â�market boundaries in such a way that any competitors that can’t fulfil all the
needs within the redrawn market are relegated to being fringe players. Firms
with an advantage in power and diversity of offering may choose the lump-
ing option because that is harder for smaller players to copy. If you don’t have
an advantage in power and probably diversity, then splitting is more likely to
work.
Indicators: AÂ€redesign option that fulfils three criteria: you can deliver it, it
aligns to what you understand about unmet needs/latent demand in the
market, and competitors will find it hard to copy.
260
3
The differentiation can be done in several
ways, and the next stage of the strategy will
depend on the choice over how this is to be
done. Product diversification (e.g. moving from
Â�multiple to single or diffuse) can split market seg-
ments into narrower niches.
Differentiating by cycle time (e.g. faster product
refresh rates) counts as a Marketect strategy only if the
market reforms around that expectation, otherwise it’s
just a way to have more bites of an existing market
segment. Essentially markets draw their boundaries
around value propositions that the market identifies as
being different so effectively we’re talking about
changing the paradigm in order to change the market
boundary.
Indicators: The first indicators of success come from
the market. Does it recognise the new value proposi-
tion as being significantly different? If the market
recognises the value proposition, then there will be
identifiable messages about this, either in the media
or social media, and tribes will start to form around the new product, particu-
larly if you’re pursuing a market-splitting approach. When lumping, the overt
signals can be much weaker; the signs to look for here are buying patterns.
Have two previously distinct groups of buyers now started to adopt the same
product?
4
Having put a different
value proposition to the
market, the next play is then
in the hands of the market: will
they choose to reform around that?
If they don’t, the strategy has
failed. If they do, then the strategy
has started to work, and the next
step is to reinforce that success.
This can be done by helping the
market to self-organise by building the coupling to the reforming market,
responding to feedback and reinforcing the product and market identity
with those aspects of the value mix that have proven to have had the most
appeal.
261
Indicators: The market starts to redraw its boundaries. The proportion of the
target market that reconfigures itself to your value structure.

The core of this strategy is about getting the market to reshape to fit around
the pattern you set for it. You need to re-evaluate the strategy if it fails to do
that or does so only weakly. If you need to reshape the herd and succeed only
in reshaping a couple of niches on the fringe, then think again.
Figure 15.3
Marketect
Marketect example
In the early 1980s, Honda and Yamaha were the two biggest motorcycle
manufacturers in the world, and Honda was slightly ahead at the leading
edge of the herd. Each operated in the same markets and had around 60
models designed for the same market segments. Yamaha wanted market
leadership and decided to take it using a critical mass approach that involved
building the world’s biggest motorcycle factory and exploiting the economies
of scale that it would provide. They calculated that this would reduce their
costs and enable them to undercut Honda’s bikes.
Honda responded but not in kind. Instead of trying to match power
with power, Honda chose instead to redesign the market. Waiting till Yamaha
262
were fully committed, they used the time to build up their agility and recon-
figure their product development and operational capabilities. Honda then
proceeded to out-develop Yamaha. Over the next 18 months, Honda intro-
duced 113 new models – practically tripling the number of their models. In
the process, they introduced a new paradigm and value propositions that
redrew the segmentation of the market. They designed bikes specifically for
smaller market niches, and new technology, new fashions and styling specific
to each niche became a new paradigm for the market. The old market segments
that Yamaha’s bikes had been designed for were now fragmented into smaller
niches for which Yamaha had no suitable bikes. Suddenly, Yamaha’s model
range looked old-fashioned but, of course, they were available in huge
numbers, so they had even less cachet and were even less desirable. Yamaha,
already heavily engaged in trying to get their new factory working effectively,
tried to respond but managed only 37 model changes. Honda were out-
developing them at a rate of almost four to one. At the end of 18 months,
Yamaha were left with approximately 12 months’ worth of unsold stock and
gave up the battle.
263
Niche
Overview
There’s great business in market domination, ideally achieved with at least
42% of market share. Market leadership at a lower percentage of market
share is still profitable but harder to achieve and sustain because of the large
number of similarly sized competitors. But for a smaller or emerging organ-
isation, market domination or leadership usually isn’t possible as it’s a
strategy of strength. What is possible is the leadership or domination of a
niche, a market subgroup with defined requirements that your capabilities
and expertise are well-positioned to meet. This strategy can flourish when
you can identify unmet (or poorly met) needs in a particular subset of a
market, where its size is such that you can take and then hold a dominant
niche share. It’s about being a big fish in a small pond, a fit-based strategy to
deliver differentiated services to the subgroup, and the differentiation could
focus on channel or product features. A Niche strategy can make you edge or
individual. Niche providers are often found as part of complex supply chains,
where they can grow as the supply chain grows, or as part of a wider cluster.
Niche providers also gain from consistency: they know their niche, and their
niche knows them.
Over time, the organisation builds capability and reputation and has the
potential to move beyond its original niche. This is how the Knight’s Move
strategy starts: moving into and then taking a niche, and then the next, and
the next .Â€.Â€. and so turning it into a competitive strategy.
Typical use
Who? AÂ€smaller organisation that is capable of providing a differentiated
service for a clearly defined subsection of the market.
When? Entering an existing market.
What do you win? Commanding market share in a target group you want
to serve who ideally will pay a premium for the differentiated offerings
you provide. It can also be a positioning move for expansion into future
niches within the market.
You will need

The Niche strategy requires:
● Concentration on the needs of the niche.

● Varied rates of change and types of stretch in order to be able to adapt.
264
● An advantage in strength over other members of the herd also present in

the niche.
● Differentiation through time – the ability to continuously meet the
evolving needs of the niche.
The manoeuvres
1
Delivering a successful Niche strategy requires clarity and
discipline. Try to do too many things and serve too many
distinct niches (and small organisations often do this),
and your offer lacks the targeted appeal that can win a niche for
you.
Indicators: AÂ€clear focus for your efforts and curtailment of activity in areas
outside your chosen niche.
2
The needs and wants of the target group will evolve
through time, and your offering must maintain a good
fit with those in order to retain margins and protect
the segment against new entrants. You will need to be able to
adapt with (or just ahead of) the segment, but as it is an exist-
ing and fairly stable market, then regular incremental or
occasional radical change should be sufficient.
Indicators: Innovation of the value proposition continues to hold the interest
of your target customers.
3
As your value proposition
becomes more recognised,
you gain traction within the
niche, and your growing strength
leads to dominance within the niche.
The Niche strategy is about providing
a differentiated offer that precisely
meets the needs and wants of its
Â�chosen target. If the niche has been
well defined, then a successful match of offering to needs will command good
margins with no need for discounting to gain share.
Indicators: Growing brand recognition within and at the borders of the niche.
Delivery of forecast niche share at target pricing.
265
4
Over time, you become recog-
nised for your clearly differenti-
ated offer that is valued by your
target audience. You are able to sustain
the fit of your offer with their evolving
needs.
Indicators: Maintenance or growth of niche share through time.

Niche share drops below 26%, as it will take a high degree of energy and
resource to sustain leadership.
Figure 15.4
Niche
Niche examples
Healthcare is a huge expense, currently requiring 10% or more of GDP in devel-
oped countries. And healthcare costs are rising rapidly, partly because of a
global shift in demographics (ageing populations) and also because of the devel-
opment and launch of new – and expensive – treatments. Enter Median Kliniken.
This German chain of clinics provides services in a range of medical specialties,
from neurological rehabilitation (after a stroke, say) to post-operative care.
AÂ€rehab clinic doesn’t need the range and complexity of equipment of a hospital
or the expensive resources required for surgery (theatres, theatre staff, surgeons
and anaesthetists), substantially reducing the cost per day for treatment. In
266
addition, the clinic is much less diffuse than a traditional hospital, with the
potential for raising both quality and efficiency by treating higher quantities of
a smaller range of conditions. The Group ensures that there are active processes
of review and learning across clinics, mediated by disease-oriented medical
boards that discuss and agree on the best quality treatments and ensure they are
implemented identically in all locations.
Savile Row in London offers a niche bespoke service, creating
made-to-measure tailoring for men. It uses its reputation, quality and –
literally – personalised service to charge a premium price for an individual
look.
267
Augmentation
Overview
You’ve moved successfully into a market or segment. Your customers like what
you are doing. How do you keep them interested in your product or service? In
some sectors, this is possible by continuing to provide increments to the offering
to existing customers, augmenting its features and so improving the customers’
experience and perception of value. This strategy works on the structural
coupling between you and your market. The challenge with Augmentation is to
manage the cycle time for delivery of new features. Too slow, and your product
will look tired and jaded, and your customers may switch to competitive offer-
ings. Too fast or too much, and you may be over-delivering on value with
insufficient revenue growth or overdoing the stretch between your offering
and the tastes, preferences and rate of change of your customers. True Augmen-
tation enables you to differentiate yourself from the rest of the herd and take an
edge position because of regular extension in attractive features you offer. And
it’s doing that in a way that uses minimum resource to hold market share.
There are some common characteristics with other strategy patterns.
Where Rapid Refresh replaces whole products or product ranges, Augmenta-
tion increments the features of an existing product. And where Lock In holds
onto customers through unattractive exit criteria, Augmentation holds onto
customers by the reverse, increasing the value of the offer and so increasing
what would be lost by leaving.
Typical use
Who? An edge organisation in an evolving market that can use regular
changes in features to keep out of the herd.
When? Following market entry and then ongoing.
What do you win? Holding and potentially growing market share and
profit growth.
You will need

The Augmentation strategy requires:
● An understanding of your market.

● Incremental stretch, to provide a pipeline of new features.
The manoeuvres
Preparation for this strategy starts with a deep understanding of your market
and its future direction, as well as of its customer base, how they use your
268
product or service and which of its features they particularly value. It’s about
determining the direction for the product, aiming to take existing customers
with you and potentially attract new customers too.
1
Using that market understanding, the first step in
this strategy is to develop a pipeline of incremental
changes to your product, a set of linked additive
changes to its value proposition.
Indicators: AÂ€sequenced pipeline of features and a portfolio of options for
subsequent releases.
2
At this point, you also need to decide the cycle time
for augmented features: are you doing something
new on a monthly or six-monthly basis, or some
other time frame? This will depend on the rate of change of
the market you are in and, to reach an edge position, you
need to be moving slightly faster than that. You’re aiming
for your rate of release to be slightly ahead of the rate of
adoption of the new features you have provided.
Indicators: Augmented features delivered on time.
3
As you gradually launch the new feature and
Â�augmented value proposition, the customer Â�experience
is altered. In fast-moving sectors, the cycle time may
need to be very short, so there isn’t the possibility to create a
big pizzazz for each small and frequent release. In these cases,
you will need to find other marketing methods to keep your customers informed
and interested.
Indicators: Positive user feedback on those features.
4
This is payback
time for your
investment in
the new features. It’s at
this point that your
planned shaping action
comes into effect, and
customers stay with
your offering. And as
you hold the freshness
of your value proposi-
tion, so you can move towards the edge of your herd.
269
Indicators: Maintenance or growth of market share through time. Reducing

rates of switching away from your product.

If a market is very saturated, then it can be really hard to hold onto an edge
position. With all members delivering some Augmentation, then the pressure
to identify and deliver new and interesting features becomes intense, and the
cycle times for new releases and the margins gained from doing so reduce.
Figure 15.5
Augmentation
Augmentation example
Started in 2006, Spotify is a commercial music streaming service. In the free
app, users listen to unlimited music but must hear radio-style adverts between
songs. Later services include an Unlimited subscription, which has no restric-
tions on the time limit and also no adverts, and a Premium subscription,
which provides faster streaming and offline access to music. Many further
features have been added, including the ability to search for others’ playlists,
streaming specific artists and playlists from their phones.
IT and particularly Internet-based technologies lend themselves
extremely well to Augmentation as the new product features can be easily
distributed to existing users, as well as providing a draw to potential new
users. As in other technologies, Spotify started with an attractive free service
to gain market share and then started to change the business model and its
associated charging, yet with a continuous flow of new features and function-
ality to keep its users interested and engaged.
270
Disintermediation
Overview
This strategy takes out the intermediary between an organisation and its
customers. It creates a coupling directly to its market, breaking the couplings
between itself and the intermediary and between the intermediary and the
customers. Intermediaries are often in the chain because they do, or used to,
create value for the customers. When intermediaries are removed, of course,
the cost to serve is reduced, and products and services with different cost-
value profiles can be delivered. The Internet has created huge potential for
Disintermediation strategies, as it provides a channel. This provides customers
with direct access to information that was previously available only through
an intermediary.
Typical use
Who? This is a strategy for an organisation that has the ability and maturity
to restructure its market and is particularly useful for weaker players.
When? At a time when you can enable existing customers for your prod-
ucts and services to connect directly with you, in a way that’s easy for
them.
What do you win? The ability to grow market share, usually by reducing
cost to the customer.
Disintermediation example
Not that long ago, we had to go to see a medical professional to get informa-
tion about health concerns or potential issues. That medical professional was
seen and treated as an expert. As content on the Internet exploded, patients
are now able to search online for information about their symptoms and treat-
ment options. Empowering in many ways, this capability makes it possible
for patients to become much better informed about their condition, as well as
providing a forum for online support groups for particular diseases, where
patients can share information and coping strategies in addition to providing
mutual support. But there is a downside: the information is very mixed in
quality, and without the interpretation of the former intermediary – the
healthcare professional – there is scope for significant misunderstanding and
inaccurate expectations.
271
Rapid Refresh
Overview
Rapid Refresh is an effective strategy when customer needs and wants are
rapidly changing and when you are able to respond quickly to those
changes with a desirable product. This requires that you shorten the
product development cycle time, so that your product offerings are virtu-
ally synchronised with (though slightly lagging) the market trend. Working
at speed is challenging (and that ‘rush order’ may mean higher cost to
manufacture), but there are advantages. You are likely to make better fore-
casts because the degree of foresight you need is reduced, and if the level of
diffusion goes up (smaller quantities of larger numbers of products), then
you are also likely to have less unsold inventory too. Care is needed,
though, that a regular refresh of the product range doesn’t dilute or confuse
the brand message.
Both Rapid Refresh and Augmentation are about renewing the customer
offering, with Rapid Refresh replacing entire products or product ranges and
Augmentation incrementing the features of an existing product. Rapid Refresh
has broadly the same manoeuvres as Augmentation, except that, in Rapid
Refresh, cycle time applies to product renewal.
Typical use
Who? An edge organisation in an evolving market that can use regular
changes in products to stay ahead of the herd.
When? Following market entry and then ongoing.
What do you win? Growth in market share and profit.
Rapid Refresh example

The clothing chain Zara can deliver clothing trends from catwalk to store
within weeks. This contrasts with many clothing retailers who commit to
designs for seasonal lines six months in advance and have completed a large
part of the manufacture by the start of the season. This is about trade-offs:
early manufacture can ensure lower pricing, but it means that you have
taken a punt that this season’s ‘in’ colour really is going to be the new black –
a reduction in your ability to flex your products for the market. So what is
Zara doing that is so different? They design much less of a season’s line in
advance, finalise less by the start of the season, and design and manufacture
a healthy proportion of that season’s clothes within the season itself. In-house
272
manufacturing capability means that they can respond to new trends as they
emerge, in experimental small batches and within two weeks in some cases.
In addition, they can use this rapid turnaround manufacturing capacity to
respond not just to trends but to sales information. And this has yet another
advantage for Zara. Because their regular customers know that Zara stores
refresh their inventory very regularly and in limited quantities for those
in-trend items, they actually visit the stores more frequently too.
Bubble
Bubble schemes exploit herd behaviour and herd mentality in which the
customer basically overvalues the product or service. In a Bubble, prices are
inflated through a sense of momentum and urgency and are driven by
emotion, a fear of missing out on a quick buck. Success with a Bubble strategy
depends on the timing: fast to join when prices are on the rise and fastest to
leave when (or just before) the Bubble bursts but, of course, the nature of a
Bubble makes this hard to predict.
The price of shares in Britain’s railways rose rapidly in the 1840s with
rapid growth in freight and passenger traffic, with small shareholders making
highly leveraged investments. With little regulation and poor planning, many
railway companies failed, and wide-scale bust followed boom, with consider-
able financial hardship for overstretched families.
Crusader
The Crusader seeks to break the structural coupling between the herd and the
market, delivering a different value proposition and often one that serves a
wider societal cause. Crusaders are on a mission to change the world, and
their objective is to win the herd over to their position and their values.
Because it’s based on values, what Crusaders do and how they do it may not
be all that different from the herd. What differs is why they do it and what
they hope to achieve in the process, and the crusade can bring a higher
purpose to the work of an organisation.
The open-source movement in the IT industry makes source code open
and available for others to access, use and build on. The difference is the value
set associated with open source, and the change in value is twofold. More
players benefit, and it creates a new community of contribution and exchange
and collaboration. Now, IT departments in corporations stop asking, “Should
we build or buy this software?” and instead ask themselves, “Should we build this
software or get it free through open source?”
273
Intermediation
Whereas Disintermediation takes out the intermediary between a provider
and a customer, Intermediation (or reintermediation) recreates these
couplings in order to provide additional information services or to create a
better channel to or for the customer.
Dell computers had always used a direct-to-customer Internet ordering
process in which customers could configure exactly what they wanted. But as
performance improvement from new hardware dropped and with the intro-
duction of tablets, PC refresh rates dropped. After some challenging years,
Dell decided to build relationships with retailers, selling desktop models in
Walmart, which has huge reach. It requires Dell to alter how it works, with
products sold through a third party, and change its supply chain.
Rumpelstiltskin
In the Grimm fairy tale Rumpelstiltskin, a miller brags to the king that his
daughter can spin straw into gold. This strategy is about identifying a value
proposition in something that has historically been considered as waste and
creating a coupling to the market by repurposing something that other organ-
isations currently see as basically worthless, and initially at least, the raw
materials are likely to be low cost.
Cashew nuts grow attached to the bottom part of a cashew fruit or
cashew apple. Difficulties in processing the fruit means that it was mostly left
to rot. Pepsi owns the juice brand Tropicana and are always looking for
sources of low-cost juice, as well as ideas for refreshing and expanding their
product range. They have developed their supply chain to be able to rapidly
collect and process the juice from the fruit, so that they can utilise cashew juice
as part of a low-cost yet potentially premium fruit juice drink.
274
Figure 16.1
Herd management strategies landscape
16
HERD
MANAGEMENT
STRATEGIES
In most strategic settings, there is a recognisable herd made up of a group of

organisations that operate as a kind of loose confederacy, almost a super-
organism, or super-organisation. And, of course, your positioning relative to
that herd forms one of the key elements of Patterns of Strategy. This chapter,
though, is not about your position relative to the herd; it is about strategies for
organisations that ‘manage’ the herd (purposefully or not), either to keep it
together or to move it in a particular direction (Figure 16.1). AÂ€characteristic of
herd behaviour is one of collective action without the existence of central
direction, so a herd and its members have capacity for some, largely uncon-
scious, self-management. The strategies in this chapter can be used by organ-
isations whose raison d’étre is management of the herd – for example,
regulators who exist to manage the standards of the herd, to move stragglers
back into the fold and to ensure that the leaders are heading in more or less
the right direction. For other organisations, there may be different reasons for
wanting to steer the herd in a particular direction, or the effect of managing
the herd may be incidental to their intention.
Four of the strategies in this chapter, Sheepdog, Wolf, Islands of Sanity
and Linus, bring the herd more tightly together and have the effect of
increasing the coherence and consistency of the herd. The first two of these
work by focusing on the laggards at the trailing edge of the herd. Sheepdog is
a classical regulator role, and the Wolf preys on the weak and the lame that
fall behind the rest of the herd. Both have the effect of tightening the boundary
of the herd and of ‘encouraging’ other laggards to move back towards the
main body if they are not also to be singled out and dealt with. Islands of
Sanity works in a different way by providing a focus that a scattered and
chaotic herd can converge onto. Linus provides reassurance to herd members
that staying part of the herd is the right thing to do.
Three other strategies in this chapter, Leader, Authority and Standard

Bearer, are about setting the direction the herd should move in. Each goes
about this in a different way or, more precisely, from a different position. The
Leader is either a member of the herd who is on the leading edge or an indi-
vidual outside the herd that the herd chooses to follow, whereas Authority
and Standard Bearer are not herd members. But in each case, the success of
the strategy is determined by whether the herd follows the direction
indicated.
The last strategy in this chapter, Puppeteer, uses a third party to manip-
ulate the direction of the herd for their own benefit rather than for the benefit
of the herd. In some ways, Puppeteer is similar to the Pied Piper strategy that
we have included in ChapterÂ€17 (Cunning plans) because both are about
sending the herd in a direction that is beneficial for that individual actor
organisation and against the interests of the herd as a whole, whereas most of
the other strategies are all in theory at least benign to the herd.
Musk Ox appears in ChapterÂ€13 (Defensive strategies), although in some
ways it is the ultimate herd strategy. It doesn’t steer the herd, but it does bring
the herd together for defence – so it ‘coheres’ the herd. If you are in a herd, one
or more of these strategies is likely to be in play from an organisation near you
and having an effect on you.
278
Herd management strategies
Puppeteer
Overview
The Puppeteer is a strategy that uses deception to destabilise competitors or
opponents. Rather than acting directly against them, the Puppeteer
Â�manipulates a third party – the puppet – and gets them to force change on the
opposition. The deception is twofold – hiding behind the puppet and, more
importantly, not letting the puppet know they are carrying out your strategy
for you.
Several types of puppet can be used for this. Regulators or bodies that
set standards for the sector are common, but it can also be done effectively
using key suppliers. In this case, where a Scorched Earth strategy would aim
to deny access to key suppliers by key competitors, Puppeteers drive changes
in the supplier’s standards that are then forced onto competitors. Using a
regulator is usually easier, as forcing change on competitors is part of their
legitimate role.
Puppeteer is often started as an unconscious strategy, and it can be oper-
ated by players for years without them realising quite what they are doing. In
these cases, Puppeteers carry out their own strategy without realising the
effect on others. As they drive change in others, this has a ripple effect
throughout the sector, affecting and setting the agenda for their competitors.
Some ‘accidental’ Puppeteers become aware of their influence and the oppor-
tunities it offers and then start to use the strategy consciously. Those pursuing
this as a deliberate strategy act this way from the start.
Typical use
Who? The Puppeteer can be used by small or large players.
When? It is typically used offensively to dictate terms to the rest of the
sector without others realising what is happening, in situations where
there is a key third party that you can influence.
What do you win? AÂ€position of dominance in a sector that allows you to
set the strategic context within which your competitors or opponents
have to operate. The Puppeteer can end up driving the strategy of every
other player in the sector by forcing them to react to change initiated by
the Puppeteer but brought to them by the puppet.
279
You will need

The Puppeteer strategy requires:
● Foresight to be able to plan several moves and countermoves ahead for

yourself, the puppet and your competitors.
● Typically faster, based either on higher rate of change or faster develop-
ment cycle.
● An advantage in stretch, a higher level of innovation.
● Ability to drive the key relationship.
The manoeuvres
One is between you and your puppet (shown in grey), and the other is between
the puppet and the herd (shown in black).
1
The first move is to identify relationships that are or
may become important enough to offer a strategic
advantage that you can manipulate. Typically this
means relationships that have innate power over your competi-
tors, such as a regulator, or resource providers that are critical, scarce and
hard to replace.
Indicators: Feasibility of this as a strategy: can we identify key relationships
that we can influence and that could drive competitors?
2
Having identified a puppet that you
can use to drive change onto your
competitors, the next move is to start
building a suitable relationship with them.
There are many ways to do this, but if we
take as an example the classic approach of
using a regulator as a puppet, then one way
is to position yourself as a sector leader
Â�needing regulatory changes to deal with the
changes you are implementing. These
changes could be based on a higher level of
stretch than the herd, or a faster development
cycle, or a higher rate of change, or foresight:
“We see this issue emerging for the sector in the future. How should we deal with
that?” It’s about building up a head of steam and pent-up change-related
‘demand’ to put pressure on the puppet, all about things you want, while
looking as though you are seeking their advice.
280
There are choices about which of your requirements to drive through.

Essentially, you can use two approaches. The first is simply to push
through changes that are aligned to where you want to go and, if those
disrupt the competition, then so much the better (this is close to a First
Mover strategy). The second is to select some changes that are aligned to
where you want to go but that have been designed to disrupt things for
competitors.
Indicators: The number and combined impact of emerging requirements for
change that you can push forwards to the puppet.
3
When playing Puppeteer, there
is often a balance to be struck of
how much disruption you can
drive through without the puppet real-
ising what you are doing. In the case of
a regulator, this is quite delicate as they
may screen out some of the more desta-
bilising changes. It is critical that the
puppet doesn’t realise what is going on;
the more this can be presented and seen
as a mutual and legitimate interest in leading the industry forwards, the bet-
ter. You know you are becoming the Puppeteer when the puppet starts to
respond to your requirements for change. There are tactics around managing
the relationship itself, and often Puppeteers will mask the fact that they are
drivers of the relationship and make it look as though this is a co-evolve
situation.
Indicators: Ability to drive the relationship with the puppet, the scale and
pace of change that can be driven and the level of trust in the relationship.
4
Now the coupling in focus shifts. It’s no
longer about your coupling with the
puppet; instead, it’s about the puppet’s
coupling to the herd and how they push change
through that. The next stage is for the puppet to
cascade change – the very changes and innova-
tions you initiated – onto your competitors. As
this happens, they will react, and their reactions
can range from helpless protest to incoherent
attempts to assimilate the changes through to
accelerating their own attempts to redress the
balance and get back to a position where they
too can have more influence.
281
Indicators: The real indicator of the success of the strategy is the percentage
of change in the sector being driven by you, coupled with the length of time
this advantage can be maintained.

The strategy is over once one of two things happens: either the puppet starts
to realise that they are being used to manipulate the sector, or your competi-
tors realise what is happening and restore a balance of influence.
Figure 16.2.1
Puppeteer to Puppet
Figure 16.2.2
Puppet to Market
282
Puppeteer examples
The nuclear industry is, for very good reasons, heavily regulated. AÂ€nuclear
operator had as one of their strategic goals being an industry leader. Their
compliance function had the job of negotiating standards with the regulator
and, looking at the working of this relationship, it quickly became clear that
the operator was far from being an industry leader. The dynamics of the rela-
tionship were that the company was being driven by the regulator far more
than they were driving the regulator. Which begs the question of why? Why
was the regulator driving their behaviour? The answer was, of course, that
other players in the sector were driving the regulator, and the regulator was
then driving the operator.
The industry leaders were posing new questions to the regulator and
collaborating with the regulator in the formulation of new standards to
address new techniques, new situations and new challenges. Some of this
regulation was very specific and only relevant if you did what the leader was
doing, but some of it changed more widely applicable standards and oper-
ating practices, and this was driven onto the rest of the industry. This put
other players continually on the back foot, both in terms of the compliance
cycle and their relationship.
In terms of their compliance cycle, they had to spend considerable
management time and energy instituting changes to address the regulator’s
new demands rather than working on the regulatory implications of the stra-
tegic changes they wanted to introduce themselves. They were continually
coping with the impact of the leader’s strategy as filtered through regulation
and this swamped their ability to push their own agenda. In terms of the rela-
tionship with the regulator, the position of being driven was a difficult one to
get out of; they were seen and treated as passive recipients of regulation, not
as potential setters of new standards. Since the regulatory cycle is quite long,
this meant that the operator was lagging several years behind the leader, and
the gap was getting wider, not narrower.
In another sector, a small market made up of three providers was oper-
ating in a sensitive and security-conscious industry where theft of IP was a
very real threat. They had a long development and production cycle time for
a mass product that had to be produced to exacting standards within a tightly
defined time window. All three used the same handful of specialist printing
firms that had invested in secure facilities to handle the large-scale printing
and distribution that the industry needed. One of the three providers cornered
the most critical time slots in the annual cycle by pre-booking the print and
distribution capacity. In some ways, this is similar to a Scorched Earth strategy
in that there was a denial of key resources to a competitor. The critical differ-
ence here is that the denial of resource was only short-lived: if it had been
283
absolute, then in some ways, it would have been easier to deal with because a
new entrant could be encouraged to develop new capacity. As it was, the
disruption was just for a period but enough to destabilise critical points in the
competitors’ development and production cycles. In this case, the key to the
Puppeteer strategy was the importance of a limited resource at time-critical
points in the cycle and the ability to use that to disturb competitors.
284
Islands of Sanity
Overview
Most managers fear chaos. We mostly thrive on organisation and order and,
despite the exhortations of some to ‘thrive on chaos,’ most managers and strate-
gists .Â€.Â€. don’t. One of the keys to Islands of Sanity is precisely that inability
of most management teams to cope with chaos. In times of chaos, it’s not the
chaos that provides the basis of advantage, it’s the lack of understanding by
others of how to take advantage from it. The weakness of others becomes part
of the strength of the Islands of Sanity strategist.
Islands of Sanity is designed to take advantage of chaotic situations by
creating the seeds of order that will allow the chaos to settle into a more
ordered state and to do that on your terms. Classically, it turns the disorder
and power of others to your advantage and, executed well, it leaves you not
only in a better situation but also able either to hide your role in delivering
order or to take the credit for it – whichever best suits your further purpose.
Islands of Sanity can set up a situation sufficiently advantageous that it
provides critical advantage, makes life significantly easier for years to come
and provides a platform for launching further strategic moves to extend your
lead. This is a relatively sophisticated strategy and demands a strategy team
that can plan development paths for multiple players and anticipate what is
likely to trigger the responses you need.
Islands of Sanity can be seen as a variant on a standard First Mover
strategy. The difference is in the context – the need to deal with a chaotic
Â�environment and the emphasis that this puts on being able to plan the devel-
opment paths of others and not only your own. It works by providing other
players with an island of order amidst the chaos, which they can then use to
stabilise their own position. As other players start to coalesce around the
islands, they build the structure of the ecosystem to your design.
Typical use
Who? It can be used at any scale from internal organisational restructures
through to redrawing the playing field for a business sector. This is one
of those strategies where relative size may not be important.
When? In chaotic situations, when there is a need to bring order so that you
can operate effectively but, critically, when the chaos presents an oppor-
tunity to create order on your terms.
What do you win? Chaotic situations are by their nature fluid, so as well as
being dangerous, they are more malleable than most strategic situations.
They are a rare opportunity to completely remake your environment.
285
AÂ€well-executed Islands of Sanity strategy takes you and your peers

from a position of chaos and confusion towards a state of relative order
and stability – and, critically, one that favours you. As well as reshaping
your environment, there is also an option to be seen as the one that
brought order from the chaos.
You will need

Islands of Sanity requires:
● Leader of the herd, although it can be carried out by an individual more

distant from the herd.
● Foresight, specifically the ability to see further ahead than other players
and anticipate how the situation might unfold.
● Stretch, at least radical.
● Ability to alter the perceptions of concentration.
● An advantage in speed is essential.
● Capability to shape. Above all, this is a shaping strategy, usually mani-
fested as a capability to design and communicate a picture of how the
future could/will be.
The manoeuvres
This strategy can be executed only by an individual or edge player. Players
deep in the heart of the herd are unlikely to be able to even see these options;
it’s the very nature of herdiness that they would be blind to them.
1
The strategy begins with understanding the
chaos: where are the drivers of chaotic behaviour,
who is affected by it and in what ways are they
affected? Next, you identify critical points where build-
ing order could have a knock-on effect for several play-
ers. Often the key to this is in understanding how
multiple players acting randomly generate chaos for one
another and understanding what would be needed to
get them to act in concert. There will usually be Â�several
options for a suitable intervention point but, given the
nature of the chaos, it’s likely to take a moderate to high
degree of stretch to break through all that noise and heat.
286
Indicators: Clarity on the nature of the chaos: who is being affected and how.
Identification of possible leverage points.
2
Next select the intervention point that will Â�create
the most advantage for you. This is not just
about how you can reduce the chaos you are
suffering from but also about seeing where getting
Â�
Â�others to conform to a model of your choosing will
Â�provide you with the best position strategically in the
future, either by extending your influence, by creating
a situation where you are able to control standards,
structures or norms, or by having others become depen-
dent on you. Having picked the intervention, the next
stage is to seed it into the chaos; this is generally a communications task.
Your actions create a clear point of focus – the Island of Sanity – and from
the perspective of the rest of the herd, this reduces the feelings of
Â�unmanageable confusion and diffusion and gives them something concrete
and reassuring to focus on.
Indicators: ‘Force multiplier’: how much effect you can have on the chaos for
how many players relative to the effort for you, together with the advantage
to your position long term.
3
If the strategy is being done covertly, the trick is to find
a way to let other players know about your solution to
the chaos without them knowing you wanted them to
know. When the strategy is overt, the communication can be
less subtle or at least more direct. In either case, it is usually
more acceptable to peers if they aren’t aware that this is a stra-
tegic move, and it can always be presented – quite legitimately –
as an offer to share a common position against the chaos.
Since the driver for the strategy lies in mobilising the fear
others have of chaos, in competitive environments it’s possi-
ble to ramp up the actual or perceived level of chaos to motivate other players
even more. As you move at speed, you heighten the sense of urgency in others
and increase their fears and sense of exposure. As soon as the next cadre of the
herd leaders start to adopt your position, then you can use them to dissemi-
nate the message to others.
Indicators: Effectiveness of communication to key players. Take-up of your
approach by other players.
287
4
Once the rest of the herd
has started to adopt your
position, the actual benefits
of the strategy can be reaped:
influence can be exerted, kudos
banked and control exercised.
Indicators: Whether the herd
Â�actually starts to implement your
approach and, importantly for
success, whether a critical mass of
the herd adopts it – when it
becomes the default position.

If your island doesn’t gain traction and other organisations fail to coalesce
around it, then you know that it hasn’t provided them with a focal point of
stability. Alternatively, it may be that the volatility in the environment is
rendering your island obsolete before it has the opportunity to provide you
with a shaping advantage.
Figure 16.3
Islands of Sanity
288
Islands of Sanity example

This can be used as a strategy within an organisation rather than as a strategy
by an entire organisation, so it is very often used by a department or team,
sometimes by a single individual, particularly in times of extreme change. So
our example is an internal one.
Often in times of organisational upheaval, one of the reasons for chaos is
because there are sets of interdependent problems that cannot be resolved
independently: therefore solving AÂ€depends on first getting a solution to B,
which in turn is waiting for a solution to C, which is waiting for AÂ€to be
resolved. Whenever a critical number of interdependent variables in play is
exceeded, systems go into spasm and become incapable of taking action.
The HR department of a large public sector organisation was facing just
such a problem. They faced major changes on several fronts, conflicting
requests for direct support for changes, for developing new policies and
processes − and all seemed dependent on the decisions of other departments.
The HR department were constantly asking for and not getting clarity from
senior managers, all of whom were in a similar position of having effective
action undermined by dependence on unresolved issues elsewhere in the
organisation. The situation was getting worse through time as changes in
their operating environment were proceeding at a pace.
The team analysed their options for creating Islands of Sanity based on
what they could actually take a lead on, the number of players this would
impact and what it would allow them to do and the impact each change
option could have in unpicking the Gordian knot of interlocked changes.
They chose two policy and process changes, which the team had long-standing
ambitions to alter.
The unilateral changes created problems for some, which the HR team
helped the affected parties to work around, but provided a framework that
others built on, and progressively the problem set started to dissolve. The
biggest visible change was in the morale within the team and its prestige in
the rest of the organisation. It was seen to have taken a lead in playing a small
but significant strategic role in unlocking the change process.
289
Leader
Overview
A lot is written in business about leadership, usually as a personal Â�characteristic
or, more prosaically, about the absence of leadership as a personal Â�characteristic.
And a huge amount of ink is spilled defining the characteristics and behav-
iours of leaders. For our somewhat narrower purposes in Patterns of Strategy,
the characteristics of a Leader are easily defined. A Leader is a player who
moves to stand apart from the herd and whom the herd then move towards.
As Peter Drucker said, “The only definition of a Leader is someone who has
followers.” The followers are what distinguishes the Leader strategy from an
Independent strategy: the point of an Independent strategy is to be apart and
stay different; the point of Leader is to get others to follow your lead.
There are then three distinct phases to a Leader strategy: (1) differentia-
tion, stretching the leading edge of the herd, (2) the herd or part of the herd
moving towards the Leader or, alternatively, new players entering the arena
to congregate around the Leader’s position and (3) the decision over the
Â�Leader’s next move since if the herd has joined you, you are by definition no
longer a Leader.
The positioning of the first move is tricky. It is relatively easy to differ-
entiate, and mostly businesses choose not to, except on the narrowest grounds
because differenceÂ€=Â€exposureÂ€=Â€risk. For a Leader strategy, the degree of
differentiation has to go far enough to be seen as different but not so far that
it is unreachable. It is possible to lead from a position on the edge of the herdÂ€–
where your position is accessible and understandable for the herd. It’s also
possible to lead from an individual position, one further out from the herd,
where differentiation is clear but access is harder.
There can be several objectives for adopting a Leader strategy. It can
split the herd and isolate the biggest competitors who may be slowest to
change because they have the most to move and most to lose. It can provide a
premium market position with the better profitability that comes with that. It
allows you to dictate the future direction of the herd and therefore lead them
in a direction that suits you. But many who adopt the Leader strategy do so
because they need to be different as part of their identity.
Typical use
Who? This is a strategy for players who are able and willing to
differentiate.
When? Whenever there is an opportunity to establish a clearly differenti-
ated position to your advantage.
290
What do you win? Reputation, possibly a premium market position,

control of the direction of movement of the herd in your sector, some-
times splitting the herd and weakening or isolating a Gorilla.
Leader example
Apple have always been different, following an Independent strategy from a
very early stage. When the rest of the IT industry went down a route that sepa-
rated software providers from hardware in an industry-wide collaboration,
Apple charted their own course, building software that was distinctively
different and run on their own machines. And they had a small but passionate
fan base and were able to dominate in particular niches. They were not Leaders
at that point because the rest of the industry more or less ignored them; they
were Independent, and they stood out on their own as clearly different and
unique in several ways. Being different when everyone was jumping on the
Microsoft bandwagon was a tough road, and it was sustainable only because
Apple managed to build a niche market amongst people who wanted to use
computers for design. This was a small but growing market that coupled strongly
to Apple’s offering, and in many ways this was a perfect coupling for an Inde-
pendent since many in the customer group were themselves outside the main-
stream corporate world. Many were freelance or working in small design studios.
This was a market that was intensely design conscious, and in the struc-
tural coupling, the importance that Apple’s customers put on aesthetics and
good design drove Apple’s own design ethic. The company and the market were
mutually reinforcing and became increasingly less and less like the rest of the IT
market, and Apple became more and more distinctive, more individuated. The
emphasis of design and adoption by the design community gave Apple an
image as significantly cooler and somehow smarter than other IT companies.
Then came the iPad and everything changed. The iPad appealed to a mass
market beyond their traditional niche. Suddenly there was a viable challenge to
the herd, and as customers opted for tablets in preference to buying new
laptops, the herd started to move. Inevitably, it moved at different rates, and
tensions were created within the herd as a mass move to tablets challenged not
only the hardware but also software design. Tablets had been around for a long
time and used a variation of standard windows software, but the iPad looked
and felt different, and suddenly tablets running adapted software looked .Â€.Â€.
old. So there was a challenge to Microsoft’s dominance of the software market.
As manufacturers flocked to emulate Apple’s lead by introducing sleek
new tablets, the pressures on traditional herd members increased. Microsoft
rushed out a new operating system designed to look more modern and inter-
esting, but to a generally unenthusiastic welcome. At the same time, Apple
291
was starting to be impacted by the shift in strategy from Independent to

Leader: having been apart and clearly differentiated from the herd for a
generation, the company was now part of a herd for the first time.
The end of the Independent position came with the popularity of the
iPad, and this really flipped Apple into becoming a Leader, not necessarily by
their own choice. It is hard to know whether Apple intended to move from
Independent to Leader or not, but Leaders are defined as having followers,
and so it’s the followers who decide who is and who isn’t a Leader. The trap
is money and success: it is incredibly hard to give up on the level of success
Apple now enjoys to become an Independent once again. So instead Apple
now competes head to head with other herd members tweaking its smart-
phone designs and battling directly against other tablet manufacturers. Now,
however, Apple no longer has the same cachet as the cool company in the
field since that was bound up with the lost position of Independent. Being part
of the herd may be many things, but it’s never cool.
Sheepdog
Overview
Sheepdog is a strategy focused on the coupling between a regulator and a
sector or between a regulator and a country. Its power is expertise-based, like
both Troubleshooter (sporadic use of expertise by the customer) and Authority
(seen as the expert in a particular area). Where the Standard Bearer defines
the direction and standards for the herd, the Sheepdog ensures that the herd
complies with those. The Sheepdog is usually granted its mandate from
government, a set of delegated powers and a boundary within which it can
apply them, including the application of penalties for non-compliance.
In practice, the work of the Sheepdog is usually with organisations
around the edges of the herd. The organisations in the middle are, by defini-
tion, very similar to each other. So the regulator is more likely to be active
with edge or individual organisations, nipping at the heels of those who are
at the lagging edge in terms of regulatory adoption and curtailing those on
the leading edge who are stretching the current regulation and its adoption in
a trajectory not wanted by the regulator. Their function is to create a densely
packed herd without any outliers.
The Sheepdog maintains its expertise and credibility because of its
multiple connections with the herd and its deep understanding of how the
herd interprets and adopts regulation.
292
Typical use
Who? This is a strategy for players who have been delegated the authority
to uphold standards in a particular area.
When? The Sheepdog will be active in the sector on an ongoing basis, moni-
toring adherence to existing standards.
What do you win? The ability to maintain sector standards for the benefit
of consumers and for society.
Sheepdog example
As the economic regulator of the water and sewerage industry in England
and Wales, OfWat is charged with ensuring that the waterÂ€companies
provide household and business customers with a good quality service and
value for money. They have wide-ranging powers, including limiting the
prices that the water companies can charge. In one case, it rejected a proposed
price increase, because it judged that the company was not doing enough to
control costs, including chasing delinquent debt, and other companies had
chosen to absorb these costs rather than passing them on to household
consumers. They expect that the companies will maintain the infrastructure
required by the industry and can take action if a company fails to meet its
leakage targets, for example, bringing the organisations at the lagging edge
of the herd into line.
Authority
Overview
Authority, like Troubleshooter, is one of the ‘positional’ supplier strategies.
As with Troubleshooter, Authority depends on having particular expertise in
a field, expertise that is acknowledged not just by an individual customer but
across the sector. AÂ€major difference, however, is in terms of time: whilst
Troubleshooters are brought in only occasionally to deal with specific crises,
Authority is a constant powerful presence and influence that shapes the
whole sector.
Authority is a hard position to achieve and normally requires huge
investment over a long period of time to build the depth of expertise and
reputation within the sector. Once achieved, it can provide a position of pres-
tige, as well as a degree of security because it is hard to displace an Authority
for any sector.
293
Typical use
Who? This is a strategy for a player who has exceptional knowledge of
their sector.
When? Whenever there is a vacancy within your sector.
What do you win? AÂ€relatively easily defensible position of exceptional
influence and indirect power, where your specialist knowledge provides
a sector-wide reputation.
Authority example
Within the IT sector, Gartner and Forrester play the role of Authority. They
provide consultancy directly to customers but, in addition and more impor-
tantly in terms of strategy, they play a major role in shaping the structure and
direction of the sector. They research the future direction of the sector, acting
as an intelligence function for the industry, and provide guidance on where
those who aspire to sector leadership should go next. As such, although they
don’t actually lead the sector, they point the direction they think it should go,
and in sector surveys, they indicate who they think the leaders in each segment
of the industry are. At the other end of the herd, their sector surveys indicate
who the laggards in the herd are, thereby putting pressure on them to move
back into line.
None of this shaping is done by the direct use of their own power. The
power they leverage is the power of the sector’s customers. It’s the customers
studying their reports and using them to pick which IT companies to buy
from that allows Authorities to put discreet but massive pressure on the
companies in the sector. The position as Authority provides the credibility for
acting as consultants, and that in turn provides access to the sector to do the
research that provides the information going into the reports on the sector.
This is a positive feedback loop where success builds more success, and each
part of the model helps build the others.
Standard Bearer
Overview
Standard Bearer is a strategy focused on the coupling between a regulator
and a sector or between a regulator and a country. Its power is expertise-
based, like both Troubleshooter and Authority. Where the Authority influ-
ences the direction and standards for the herd, the Standard Bearer actually
defines the direction and standards for the herd. Standard Bearers are usually
granted their mandate from government, a set of delegated powers and a
boundary within which they can apply them.
294
The Standard Bearer needs leading edge partners. How else can it get
the learning and feedback it needs to shape the direction of regulation for the
sector and to develop the specific regulations which will apply? From the
perspective of the regulated, it is far better to be a partner to the regulator on
the leading edge of regulation, where there is potential to shape that regula-
tory direction and content, and to shape it in a way that is beneficial for you,
than to be a reacting, lagging edge organisation.
The Standard Bearer needs to manage these leading-edge couplings
very carefully: choose them for their input in forming regulation or because
the herd will follow their actions in adopting regulation, but not be overly
influenced by them because a cornerstone of being a Standard Bearer is
neutrality for the good of the sector and avoiding undue influence from
would-be Puppeteers. The Standard Bearer maintains their expertise by
working with the herd to understand its challenges, opportunities and likely
direction and by gathering evidence that supports and informs the develop-
ment of new regulation. They also work beyond the herd to take learning
from how other Standard Bearers in other sectors and disciplines define and
uphold their standards.
Typical use
Who? This is a strategy for players who have been delegated the authority
to define standards in a particular area.
When? The Standard Bearer will be active in the sector on an ongoing
basis, gathering evidence about all elements relating to the standards
they uphold. They will introduce new standards to the coupling when
evidence demonstrates its value.
What do you win? The ability to shape the standards of a sector, influ-
encing and influenced by societal norms.
Standard Bearer example

Successive governments in the UK and elsewhere have focused on improving
road safety, including reduction in accidents, injuries and deaths, a structural
coupling at a country level. All of the campaigns and regulations have been
based on clear evidence that the proposed standards will have a positive
impact on road safety.
“Clunk Click Every Trip” was a memorable slogan used in a series of
promotions from the UK’s Royal Society for the Prevention of Accidents; its
message was that the first thing the driver should do after closing their door
(the clunk) was to fasten their seat belt (the click). These adverts, some of
which featured graphic scenes of accident and injury, started to change
295
attitudes towards seatbelt use before the regulatory framework introduced a

law for compulsory seat belt use in 1983. AÂ€legal framework for the provision
of appropriately sized child restraints in cars followed in 2006.
Some of the most serious accidents are caused by drink-driving. The law
defining the legal limit of blood alcohol was passed in 1967, and although
breathalysers existed at about the same time, there were public protests that
the breathalyser infringed on personal liberties, and publicans claimed that it
would harm their businesses. Drink-driving related deaths have dropped
almost every year since the introduction of the legislation, monitoring tech-
nologies (notably the breathalyser) and the influence of powerful campaigns.
This is a reduction in absolute terms, an even more impressive accomplish-
ment given the increase in both cars and miles driven over that period.
Linus
The Linus strategy (named after the Peanuts character’s dependence on a
comfort blanket) is based on a coupling to a herd that provides a particular
value proposition to its members. The value offered is reassurance – that
being a member of the herd is the right thing to do and that you are doing the
right thing as a herd member.
Organisations operating the Linus strategy are key in maintaining the
cohesion of the herd, and they range from small consultancies to major players
including organisations like ISO – developing infrastructure to support stan-
dard practices and make them more acceptable to herd members.
Wolf
Wolf is a predatory strategy, one based on picking off ‘the weak and the lame.’
The Wolf’s target can be an individual, but usually it’s a member of a herd
and one that the Wolf has spotted as trailing the rest of the herd. The prefer-
ence for herd members is partly because of what the Wolf does with its victim
which typically is to dismember it, keep the bits it wants and dispose of the
rest, and the assets of herd members tend to be more standard and therefore
have a wider market than those of individuals.
An example is Granada’s purchase of the Forte group, prompted by its
underperformance in several areas, but most noticeably in returns to share-
holders. After the acquisition, Granada kept the mid-range and budget hotels
but sold off the luxury hotels valued at £1.6Â€billion. In ecosystemic terms, the
threat Wolves pose has a dramatic effect on herds, forcing laggards to keep up
with the rest of the herd or risk disaster.
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Figure 17.1
Cunning plans landscape
17 C UNNING PLANS
Deception has been around in nature ever since there was a food chain. Some-
times it’s about concealment and disguise for potential prey to avoid detec-
tion or mitigate attack; sometimes it’s about aggression and appearing bigger
and more threatening than you really are. A ‘dummy pass’ in rugby focuses
defenders on where the ball appears to be going, wrong-footing them and
moving their momentum in a different direction. In fencing, a feint is designed
to mislead, to give the opponent the impression that a certain stroke will
follow, when in fact you intend to use another, or none at all. Guile and decep-
tion are also incredibly well used in military strategy, with many, many
examples of purposefully seeking to confuse or mislead the enemy.
‘Deception’ may seem like a dirty word in a business context. When we
started collecting business strategies based on cunning plans, we’d expected
to find only a few that were practiced regularly. In fact, we found around 20
that are commonly used. Cunning plans, guile and deception are alive and
well in business strategy. If you find that distasteful, perhaps it’s worth
bearing in mind that some of the deception strategies are benign for their
target, and for those that aren’t, aren’t you better off being forewarned?
Cheng and chi

Sun Tzu, in The Art of War, used the concept of ‘cheng’ for doing the expected,
the orthodox set piece, often a strength-vs.-strength face-off. Think about
massed armies lined up against each other in a military context or the
competing sales forces each using their advertising budgets to convince us
that their washing powder really is superior/cheaper/better value than the
other. Cheng is about applying force in a direct way. If your competitors are
smart, they will expect you to be doing something, to have a presence, to be
following through on an action plan. Once the competitor sees the cheng
action, then they are likely to react to that or seek to shape you in return. Job
done: their attention is now on addressing the cheng.
Boyd built his ideas of manoeuvre warfare on Sun Tzu and partnered
the straightforward cheng with the crafty chi. Use of chi is about deception,
doing something unexpected, unorthodox and unpredictable, something that
surprises and disconcerts the competitor who has just started to address your
cheng move. Again in military terms, the cheng is the frontal attack, the chi is
the unexpected flanking move. The essence of chi is that it needs to be
constantly reinvented; if the competitor can see it coming and recognise it,
then by definition it is cheng, not chi. In World War I, Lawrence of Arabia
became a master of chi moves, harrying the Turks in a series of short, intense,
surprise moves, draining their resource, dragging their attention to his activi-
ties and then melting away into the desert. In World War II, Rommel success-
fully made the British 8th Army believe that his forces were greater than they
were. For example, he used his transport vehicles, dragging tarpaulins behind
them, to create a huge dust cloud, giving the impression of a large number of
his tanks at that location. The British never wanted to throw all their tanks
into battle, so they tended to split their battalions, leaving many in reserve
and shifting the balance of power and momentum to Rommel’s smaller force.
Cheng baits the trap, chi springs it. The Special Boat Service is one of the UK’s
Special Forces. Its motto? “By Strength and Guile.” Cheng−chi in action.
The 2002 Millennium Challenge war game, in which a Red Team
commander beat the Blue Team of the Pentagon, is notorious. The Blue Team
(cheng) plan involved wholesale destruction of the Red Team’s infrastructure
and other major physical assets, including telecommunications, thinking that
deployment of massive power would cripple their ability to respond. The Red
Team had correctly predicted this and was prepared with a series of chi moves:
a team of messengers on motorbikes to avoid the use of radio signals that
could be intercepted, visual signals to control aircraft, and small craft including
pleasure boats to move easily amongst the US fleet. The Red Team combina-
tion of cruise missiles and suicide tactics sent 16 Blue Team warships to the
bottom of the Persian Gulf. Game over.
Surprise
There are three basic ways to achieve surprise. The first is through deception –
to convince our competitors that we intend to do something other than what
we are really going to do, to induce them to act in a way that is prejudicial to
their interests. So we provide a clear picture to our competitors of our inten-
tions, but the wrong picture. The second way to achieve surprise is through
ambiguity, acting in such a way that our competitors don’t know what to
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Cunning plans
expect, or providing conflicting signals, or even declaring all the ways in

which we could act. And in not knowing what to expect, they must examine
and prepare for numerous possibilities and can’t prepare adequately for any
particular one. Any preparation they can make is likely to be stretched thinly
across the possibilities. Both of these are about creating uncertainty and
denying foresight to our competitors, making it difficult for them to know
how best to use their power. The third way is through stealth, denying the
competitor any knowledge at all of our impending actions. They are neither
deceived nor confused of our intentions, as in the previous two options, but
are ignorant of them.
Of these three, deception generally offers the greatest effects but is most
difficult to achieve. This is because it requires the organisation to hold two
different intents and courses of action simultaneously; a credible pretence at
one course of action while preparing for and delivering a second. It also
requires congruence across the whole organisation; one leak, and the decep-
tion is destroyed.
Deception about size

Deception is often used to make an organisation or one of its offerings seem
bigger than it actually is. This raises the perceived bench strength of the
organisation in the eyes of potential customers, making the organisation’s
products and services more credible. Most large organisations prefer to buy
from well-established organisations – a herd member buying from another
herd member. It makes it a predictable purchase in that herdy sort of way.
The Internet delivers the ultimate shop window, where it is often difficult to
assess the size of an organisation from its Web presence alone; an attractively
packaged website can appear to represent a large organisation, yet could
actually be an organisation of just one person.
While looking bigger is generally a positive thing, it does have its down-
side in business. Look too big, and competitors are more likely to direct energy
and effort to limiting the organisation’s freedom to manoeuvre and, in addi-
tion, looking too big may set customer expectations too high. Occasionally,
deception is used to appear smaller. Here, it’s about sliding under your
competitor’s radar and not becoming a focus of their attack. Equally, it can be
used as a way to segment a market by developing multiple competing brands,
with the total market share held being greater than either brand could sustain
alone.
Given that cheng−chi combination can be so devastatingly effective, why
are these forms of deception not commonly understood in business? The
reason may well be related to the level of organisational and especially
301
management competence needed to pull off a cheng−chi combination in busi-

ness. The examples earlier were drawn from sport and from the military,
traditionally disciplines with intense and prolonged training, building up
incredibly high levels of competence and cohesion within the organisation,
and in these environments there are generally very short feedback loops to
assess the impact of whatever manoeuvre has been made. Successful decep-
tion requires high levels of trust and shared understanding to be able to
manage the tension and duality required to pull off a cheng−chi move.
OODA in cunning plans

In competitive situations, you can use combinations of power and time to
create advantage. It makes sense that you would also want to act with
surprise, to maximise the impact of your actions in disadvantaging your
competitors. Surprise degrades a competitor’s ability to respond by your
acting in a way for which they are unprepared. You can get the benefits of
shaping the situation, and successfully getting inside their OODA loop
(Observe-Orientate-Decide-Act); they are on the back foot and trying to
understand what is happening before they can decide how to act, and mean-
time you are following through on your chosen course of action and perhaps
moving onto a second set of actions. Advantage comes from the degree to
which you can throw them off balance and from how long it takes them to
recover. The OO of the OODA loop are Observe and Orientate. For your
competitor, their Orientation holds their model of expectations, how they
think the environment works, and also what they think about you, what you
are capable of and what you could do next. The OO tests their observations
against their orientation, against their model. When there are only minor
mismatches between their model and what’s happening (i.e. your actions are
mostly in line with their expectations), then the degree of their unbalance is
low. On the other hand, if you create a large and increasing mismatch between
their model and what they observe, then you create increasing disorder in
them and in their thinking, as they become – literally – more and more disori-
entated. AÂ€series of fast-moving changes gets you inside their decision cycle
and leaves them confounded, a fluidity of your chi events shaping a succes-
sion of unexpected scenarios for them. AÂ€relatively faster speed of decision–
action cycles is significantly advantageous. Because you are shaping the
unfolding scenario, you are always more ready and more prepared. Even if
they have available resources, a fast-moving sequence of chi actions repeat-
edly alters the scenario they face, causing them to re-evaluate and replan. This
prevents them using those resources and in effect degrades and renders inef-
fective any agility they might have built.
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Cunning plans
Information asymmetry
Clearly, successful surprise flows from the high quality and currency of your
situational awareness and foresight and from the poor quality and currency
of situational awareness and foresight on the part of your competitors. Donella
Meadows described 12 points to intervene in a system, based on the observa-
tion that changes in some systemic factors are very high leverage. One of
these is the structure of the information: who in the system does – and does
not – have access to information? Deception, ambiguity and stealth are all
ways to create information asymmetry: you know things that your competi-
tors do not know, and this is at the heart of all cunning plans. Information has
become a leverage point, and you can shape the environment through supe-
rior control of information.
Cunning plans provide ways to confound competitors about the nature
and intentions of a business, its size, capacity and strategic direction, making
it difficult for them to assess the nature and level of threat that the business
poses to them and slowing down their decision–action cycle time (FigureÂ€17.1).
Four of the strategies, Pied Piper, Veneer, Feint and Zebra, have confound
at their heart. Pied Piper uses misdirection towards a competitor; Veneer,
Zebra and Feint aim to confound the market.
Guerrilla is about time and using short deployments of power to under-
mine and destabilise a competitor. Camouflage is about appearing smaller
and weaker than you actually are, so that you don’t attract attention to
yourself.
Two strategies purposefully break or disrupt structural couplings. Loki
causes chaos in others’ structural couplings, and Harlequin breaks its own
structural couplings to enable its own reinvention. Both Masquerade and
Scapegoat also redefine structural couplings. They position one business as
though it were two, each with its own structural coupling. Masquerade pres-
ents two attractive yet different faces to the world, and Scapegoat segregates
an unattractive part of the organisation.
All the cunning plans in this chapter, with the exception of Loki and
Guerrilla, depend on misdirection and the manipulation of identity.
Â�Scapegoat, Veneer, Feint and Zebra present a false identity, and Pied Piper,
Camouflage and Masquerade rely on concealing the organisation’s true
nature. Harlequin is about the genuine reinvention and reshaping of identity
to maintain a position as an individual.
303
Pied Piper
Overview
The Pied Piper strategy involves duping competitors into following your lead
in a particular direction. The deception is that the lead you give them is
misleading. It isn’t necessarily wrong, in fact, if it is actually wrong, the decep-
tion is likely to be detected more quickly, so a deception that is ‘right’ but not
the real secret of success is best. Done well, the Pied Piper can deceive an
entire industry sector for years, even decades.
One of the key aids to executing the Pied Piper strategy is that much of
management theory is adopted unthinkingly by many organisations. This is
a normal characteristic of herd organisations, many of whom will be happy
to adopt what they see as a winning strategy from another sector or compet-
itor, without considering whether it’s really appropriate for their situation
or indeed without bothering to understand it properly. As a result, many
end up simply following ‘recipes’ as a substitute for thinking strategically
about themselves and their situation, so Pied Piper relies heavily on the
herd effect working on competitors. The more the Pied Piper’s positioning
can push competitors into reacting as a herd, the more likely the strategy is
to succeed, not least because then their reaction will be largely unthinking.
If you can induce a sense of panic in the herd − that X really is the future and
they had better adopt it as fast as possible or be left behind − then their
critical faculties are likely to be even more reduced, and the deception is
even more likely to succeed. This is a sophisticated strategy and demands a
strategy team that can operate multiple streams of thought and activity in
parallel.
Typical use
Who? Pied Piper is an option for anyone who holds a critical advantage
over their competitors. Typically, this will be an advantage based on
technical ability or a technique that can be copied. It is often used by
First Movers wishing to maintain advantage for longer.
When? There is a possibility that competitors may catch you up.
What do you win? This is used as a smoke screen to create, protect and
maintain competitive advantage whilst making competitors believe
they have discovered the secret of your success. Doing this can trap
competitors into adopting a losing strategy, believing it to be a winner.
This allows the strategist to extend their advantage for longer.
304
Cunning plans
You will need

The Pied Piper strategy requires:
● Paradigm shift. Often the Pied Piper will be used to cover the fact that
the strategist has executed a paradigm shift.
● Usually, it will require a higher rate of change. The Pied Piper must be
seen to be moving ahead, otherwise key competitors in the herd won’t
bother to follow; at the same time, the actual rate of change has to be
even faster than the perceived rate, since only part of the real progress
can be visible if the deception is to be maintained.
● Typically moving to leading edge or individual, whilst deceiving the
herd you are still a herd member.
● Shaping. For the strategy to be successful, competitors must react; often
the strategy will require shaping the competitors to react as a herd.
● Confound, the core to this strategy.
The manoeuvres
1
The strategy begins with building a new model that
offers a significant competitive advantage. This can be
based on a paradigm change, or on step changes in
cycle time or rate of change or agility, or on any combination
of those. In theory, it might be possible to do Pied Piper for an advantage
based on critical mass, but since critical mass is usually easy to spot, hiding it
is a hard trick to pull off. If the critical mass is based on an alliance, where it
can be hidden, then it might be possible.
Indicators: Competitive advantage gap and period (how big is the advantage
and how long can it be maintained?).
2
The second stage is to build the deception
strategy – to write the tune you will play.
Ideally, this will be a component of the real
strategy that can be essential to your success but
isn’t sufficient on its own. When the herd follows
your tune, you don’t want them to actually be able
to beat you at your own game, so a key part of the
game must remain hidden. The more plausible
your tune is, the better. It needs to provide a cred-
ible explanation for your success, be something
that is possible to copy, but not so easy to copy that
competitors find out too soon that they’ve been
305
duped. It is really important that the true strategy remains hidden and that
includes hidden from the majority of your own staff. After all, if it’s success-
ful, your competitors are likely to try to steal some of your key staff to learn
from them.
Indicators: Monitoring the messages your own staff use is critically
important.
3
Having written the tune, the next step is to
play it. Here it’s really a choice of media
and timing. If you have time, then building
the tune up slowly is more reliable; academic
papers, conference presentations and articles in
industry journals can all be used. Third parties,
including consultants, can be used for this, and
normally when this is done, they are not party to the real strategy or that they
are being used as part of a deception. Spreading the message has been done
very successfully by the company running the strategy and sometimes with a
bravura twist of “Catch us if you can!” Once the herd’s thought leaders
(whether these are specific companies or commentators) start to play the
message, the herd is likely to follow. It’s important to monitor the song the
herd is repeating to spot whether they have bought your tune or whether
anyone has picked up on the true nature of the hidden strategy.
Indicators: Messages by industry commentators, whether these are academics,
consultants or journalists. The balance of debate will tell you whether your
Pied Piper’s tune is catching on and whether the herd is starting to follow.
4
Once the herd starts moving in the
direction you want by copying
your deception, then reinforcing
the message can be useful and should be
easy to do since there will be an increasing
number of commentators desperate to
jump on the bandwagon. All of these can
be used to amplify and transmit your
Â�message for you at very little or no cost. If you need to panic the herd into
Â�moving faster, then conscripting some of these commentators and feeding
them stories about how successful the ‘strategy’ is, should work. At this stage,
it’s practically become a standardised industry approach – and the herd is
Â�merrily following behind you.
Indicators: The herd actually starts to implement your approach and, impor-
tantly for success, whether a critical mass of the herd adopts it – when it
306
Cunning plans
becomes the default strategy for your industry. Attempts to poach your staff
in an attempt to acquire your secrets, the number and type of consultancies
offering services and training in copying your approach.
5
Ultimately, the success of the Pied Piper
Â�strategy rests not in the deception itself but in
the advantage that it is protecting for you.
Indicators: That advantage is measured in terms of
the size of the gap (however this is measured for youÂ€–
profit, market share etc.) and also the advantage
period, how long that advantage can be maintained before either it loses its
effectiveness or someone notices the deception.

If your competitors spot the deception and start adopting your strategy (your
actual strategy, not the one you have been promoting as your strategy), then
it’s lost its advantage for you.
Figure 17.2
Pied Piper
Pied Piper example

For over 20Â€years now, the automotive industry has been playing catch-up
with Toyota, and it took an even longer time before the industry noticed there
was anything to catch up to. The innovation that is the Toyota Production
307
System (TPS) dates back to just after World War II. It represents a radical
change in how production could be done that has become the benchmark not
only for the automotive industry but across manufacturing sectors and into
service industries.
Toyota has never been shy about sharing information on TPS, and it
seemed that the more they shared, the further behind those trying to copy
them fell. And yet the information on how to do TPS was genuine, and the
message was spread by consultants, writers and academics, all of whom
urged other industries to follow Toyota’s lead.
But, of course, following Toyota could only ever mean second place at
best for competitors. There was no way to beat Toyota at their own game. And
herein is the real key to the strategy. When Toyota developed TPS, it was
innovating at two levels, one was the introduction of the content of TPS –
continuous improvement, Just In Time and cellular manufacturing, which is
what was largely copied. But behind this was the innovation of introducing a
totally new business approach. To match this, a competitor would have to do
the exact opposite of copying TPS; they would have had to come up with a
radically different and better business approach themselves. By copying
Toyota’s model rather than coming up with an equally disruptive model to
supersede it, they consigned themselves to losing the strategic contest. Toyota,
with the help of consultants, academics and journalists around the world (but
particularly those in the West), successfully got all its major competitors to
dance to Toyota’s tune and to pursue what could only ever be a losing strategy.
It’s important to remember that when we talk about strategy, we’re
talking about a pattern of interactions between organisations; we’re not neces-
sarily talking about a plan or even a conscious intention by the management
team of one of those organisations. We don’t have any inside information on
whether it was part of Toyota’s plan to deceive Western automotive compa-
nies into pursuing a second-place strategy or not, but that was the pattern of
interaction, intentional or not. The pattern has its own natural dynamic and
draws its energy from the roles that all the players in the game adopt and the
interplay between them. In this case, the motive power for Toyota’s Pied
Piper strategy was fuelled primarily by the Western companies. Toyota
started the move, but it was their competitors that supplied the energy – and
to this day, they continue to supply the energy that still keeps this pattern in
play.
308
Cunning plans
Guerrilla
Overview
The word Guerrilla translates from the Spanish as ‘little war’ and shares
many of the characteristics of warfare. Guerrilla warfare involves a small,
weaker, yet mobile force taking on a larger, stronger but less agile one. The
mobility of the Guerrilla force means that it can easily probe and withdraw,
identify and occupy territory that its larger enemy cannot, and its tactics
include attacking enemy resources (such as its supply chain), as well as the
enemy itself.
In business as in warfare, a Guerrilla strategy is intrinsically asymmetric
and is attractive for the Guerrilla because it makes a virtue out of the
comparative power weakness. Even with low resource, the ultra-mobile small
Â�organisation can shape the coupling between it and the target, tying up
relatively large amounts of resource on the part of the target in trying to
predict where the strike may come from and then reacting to the action of the
Guerrilla when it has happened. Part of the Guerrilla’s effectiveness comes
from preying on the minds of the target, in that what-on-earth-are-they-going-
to-do-next? sort of way, and this consumes management resource and
attention, in addition to the actual resource needed to respond to specific
Guerrilla activities.
The Guerrilla is weaker than its target, so can’t afford to get into a
symmetric conflict, as this is a losing position for it. This requires that the
Guerrilla operates a set of harassing activities: probe and withdraw, attack
and retreat, but never stand and fight. The Guerrilla is the ultimate chi strategy
against a cheng opponent. In the nature of chi, the form of the attack and how
it is launched need to be constantly renewed to keep the opponent guessing;
as soon as the action is predictable, then it is by definition no longer a chi
strike.
Typical use
Who? This strategy is generally used by a small organisation competing
with a much larger one.
When? Sporadically, unpredictably.
What do you win? AÂ€high use of competitor resource and a distraction
from their intent and strategy, for low use of your own resource, gradu-
ally advancing your own goals as the resource of the competitor suffers
ongoing attrition.
309
You will need

The Guerrilla strategy requires:
● An organisation that is edge or individual; a herd member won’t have

the ability to develop the requisite chi ideas.
● Foresight, to identify high-leverage situations to act in.
● Agility, to rapidly deploy and then extract resources from situations.
● Faster decision and operational cycle times than your target.
● High change rate and rates of stretch, to reconfigure for the next strike.
The manoeuvres
1
The strategy starts with a clear understanding of the rela-
tive strengths of the two actors and identifying situations
and contexts where your agility can be used to manipu-
late the target. It looks in particular for places where asymmetry
is positive for you and where the size of the target makes them cumbersome.
This requires flair and creativity to develop new ideas that will confuse and
disorientate.
Indicators: Areas for your action identified.
2
And so it begins. You use your agility to
unleash action on the target. You aim to
leverage highly focused resource but for
only for a limited period of time, so the cycle time
for the engagement is short. You need to be agile
both in deploying the resource for action and then
in withdrawing it once the action is complete.
Often, your action achieves a divide-and-conquer
effect, creating an actual or perceived diffusion.
Indicators: Difference in time between you
deploying resource and the target starting to
deploy theirs.
3
The foresight activity has created manoeuvres and
scenarios that are new and so could not be readily
anticipated by the target. The goal is to create a
sequence of unexpected and unplanned for chi actions that
strike the target suddenly and unpredictably. The paradigm
shift comes from the nature and the timing of the actions.
Indicators: Measurable degradation in the performance of the target.
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Cunning plans
4
The combination of unexpected
actions, delivered at speed, has a
devastating effect on the target.
When the unexpected is done well, the
target is still disorientated from the first
action and trying to react when the
second and subsequent actions are
Â�
launched, altering the situation again.
You have now got inside the target’s
decision–action cycle.
Indicators: Clumsy, slow or incoherent response from the target. Some
attempts at adaptation may be visible, but they will substantially lag your
actions and be focused on reacting to a previous paradigm play.
5
As the sequence of actions builds up, the
target is increasingly confounded by your
actions. The target has lost its ability to
mount a credible defence, let alone come back
with a strength-based attack. So part of your
Â�success is that you are too diffuse to be readily
attackable using the approaches that the host is familiar with. Once you com-
plete your action, it’s all about rapidly withdrawing the resource again, ready
to fight another day, before the opponent gears up for response.
Indicators: Difference in time between you withdrawing resource and the
target mounting their reaction. Difference in resource used by you and by
target.

The effect you are inflicting on your target is reducing your resource at an
unrecoverable rate; the larger target can lose much more resource than you, in
absolute terms, and still remain viable.
Guerrilla example
Greenpeace is a non-governmental, global organisation that campaigns to
protect the natural world, using lobbying and research to forward its goals, as
well as direct action to investigate and expose environmental abuse and those
who are accountable for it. Throughout its history, it has been able to identify
situations that are high-stakes for both itself and the target organisation and
to intervene in a way that is disorientating and exposing for the target.
311
Figure 17.3
Guerrilla
Within its ‘natural world’ banner, it has a range of interests, and its
actions have ranged from a single ship sailing into an exclusion zone to inter-
rupt nuclear testing (French Polynesia in the early 1970s), to disruption of
whaling by getting in between the whales and the whaling ship and making
sure that the footage was widely seen globally. In the spirit of chi, Greenpeace
has used a variety of approaches to bring public attention to its goals and to
the activities of those who it feels are acting against the good of the planet. It’s
asymmetric because with one boat and its crew, with a small amount of
resource, Greenpeace can command a lot of media attention and tie up a lot of
resource and effort on the part of its target.
Its effectiveness can in part be evaluated by the reactions of its targets.
Greenpeace has been spied on, its computers hacked and, tragically, its flag-
ship Rainbow Warrior was sunk in Auckland by the French, with the loss of
life, because of its continued protesting about French nuclear testing.
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Cunning plans
Camouflage
Overview
A small organisation can continue unchecked, providing its offerings are
attractive to its customers. Once it starts to increase in size and in its ability
to take market share, an organisation can attract unwelcome attention from
its competitors and may no longer fit the values of the market, both of which
can act to reduce its success. There can be advantage to keeping growth
under the radar, hiding success and maintaining an appearance of small-
ness to avoid competitive intervention. This is a strategy focused on the
coupling between you and the market, based on appearing to be consider-
ably weaker than you actually are, weak enough that others won’t object to
your size.
Typical use
Who? This is a strategy for a medium-sized organisation whose market is
sufficiently disparate that it can conceal its wider presence.
When? Camouflage needs to be maintained to be effective; one exposure of
the true scale of the organisation has the potential to undo all the
previous concealment.
What do you win? The ability to grow and to grow market share with
minimum competitive interference.
Camouflage example
Established in the 1920s, the family-owned E.E. MuirÂ€& Sons is one of the
largest distributors of fertilisers, chemicals, seeds and other farm supplies to
the agriculture industry in Australia. Back in the 1940s, the business consisted
of one small shop. At that time, growers were uncomfortable dealing with
larger businesses and preferred dealing with family firms, but economics
were against these smaller companies, which were unable to provide suffi-
ciently broad product ranges, or compete on price or delivery schedules.
Slowly and unobtrusively, E.E. Muir was able to purchase one after another of
these small firms but didn’t visibly consolidate them, instead maintaining
their names and clients in the existing locations. The customer continued to
receive products under their original names and to see – and work with – the
organisation they had always known, but behind the scenes, E.E. Muir was
able to benefit from economies of scale and scope. Keeping up the original
brand of each of these firms concealed E.E. Muir’s growth, thus mitigating
potential dissatisfaction from its customers.
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Feint
Overview
The Feint strategy involves pretending to put your resource into something
but without actually doing so. This is done for two main reasons: either to
mislead a competitor or to mislead someone who has tasked you with some-
thing you don’t want to do or can’t do. Within organisations, it’s incredibly
common as a strategy in interdepartmental positioning. At the whole organ-
isation level, it can be harder to spot but is also very common. Part of the
reason it can be harder to spot is that very often the organisation concerned
deceives not only external observers but themselves as well. As with many of
the guile strategies, it’s incredibly hard for a whole organisation to maintain a
deception if people know it’s a deception; usually someone will break the
conspiracy of silence, and the truth comes out. The exception to this is when
the purpose is to hoodwink a competitor, and then a wall of silence can be
maintained if you are careful and if everyone inside the organisation who
knows it’s a ploy believes in the strategy.
Typical use
Who? Anyone.
When? Either when under pressure to deliver something unpopular or
difficult or to deceive a competitor.
What do you win? As a pressure relief strategy, you win time; by conning
the actor putting you under pressure that you are doing what they want,
the pressure is lifted. When deceiving competitors, you win their confu-
sion. You can use this to lure them into investing in a market that is not
the one you are entering, leaving you free of direct competition.
Feint example
The British government had an agenda to change the National Health
Service and specifically to make it more responsive to changes in demand,
to address unmet needs and long-standing health inequalities. Historically,
doctors had decided what treatments were needed and in what proportion
and so in effect had determined the strategic priorities of the service; we
had the treatments the profession had trained itself to deliver, and these
were not necessarily always those most needed. The government’s approach
to this was to set up a group of organisations linked directly to primary care
(so they would have first-hand information on health needs in their area),
which would then commission services from hospitals. These new Primary
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Cunning plans
Care Trusts (PCTs) were launched with a huge fanfare and the intention
that they would be ‘world-class’ commissioning organisations. Commis-
sioning was supposed to involve scanning the local environment to
Â�determine health needs, check these against available provision and then
decommission services that were underused or lower priority and commis-
sion services to address shortfalls in provision. The plan was that this would
allow a more equal provision of care and a more proactive management of
a community’s health – for example, rebalancing from diabetes care to
diabetes prevention.
A study of around a quarter of PCTs found hardly any evidence of
commissioning of this sort. Instead what PCTs were overwhelmingly doing
was reinforcing the provision of existing treatments. PCTs were not really
doing the very job they had been set up for but, critically, this finding was not
really discussable. Individuals within PCTs could talk about the fact that they
weren’t doing commissioning, but as soon as you got two of them together, it
became undiscussable. Maintaining the wall of silence was possible only if
everyone pretended that nobody else knew.
Veneer
Overview
The Veneer strategy is about covering over your core business with a thin
skin that makes it look more attractive. Typically, this involves substi-
tuting value types, so, for example, pretending that the business’s core
driver is ethical concerns rather than profits. The nature of the deception
is to appear to change without actually having to change substantially,
and the trick is to divert only just enough resource and to change just
enough of the organisation’s activities to cover over the rest, so that, seen
as a whole, the organisation appears to have the new value, whilst leaving
the bulk of the organisation to carry on with business as usual. Usually,
Veneer is easy to spot since in an attempt to get the greatest coverage for
the least diversion from normal business, the Veneering is built around
publicity, and even small projects will receive a totally disproportionate
level of publicity.
As with many of the guile strategies, it’s difficult for a whole organisa-
tion to maintain a deception if the staff know they’re involved in a deception.
This requires that the deception is plausible inside the organisation as well as
outside. This is usually done by segmentation; the staff involved in building
the Veneer are structurally separated from the rest of the organisation so that
all they see of the organisation is the Veneer.
315
Typical use
Who? Usually large herd or laggard organisations that have a large estab-
lished core business that is hard to align to a new value set and that
haven’t seen change coming and need to play catch-up.
When? Whenever organisations face shifts, particularly shifts in value
types, in their environment, either from customers, regulators, media or
competitors.
What do you win? Veneer can be used to buy more time to adapt in a
changing environment. By pretending to have substantially changed,
the pressure is lifted and generally falls on someone lagging even more.
Often, though, it is used as a ‘solution’ rather than just a stopgap. This is
successful only if the environmental change is transitory and the
Â�deception can be maintained.
Veneer example
Several factors came together to change the environment for energy and oil
companies dependent on fossil fuels. Diminishing reserves, concerns over
global warming, governmental pressure and concern over various sorts of
pollution led to a gradual readjustment of priorities between value types by
the public.
Some companies responded by launching greening campaigns. Typi-
cally, this involved investing in renewable energy, usually by buying a
company already in the renewables business. The reality of the level of invest-
ment in green technology was stretched to cover as much of the core fossil
fuel−based business as possible by skilful marketing. New green iconography
and colour schemes were adopted, and advertising showed wind generators
rather than refineries.
The thinness of the Veneer becomes visible as soon as you look at the
relative size of the green and traditional businesses and the relative environ-
mental impact. This was shown up very sharply with the 2010 BP Deepwater
Horizon oil spill in the Gulf of Mexico. There, the harsh reality of the extant oil
industry contrasted with the new green image BP had sought to portray.
Zebra
Overview
Like other members of the horse family, Zebra live in herds. And although
they all look incredibly similar, the black and white stripes are unique to an
individual, just like human fingerprints. The Zebra strategy is about highly
316
Cunning plans
herded organisations that are alike in almost all characteristics and where the
differentiation is only skin deep. This gives competitive parity with other
organisations in the herd and all the advantages of being in the herd but, of
course, all the disadvantages as well. Herd organisations don’t always realise
that they are in a herd because within the herd, it is easy to focus on (and
magnify) the small areas of differentiation rather than on the huge areas of
similarity. But it’s easy to spot from the outside.
Typical use
Who? AÂ€densely packed herd in a mature market.
When? Ongoing.
What do you win? AÂ€market that is shaped by the herd and not just by
your own efforts.
Zebra example
Within the car market, there is a constant fight by mainstream brands to retain
market share. Overall market size is heavily affected by household prosperity
and disposable income and therefore fluctuates with economic cycles, rising
with increasing house prices and employment. It’s a zero-sum game, with car
manufacturers fighting for market share.
For most people, a car purchase is the second single biggest purchase
(after a house), so a big emotional loading comes with all that investment.
Small wonder, then, that the manufacturers do their best to provide a
plethora of models, engine sizes, colours, finishes and optional extras in
order to turn it from a commodity purchase to a personalised experience.
Wing mirrors in colour to match the car body? Metallic paint? Parking
sensors? Absolutely. And all these peripheral things are required to differen-
tiate one manufacturer from the next, one model from the next, because the
intrinsic function of a car (I get from AÂ€to B safely, in comfort and at a reason-
able price) is provided by all cars, and the business model of all the major car
manufacturers is the same.
Harlequin
Like the Commedia dell’Arte character, the Harlequin strategy consists of peri-
odic changes in identity. This goes beyond mere branding; it’s about changing
the role that the organisation plays and indeed the sort of business it is in. At
its extreme, Harlequin involves breaking all its existing structural couplings to
enable the organisation to reinvent itself. It’s a wholesale identity shift.
317
Nokia became most famous for its mobile phones before being bought
by Microsoft, but the history of the company prior to that shows a much more
diverse and eclectic track record. Nokia started with wood pulp in 1865, went
to rubber in 1898, to electricity generation in 1902, to electricity and phone
cables in 1912, and from 1922 developed a range of electrical and then elec-
tronic equipment, including mobile phones from the 1980s.
Loki
Loki is one of the gods in Norse mythology, seen as a wily trickster and
mischief-maker. Loki deliberately destabilises the structural coupling between
two or more other actors, creating chaos that Loki aims to exploit. As a smaller
player, it’s a way to level a power-based playing field by creating an unpre-
dictable situation where nimbleness is valuable.
Hackers and writers of viruses, Trojans and Botnets don’t comprise an
organisation as generally understood. But they do form a recognisable
community that has its own values, infrastructure, knowledge networks,
media and hierarchy with its own agenda and intentions. Sometimes that
agenda is to bring a little chaos to the ordered world of big business or govern-
ment agencies.
Masquerade
The Masquerade strategy usually involves a large organisation building a
new subsidiary, allowing the new business to present a different value propo-
sition that is attractive to another segment of the market: two structural
couplings from the same organisation. One of the key benefits of a Masquerade
is the ability to do something different and experiment with a different image
and operating practices, whilst retaining ownership and still being able to
exploit economies of scale.
In the UK, Churchill and Direct Line both provide general personal
insurance products. So far, so normal. Look a bit closer, and those ‘rival’
insurance brands both belong to .Â€.Â€. Direct Line Group. Look a bit closer still,
and both brands appear to use the same underpinning e-commerce site. All
that varies is the font and the branding on the sites. As well as having two
brands positioned in the marketplace, Direct Line Group reduces its cost-to-
serve by sharing its infrastructure.
Scapegoat
Scapegoat is a deception strategy based on the separation of publicly accept-
able parts of the business from the unacceptable parts. The part of the
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Cunning plans
business that is thought to be toxic is hived off to protect the larger parent
organisation, creating a new structural coupling for the offshoot and ‘decon-
taminating’ the structural coupling of the parent to its market.
Northern Rock bank was one of the first UK casualties of the financial
crisis, and the UK government took it into public ownership to prevent a
domino effect on other banks. The bank was subsequently split into a ‘good’
bank – later sold off to become Virgin Money – and the Scapegoat leftovers
with their toxic debt and toxic reputation remained in government hands.
319
18 ROCK, PAPER,
SCISSORS
Up to now we’ve really talked about strategies as an interplay of manoeuvres

between two or more players, built around a single engagement. But, of
course, even if your strategy succeeds, the world doesn’t stop; success can
breed new competitors and new challenges. AÂ€set of manoeuvres inevitably
takes you to a new position where you face new opportunities and risks, and
new players enter your environment that your strategy has just changed. So
this section looks at some examples of some longer stories, where strings of
strategies are deployed and players come and go. For some of these we’ve
looked at the sequence of strategies that have shaped an industry; in other
cases we’ve taken an inter-company duel that ran through a series of strate-
gies. What comes through quite clearly is that what makes the ‘winning’
strategy in an industry changes through time and can change quite quickly.
Today’s winning strategy can be disastrous tomorrow.
Commercial aerospace industry

In this industry, the ‘lifespan’ of most strategies has been about ten years,
mostly because the capabilities to design and manufacture aircraft are heavily
capital-intensive, leading to a long cycle time for product development and
introduction. The strategies are both innovation and market driven.
First Mover
During World War II, the US and UK broadly divided aircraft manufacture
for British use, with the US building transport aircraft and the UK concen-
trating on bombers. In 1942, only halfway through the war, as it turned out,
Britain became concerned that all the expertise and infrastructure for trans-
port aircraft was building up in the US. The Brabazon Committee in the UK in
Rock, paper, scissors
1942 explored the global requirements to support Britain’s non-military uses:

passengers, mail and cargo. They outlined five types of planes for different
market segments, one of which was the de Havilland Comet, the world’s first
commercial jet airliner, designed to fly higher and faster than previous
airliners. The Comet was consciously positioned as a First Mover by the
Committee, planning the creation and domination of a peacetime market
even in the middle of a war. The Comet was highly innovative in its design
and use of materials, and initially found success, but after a number broke up
during flight, their airworthiness certificate was withdrawn. Exhaustive
investigation found that the technology and the design had created stress in
the fuselage, leading to catastrophic metal fatigue. All that innovation came at
a price; the Comet was a bold step forwards, but ultimately it proved that the
science and technology weren’t well enough understood.
Fast Follower
As part of the investigation, de Havilland made their research and data avail-
able to prevent further crashes and tragedies. AÂ€key advantage of Fast
Follower is the ability to learn from the successes and failures of the First
Mover, and so it proved here. Other aeronautical companies were handed an
opportunity to learn about the design and technology requirements for a
successful commercial airliner, along with a proven market and no incumbent
player. Stepping into this vacated market, Boeing’s 707 was the first jet airliner
to achieve global commercial success, dominant during the 1960s, with airport
infrastructure developing to meet market demands. Despite the attractive-
ness of the market position, this was no small step for Boeing. Their expertise
was primarily in military aircraft, and they invested 25% of Boeing’s capital
value into the development of the 707, a high-risk step to take.
Paradigm Attack
Supersonic flight was already being talked about in the 1950s, in parallel with
the developments of the Comet and the 707, though there were substantial
design challenges to overcome. This paradigm shift altered what was consid-
ered possible for commercial aviation and was to slash transatlantic flight
times by more than 50%. In the event, the development of Concorde suffered
massive cost escalations, and by the time of its maiden flight in 1969, the oil
crisis highlighted Concorde’s huge fuel consumption. But despite this and
complaints about the noise from the sonic boom, it flew for the next 30Â€years,
for the cash-rich/time-poor market segment. The fatal crash in Paris in 2000
marked the beginning of its end.
321
Streets Ahead
Meantime, Boeing hadn’t been sitting idly by, simply cashing in on the success
of their 707 jet airliner, having already seized a leading position with this
aircraft. The huge growth in air travel through the 1960s meant that the 707
was no longer the right size aircraft for the passenger numbers on the key
routes. So it scaled up and designed the 747, the first airliner with twin aisles,
more than doubling the passenger numbers that a single plane could carry. It
consolidated its position and moved still further ahead of other commercial
aircraft companies in terms of market share.
Alliance
Boeing had achieved such dominance that no single player could take them
on. In an industry requiring deep expertise and high investments in
Â�infrastructure, it becomes a power play. The legacy of that World War II
investment in aeronautical capacity was still paying dividends for the US. So
the Airbus consortium was formed from European aviation firms to compete
with America, especially Boeing. Different countries took accountability for
different parts of the design, depending on their areas of specialist expertise,
and it was only by combining capabilities across the alliance partners in this
way that Airbus could achieve critical mass in this very competitive market,
starting with the Airbus 300.
Frontal Attack
Having achieved good market penetration with the A300, Airbus moved in
on Boeing’s 747. They wanted to extend their own range of products and also
break Boeing’s dominance. So Airbus developed the A380, an airliner for high
passenger numbers, just like the 747, competing with Boeing head-on in the
attractive long-haul market. The A380 provided substantial fuel efficiencies
for operators compared with the 747, an important factor, particularly given
the high oil prices of the time. In terms of planes ordered and planes delivered
(two key metrics), the Airbus A380 and the Boeing 747 compete intensely,
with neither currently able to sustain a clear advantage.
Downsizing
In the early part of the new century, Boeing predicted a cyclical downturn in
the aviation industry. This, combined with the after-effects of the terrorist
attacks on the Pentagon and the World Trade Center, prompted Boeing to
carefully reduce capacity, holding onto core skills and expertise.
322
Geoffrey Moore’s technology adoption life cycle

Geoffrey Moore identified a repeating pattern of adoption of new technology
in his very successful series of books on the subject that have become a corner-
stone of strategy for IT firms. Moore identified a series of strategies that are
appropriate to each phase of the adoption cycle and, in deference, we have
used his names for these strategies. In theory, it is perfectly possible for a
single organisation to take an innovation right through the life cycle by
switching strategies as the market develops. And this does happen, but it’s
more common in IT, and in certain other sectors, for different organisations to
run the strategies in sequence – each being successful for a phase of the adop-
tion life cycle and then being supplanted by a competitor deploying the next
strategy at the appropriate time.
Moore’s classic sequence runs: First Mover, Bowling Alley, Tornado,
Gorilla, Augmentation, Long Tail. First Mover is based on innovation, either
paradigm or disruptive. Once First Mover has established the approach,
Bowling Alley supplants it by taking the approach into a series of new sectors
and applications. After Bowling Alley has successfully demonstrated the
practicality and utility across sectors, everyone wants it, and a player who is
able to scale up supply using the Tornado strategy takes over to achieve
market dominance: the Gorilla. When the innovation is established as the
default option, we’re into a strategy of stability and continuous product
improvement: Augmentation. And finally, as the market declines, that is
supplanted by the strictures of the Long Tail. Although some of these strate-
gies can slide effortlessly into one another, Gorilla through Augmentation to
Long Tail can be a slow transition where the shifts are hardly noticed, as
Moore points out, there are some radical shifts early on and it’s rare to find
organisations that can go from First Mover through to Gorilla. So this end of
the cycle tends to be a situation where different players with the right capa-
bilities to execute a particular strategy attack and then supplant the position
of other earlier players.
Automotive industry
If we look at the development of the global motor industry, the industry
started off by leveraging the existing industry and support network for
Â�horse-drawn carriage builders, and so operated as a Cluster with specialist
component makers and finishers such as coachbuilders, who built and painted
the bodies. This industry model was progressively overturned by Ford, who
pursued a Market Maker strategy but initially still relied on the network of
support organisations, who in turn pursued an Autolycus strategy to main-
tain a strategic fit around the new giant.
323
Ford’s first real competition came with a series of Fast Follower compa-
nies, all racing to catch up, most obviously General Motors. GM attacked
Ford’s position using a Marketect strategy: carving the market into segments,
each served by one of their divisions. Once the Fast Followers had caught up
to Ford, together these companies formed a herd, although with Zebra tenden-
cies as some sought to differentiate on the thinnest of pretexts. The herd then
pursued stability through Rapid Refresh and Augmentation as each sought to
stay with the herd whilst appearing to differentiate just enough to be visible.
Any actual moves to take a localised lead within a sector using a First Mover
strategy or Bowling Alley (for example, the introduction of people carriers or
SUVs) were quickly countered by the rest of the herd playing Keep up with
the Joneses. This cosy stability was overturned by Toyota’s Pied Piper strategy
that went unnoticed for years until they were significantly ahead of the herd –
which then had no option but to sit up and take notice. Some of the herd then
went off pursuing the wrong target in trying to emulate the famous Toyota
Production System. When this failed, as it almost inevitably would (since the
Pied Piper had tricked them into merely following the lead – a recipe for
second place at best), most have resorted to Downsizing and consolidation
through Alliances and M&A for Economies of Scale.
Autolycus and the Gorilla

It may be pure coincidence, but at the time of writing, we have two clients
who have the same strategic issue. They both started off with an Autolycus
strategy, snapping up the unconsidered trifles of the giant players that domi-
nate the industries they are operating in. One of the keys of being successful
as an Autolycus is staying nimble but, when the strategy works too well and
the unconsidered trifles are rich enough pickings to do well on, then nimble-
ness tends to slide into comfort.
Eventually, of course, once the Gorilla has dealt with the bigger issues
in their domain, they start to consider those trifles that were previously
unconsidered, and they start to move from a pure Gorilla strategy and into a
phase of consolidation based on Augmentation, gradually bundling the
Autolycus’s trifling offerings into their main offer.
How, then, to react? There are several options. One is to try to defend
market share, typically using one of two time-based strategies: Lock In or
Easy Entry. Although one is based on lengthening contract time and the other
on drastically shortening contract time, both are designed to make it more
likely that customers will stay rather than defect to the Gorilla. Another
option is to try to move to a Strategic Alliance with the Gorilla; this is a tricky
move to pull off unless you have a clear advantage in technical strength that
324
the Gorilla can recognise. AÂ€third approach is to retaliate with an Augmenta-

tion strategy of your own and hope that your speed of development will be
enough to offset the bundling of a free offer from the Gorilla. AÂ€fourth
approach is to refresh your identity as Autolycus and seek out another hunting
ground in which to resume the search for another set of unconsidered trifles.
The fifth option is to find a use for the domain expertise you have built up
while the Gorilla was distracted in order to produce a new offer based on a
different paradigm. Most of these are easier to execute if you know that the
Gorilla is likely to wake up at some point and therefore that you need to
prepare for that day.
Waves of innovation – the IT industry

The IT industry is often cited as a fast changing and unpredictable industry,
and if you’re in the middle of it, no doubt that is true. When you stand back a
bit, though, some simple patterns emerge, and the successive waves of inno-
vation around hardware platforms form one of those. Not only is there a
recognisable and recurring pattern, but after its infancy, the industry settled
down into an almost metronomic sequence of waves of change. Within each
successive wave, the sequence of strategies was fairly similar, mostly starting
with a disruptive innovation and running through to Gorilla dominance until
that dominance is challenged by the next wave. The story of the industry, as
well as being surprisingly regular, also shows the importance of Paradigm
Attacks if you want to dethrone a dominant player. Mere disruptive innova-
tions could be fatal to second-tier players in the industry but generally left the
Gorilla unscathed – a bigger gun was needed for them. The sequence of
waves was as follows.
1950s–1970s mainframes
The sequence was First Mover based on a new Paradigm Attack, Broadcast,
Fast Follower, Tornado, Gorilla (the evocatively named ‘IBM and the seven
dwarfs’).
1970s–1980s minicomputers
This consisted of First Mover based on a disruptive technology, Fast Follower,
Tornado. The Broadcast step was unnecessary because minis were treading
the path already set by mainframes, so there was relatively little need to prove
applicability; this was a given. No player really achieved full dominance.
Although DEC led the minicomputer market, they remained second to IBM in
325
the overall hardware market, and their bid for industry dominance based on
a disruptive innovation failed.
1980s–1990s PCs
This wave happened in two phases. The first phase was hardware based, the
second phase software based, and this shift marked a state change in the
source of value for the whole industry, as well as a shift in power between
players. So phase 1 was a familiar one around the hardware: First Mover
based on a disruptive technology, Fast Follower, Tornado, Gorilla (IBM
restored to undisputed industry leader). Phase 2 was a move from left field –
another part of the industry that had been largely taken for granted until then:
software. So from an Autolycus strategy, Microsoft launched a Paradigm
Attack that changed the dominant logic of the industry and reversed the rela-
tive importance of software and hardware, shifting software from a commodity
to differentiator and shifting hardware from differentiator to commodity.
This move propelled Microsoft to the Gorilla of the industry. Microsoft
succeeded where DEC had failed by using a Paradigm Attack. Moving from
the Autolycus strategy meant that the existing industry was blind to the threat
until it was too late.
1990s–2000s laptops
After the shock of being supplanted as the most important element in IT, the
hardware manufacturers settled back into their familiar pattern of hardware
platform renewal with the move to laptops. Again, this was First Mover based
on a disruptive technology, Fast Follower, Tornado. As with the move to
minis, the ground had already been broken, so there was no real need for a
Broadcast strategy, and no real Gorilla emerged from the battle for market
share in hardware but, of course, Microsoft remained as Gorilla in the overall
IT market.
2000–2010 tablets
The shift to tablets started conventionally enough, First Mover based on a
disruptive technology – with the different interface – then Fast Follower, but
the tablet market was growing slowly and before it could go Tornado, Apple
stepped in with a Paradigm Attack. As with Microsoft’s earlier Paradigm
Attack on IBM, Apple came from left field. Apple had always stood as an
Independent, well outside the herd in terms of both its hardware and its soft-
ware. As such, it was largely ignored, it had its own niche of specialist users
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and it ploughed its own individualistic furrow – apparently not interested in

the main market and no threat to the main market. Apple’s position as an
Independent allowed it to come up with a Paradigm Attack based on a
powerful combination of sleek design, cool branding, and software that was
different and more intuitive for some users, together with a crowd-sourced
range of applications. Taken on their own, none of these factors might have
been enough to stand out as a paradigm shift, but together, the iPad was a
mould breaker. The iPad went Tornado and duly propelled Apple into
Â�position as the new industry Gorilla.
Clippers
Just to illustrate that some of these patterns are timeless, compare one of the
waves of the preceding IT example to the sequence of strategies in the sailing
ship industry in the 19th century when this was the method of global trade
and key to the industrial revolution and the start of globalisation.
The story starts with a stable herd operating as they had for around
100Â€years. Enter some brash American entrepreneurs keen to take global trade
away from the British, and their First Mover strategy was based on a Para-
digm Attack, a completely new design of ship – the Oriental, with a different
sailing approach that cut transit times dramatically. The British responded
building fleets of clippers of their own and improving the design – Fast Â�
Follower. Just as it was stabilising, the clipper trade was in turn hit by a
Â�Paradigm Attack with the building of the Suez Canal and the introduction of
sailing steamships like the Blue Funnel Line’s Agamemnon. The clipper opera-
tors, unable to compete directly, responded with a Bowling Alley strategy –
taking the clipper formula to other cargos than tea. And, finally, they worked
through the Long Tail – refining technique and perfecting designs for another
80Â€years.
A sector ecosystem
The previous examples in this chapter have focused on sequences of winning
strategies and responses – a sort of ‘lunge, parry, riposte’ set of stories. This
example takes a snapshot – a look at the strategies of different players at one
point in time within a business ecosystem. We’ve picked the energy sector as
one that is large and diverse, one that everyone has some contact with – if
only as a consumer.
The field is dominated by a herd of providers, the biggest of whom
operate internationally or globally. There is no Gorilla; instead, there is a small
number of huge players of roughly similar size, surrounded by rings of
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successively smaller players. The main herd is built around fossil fuel tech-
nologies but is not homogeneous, so there are two main subherds within the
fossil herd – one built around coal and the other around oil and gas – and most
players are in one or other of those two. Within these two subherds you can see
a range of strategic roles being played out. In addition to large and small herd
members, there are Strategic Partners like Schlumberger, Troubleshooters like
BootsÂ€& Coots, Go-Betweens who provide key enabling pan-organisational
infrastructure such as distribution systems, there are specialist exploration
firms who use Broadcast to find new fields, and within part of the herd a
Cartel – OPEC − fights to hold the herd together and has in the past deployed
an Islands of Sanity strategy to stabilise previously chaotic oil prices. The herd
is subject to several significant pressures, both global and national, from Green
activists, to national energy security, to shrinking sources of supply, to Â�variable
demand, and under this pressure you can see a range of defensive strategies
and consolidation strategies operating. These include: Downsizing, Core, and
Long Tail as direct responses to industry shrinkage, particularly in coal, in
addition to the full range you’d expect of dog-eat-dog strategies in a sector
under pressure: both Horizontal and Vertical Integration, and M&A for Econ-
omies of Scale. Together the two subherds have both adopted a Musk Ox
defence to counter pressure from the environmental lobby.
One characteristic of the herd is that it is not moving fast in response to
the pressures it is under, and around its borders, a battle is going on between
other players to determine who will set the direction that the herd will move
in. The external actors contending to influence the direction of the herd range
from environmentalists to regulators and alternative energy technologies.
The environmental lobby have typically used Guerrilla and Trouble-
maker strategies. Guerrilla helps small organisations to attack much bigger
multinational corporations, and Troublemaker is used to break the link
between the corporations and government by leveraging the media and,
through them, public opinion – a three-stage force multiplier. In response,
the herd has generally defaulted to Musk Ox, and regulators have mostly
resisted becoming complicit in Puppeteer at the beck and call of the
environmentalists.
The herd has to deal with a wide range of national and international
regulators, most of whom are content to Sheepdog stragglers back into line
but who in some cases have collaborated with the herd in singling out partic-
ular players as Scapegoats.
The problem of herd direction is partly because there is no clear way
forwards for the herd, and the principal drivers of direction come from three
rival technologies, each of which exerts a pull on the herd towards their tech-
nology. Two of these, nuclear and renewables, represent very different
328
technologies to the fossil fuel−based herd, and each holds a small but signifi-
cant share of the market. The third possible direction for the herd is back to
their fossil fuel heritage with the use of techniques to exploit harder-to-reach
fuel sources such as shale gas, fracking, oil sands and brown coal.
Nuclear and renewables are both Paradigm Attacks for the herd started
by Experts (because these are specialised new technologies) and Independents
going for First Mover, quickly backed up by Fast Followers, together moving
to attempt to become Leader of the herd, but so far none has succeeded in
executing this last evolution. Here, the environmental lobby has played a crit-
ically important role: it used Troublemaker to build public opposition over
the problem of nuclear waste, and this stopped the nuclear industry’s growth
in its tracks. Instead of dealing with this issue and moving forwards, the
nuclear industry opted for a Wait Out strategy in the hope that the economics
of a declining fossil fuels sector would overcome resistance for them, backed
up by Lock In (nuclear is a very long-term bet; once you’ve got it, you have to
retain some sort of nuclear industry to manage it effectively forever). Some of
the international and national regulatory bodies have tried to execute a Stan-
dard Bearer strategy to extricate the nuclear industry from its problem, but so
far the radioactive waste problem remains unresolved. In contrast to their
actions against the nuclear industry, the environmentalists have formed an
Alliance with the renewables sector, thereby skewing the playing field against
nuclear and in favour of renewables and, with their help, renewables has been
able to adopt a Crusader strategy to differentiate themselves more clearly
from nuclear as the non-fossil fuel of choice in the global warming debate.
Attempts by some of the big nuclear players like EDF to also project them-
selves as ‘green’ Crusaders have been less successful because they don’t enjoy
the Alliance with the environmentalists.
The third possible direction is in one sense a retreat for the herd to its
fossil fuel roots, and some of the Leaders in this field have used a Bowling
Alley strategy, taking fracking techniques – which have been in use for a very
long time in vertical wells – and transferring the approach to horizontal wells.
Since these second-generation fossil fuel technologies are controversial in
some areas, the Scapegoat strategy is extensively used: big energy companies
that own the rights use smaller specialist fracking companies to distance
themselves from adverse publicity.
The response of the herd to the considerable pressures it is subject to has
been largely to sit still. There has been some exploratory Diversification, with
big energy companies buying into new technologies in both the renewables
and the second-generation fossil fuels – effectively buying options on different
futures. There have been desultory attempts at a Marketect strategy, with
green energy contracts offered to consumers, but so far without enough
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success to provide the herd with any clarity on which of the potential futures
on offer it should aim for.
In this situation, strategies tend to be subsumed by issues of Doctrine
and Capability; the main players in the herd are tied into earlier choices of
technology and capability, so it is really hard for oil and gas giants to move
towards a nuclear future. New options tend to be pushed by new entrants,
and the battle for the future direction of the sector becomes a battle for corpo-
rate survival as well. Decisions about capability drive issues of organisational
identity, and this in turn tends to dominate the strategic choices that indi-
vidual organisations can see as being available to them, and that in turn slows
the rate of change of the whole sector.
Figure 18.1
Business ecosystem example
330
This is a business ecosystem (FigureÂ€18.1) where we can see 32 strategies

in play and, of course, amongst the multitude of different players in this
sector, many of these strategies will be visible several times over, and there
will be several more in play that are not in our list of 80. This could seem an
impossibly intricate and complex system to try to model. And, of course, if we
were aiming to get to a prediction of what will happen as a result of these
strategies colliding, then that would be a significantly big task. But from the
point of view of any player within the system, the range of structural couplings
we might need to model in any detail is very much smaller and therefore
more manageable. And in an ecosystem of this size, once you’ve sketched it,
it’s really easy to monitor the outcomes of those strategic encounters that are
more distant from you without ever needing to map every move. Most of the
time, this ecosystem moves quite slowly, so it’s easy to monitor, and it’s easy
to spot where there are pressure build-ups that might suddenly transform
into action. Even in a large ecosystem it’s not a huge task to map the Patterns
of Strategy well enough to both populate a radar plot of how players are
manoeuvring and to plan your own strategy.
A longitudinal study
Previous sections in this chapter illustrate how the dominant strategy in a
sector changes over time and explore how actors deploy a range of strategies
in an ecosystem. This last section looks at how organisational identity ‘remem-
bers’ and reuses preferred strategies, irrespective of whether these are the best
choice for the context and the structural coupling. Knowing the preferred and
instinctive pattern for your organisation, as well as those of key competitors
and partners, gives you insight when you next develop strategy.
We are all familiar with the idea of genes, a biological element trans-
ferred from parent to child that has an effect on the child’s characteristics. In
this, we can see the genetic heritage, the life history of the family, manifested
in the offspring. Yet there is an ongoing debate about how much of behaviour
is shaped by nature, that genetic inheritance, and how much by nurture, the
upbringing and experience of the child. Looking back through family histo-
ries, it is possible to see patterns of behaviour, traits and particular types of
responses in particular situations, repeating again and again down through
the generations.
Richard Dawkins defined a meme as “a unit of cultural transmission,” an
element of culture or way of behaving that moves or is passed on. Memes are
a mechanism that develops organisational identity. And just as families have
patterns of behaviour, so do organisations. Businesses have life stories just as
families do, and the significant events in an organisation’s life show up in
331
conversation, often as ‘before (or after) such-and-such.’ These past events shape
the present and the future, and it was the previous organisational ‘generations’
that have ‘chosen’ which events have formed that cultural identity.
Since identity and memes are deeply ingrained in an organisation, past
behaviour is a reasonable predictor of future behaviour. What the organisa-
tion did the last time it was in a particular situation, it is likely to do again.
And so, to an extent, its instinctive choice of manoeuvres through its Patterns
of Strategy is an expression of its identity. AÂ€large organisation that has
historically been able to dominate by strength would find it hard to deliver a
strategy of competing through nimbleness and speed. AÂ€small organisation
with sophisticated market scanning, agility and high degrees of stretch would
find it hard to be successful in the constraining environment of a herd. And in
addition, as structure and strategy are inevitably intertwined, so are strategy
and identity: it is unlikely that you could execute a strategy that required you
to be something that you are not and also unlikely that you would even
conceive it.
Let’s take an example. Imperial Chemicals Industries (ICI) was a
global conglomerate centred around chemicals, formed in 1926 from the
merger of four existing chemicals organisations. Throughout its life, it was
a highly innovative organisation, operating at all ranges of stretch across a
range of chemistry disciplines, from explosives to polymers to pharmaceu-
ticals to paints. It held more than 150,000 patents worldwide in a range of
sectors. As well as being innovative with chemicals, it was also innovative
in its ways of working, pioneering process intensification (reducing plant
volume and associated capital costs while maintaining production capacity)
and, more broadly, it had a focus on safety and particularly hazard and
operability studies (HAZOPs), reviewing an operation to identify risks to
people, equipment or efficiency. But in 2008, after struggling with high
levels of debt, the rump of the organisation was bought by Dutch firm Akzo
Nobel.
If we look at this history, using the frame of Patterns of Strategy to
review its peaks and troughs, there are two dominant recurring patterns: the
first is a series of switches in stretch, using innovation to become herd leader,
then moving back into the herd with incremental change; the second pattern
is diffusion, followed by consolidation. At its peak, it held interests in cyclical
commodity chemicals alongside specialty chemicals. The commodities busi-
ness is herdy, dominated by strength, synchronised (slightly lagging) with the
economic cycle and very price sensitive. The specialty chemicals business, on
the other hand, is about differentiation, using foresight to predict and shape
the market, with higher orders of stretch in play. Sustaining fit often requires
repeated product innovation as market trends evolve.
332
Looking back to ICI’s antecedents, there are lots of examples where they
had been in a herd. Examples include the alkali market in the 19th century
(herd, incremental, weaker, lost market share by failing to introduce latest
technology) to the manufacture of dyestuffs during and after World War I
(herd, react, weaker and slower than market). And these examples show a
lack of foresight and only a single style of stretch available (incremental). But
in other business units, there are examples of market creation and market
leadership, primarily through technology innovation: safer nitroglycerine
and the invention of a detonator to control the blast in explosives (edge,
disruptive, shape) and the development of an alkali process that was more
economical and less polluting (edge, radical, shape).
Part of the rationale for the formation of ICI in 1926 was “the first step in
a comprehensive schemeÂ€.Â€.Â€. to rationalize the chemical manufacture of the world,”
with the ‘Imperial’ in the name referring to its importance to the British
Empire. The new organisation had capacity and capability across many
sectors and a huge span of markets. Coming together gave it strength through
critical mass in key areas.
From then up to the 1960s, this breadth of divisions and sectors
continued, and so did the oscillation between herd and edge/individual,
between incremental and disruptive stretch. The company used a range of
business models from what was effectively a cartel with Du Pont (fixing prices
for nitrogen, a key component of fertilisers, by agreeing who would sell in
which territories) to co-development with a former competitor (again, Du
Pont, developing what would become Dulux paint) to partner with the UK
government (they built plants during World War I, which ICI ran). There was
still a high rate of innovation, and some of the materials they developed
turned out to be incredibly versatile: polyethylene, and hot on the heels of
that Perspex, both as individual, paradigm, shaping launches. The fledgling
pharmaceuticals market was also doing well, introducing the first synthetic
treatment for malaria and fluothane, for a while the most used anaesthetic in
the Western world. In the commodity chemicals market, trading conditions
were challenging and, having used only incremental stretch, ICI found itself
with obsolete production capacity and outdated management practices, and
its previously monopolistic (stronger) position in Britain and the Empire was
being challenged. The scale of diffusion was immense, including Sunbeam
motorcycles, and an unsuccessful attempt to build an atomic bomb during
World War II.
By the 1970s and 1980s, ICI still had a huge and diffuse range of prod-
ucts in relation to its size, and a number of these were unprofitable. It
continued to invest in capital- and plant-intensive commodities but then
started to focus on higher-margin specialty chemicals. But the downturn of
333
the early 1990s left ICI with expensive overcapacity. Aggressive focus on effi-
ciency through a large downsizing programme followed, yet still ICI sought
extensions to their product line, largely through acquisition, some of which
came with a very high price tag. The drive to concentrate was resisted by an
organisation used to diffusion. Following a failed takeover bid, the high-
margin businesses were spun off (to form Zeneca Pharmaceuticals and Zeneca
Agrochemicals), leaving a business highly invested in mature commodities,
with intense competition from the Far East.
Throughout its life, the preceding companies and ICI itself swung
between herd membership and edge/individual. In some cases, poor fore-
sight made them susceptible to market changes. Where it utilised a full range
of stretch, with the risk-taking attitude of the higher order stretches, it flour-
ished. Where it stayed in the herd, with a risk-averse ‘no surprises’ motto, its
strength was not enough to win the day, partly because of its diffusion. The
lack of a clear identity, often a problem for a conglomerate, made it impos-
sible for the organisation to prioritise; such organisations are generally poor
at ‘stopping things,’ and this shows up in the recurrent diffusion with a huge
product range, and while somebody wanted it, it was still produced, no
matter the cost. ICI was never clear about its identity: was it an innovative
edge organisation or an incrementally changing strong herd member? This
switching back and forwards, back and forwards, indicates an organisation
that doesn’t know who it is.
Throughout a two-hundred-year history, ICI and its forebears had a
pattern, moving between these two broad types of manoeuvres. These were
its dominant memes and were demonstrably handed down through the
culture of the organisation. It is important to know the strategy repertoire an
organisation traditionally exploits. These are the ‘default settings’ – the
Â�repertoire it is most comfortable with – and the organisation may actually be
incapable of using some of the other manoeuvres, for sheer lack of capability
and practice.
Your own organisation will have a set of Patterns of Strategy memes
that is dominant, and you can explore those to understand what its reflexive
choices will be. Equally, you can apply this approach to your competitors.
What is in their strategy repertoire? Which do they use, and in what circum-
stances? Which can they deploy with skill? This is a form of foresight, as input
to your strategic planning. You can also explore potential partners in this
way. They may position themselves as solid candidates, controlling markets
through strength, operating multiple lines of business, or as edge organisa-
tions constantly updating their fit with the market through superior rates of
change and agility. They may tell you that, but what does their history say? Is
there a difference between the words and the past actions?
334
Identity matters; it’s harder to define “who we are” than “what line of busi-
ness are we in?” but it will affect the strategies that you and the other actors in
your structural couplings can imagine and can execute. So it’s useful to under-
stand, and an examination of the most and least used manoeuvres will serve
you well.
335
PART FOUR
DEVELOPING
AND EXECUTING
STRATEGY
PATTERNS OF
19
STRATEGY – THE
DEVELOPMENT
PROCESS FROM
STRATEGY
TO PLAN
In this chapter we describe how you can use the elements of Patterns of
Strategy to develop and explore your strategic position and options, starting
with modelling your current position, through developing one or more strate-
gies to improve it, to a plan for execution.
In Patterns of Strategy, there are three dimensions to any strategic
Â�position: fit, power and time. Once the set of strategic positions held by the
different actors within a strategic arena are understood, we can establish what
strategic manoeuvres are desirable and possible. The elements of
Â�differentiation, drive, stretch, concentration, strength and time provide the
building blocks, and the earlier chapters in Part Two described each of these
in turn and gave examples of what winning could look like in each pair of
elements, for both competitive and collaborative situations. This chapter
describes one process for building the strategy for your organisation, which
might be a whole organisation or part of an organisation. You can use it with
either. This isn’t the only process you can use, but it is the one we most
commonly use, and we’ll illustrate each step using a supplier strategy case.
We’ve done this in outline to illustrate the type of content to be captured at
each step. Â�Obviously, the discussion and exploration would be much richer
than we have shown, but Patterns of Strategy provides a shorthand for
notating the essence of strategies.
There are four stages to the process (FigureÂ€19.1).
1 Current situation – You set the context and scope for the strategy exer-
cise, defining which structural couplings are to be explored. You then
assess the strengths and weaknesses of your current strategic position
by modelling each structural coupling in turn, using the three Patterns
of Strategy dimensions.
Developing and executing strategy
2 Options – Next, define your strategy.

You develop strategy options by
either changing the elements of one
or more existing couplings or by
adding or ending specific couplings,
and then select your strategy
preference.
3 Plan – From your strategy, you
develop the plan for strategy execu-
tion. The plan confirms the set of
manoeuvres to be executed and the
changes in capability required to
deliver them. These changes in capa-
bility feed directly into the plan for
strategy execution. You can then
build a measurement system to
monitor the progress of the strategy
and its effects on both you and on the
other actors involved in structural
couplings with you. Once the plan is
complete, you also use a simple
approach to create a clear and
Figure 19.1
powerful communication message Strategy development process
for the strategy.
4 Test – The final stage is to test the
strategy. This includes tests for the
robustness of your thinking, the coherence in your position across the
different couplings, and practicability: can you actually do it and is it
likely to work?
1â•‡ Current situation

1.1â•‡ Define structural couplings
Here you define the structural couplings to be explored. When you list all the
relationships you have, you will generally find that your organisation has
quite a few. But in that Bateson “it’s the difference that makes the difference” way,
it’s about looking for the critical few. Understanding a structural relationship
or structural coupling is about understanding your fit with your environ-
ment. AÂ€structural coupling is where the relationship is important enough to
change each actor structurally; what you do and how you do it are affected by
the relationships you choose to be in and how you manage those
340
FROM STRATEGY TO PLAN
relationships. There will be some of your current structural couplings that are
clearly significant; the nature of these relationships affects your ability to do
business the way you want to, today. And there will be some ‘emerging’ rela-
tionships, that will – or could be – significant to you in the future. If you’re not
sure whether a relationship is or will be important, we suggest modelling it
anyway. It’s quick to do, and if you’re not sure of its importance, then the
modelling will help you understand what you don’t currently know or under-
stand about it. The relationships could each be of different types, and Â�examples
include:
● competitors, if you want to develop a competitive strategy;

● regulators, if you are in a heavily regulated sector;
● key customers, or key suppliers, or a whole supply chain;
● market or industry sector, if you want to develop your strategy either to
defend an existing position, or move to a new position, or create a new
opportunity and
● key partners, if you want to develop a collaborative strategy.
It’s important to be very clear on whom you are taking as the actors in each
relationship: is it the whole of an organisation or
just a part, for example the organisation’s activi-
ties in connection with a particular function,
product or country? It’s easy to make a mistake
and shift the scope partway through an exercise
and do part of the assessment based on a divi-
sion and another on the whole organisation or
vice versa.
Having defined the scope, assess the
strengths and weaknesses of your current strategic position. You model
Patterns of Strategy for each structural coupling in turn. Having decided
which relationship(s) to evaluate, the usual practice is to start by looking at
the nature of fit within each relationship. In a bilateral Â�relationship, like
chess, you play White, and the actor on the other side of the Â�relationship
plays Black. Assessment involves looking at the elements of Patterns of
Strategy for each organisation as things are now, before either actor makes
any changes. For each element, you look at both White and Black before
moving on to the next. It is possible to take several different routes through
this part of the process, so the sequence below is just a suggestion of one
logical and common route. Several of the assessments involve comparing
variables between you and another actor – which of you is stronger, for
example? In theory, this could be an incredibly complex question, but in
341
practice, it is almost always extremely straightforward; teams know whether

they are significantly stronger or weaker or roughly in balance, and coming
quickly to a judgement on these questions is almost invariably clear and
simple for teams in the know.
1.2â•‡ Assess value exchange

Next, look at the value exchange between the
two actors. Capture all the value types that
White gets/Black gives and all the value types
that Black gets/White gives. Describe them in
as much detail as possible, including measures
of the value where possible. In addition to the
value exchange that is actually happening, it’s
useful to get an early view of how each actor
feels about it. Often, there is value that an actor
would like to get from the relationship but
currently isn’t, or value that an actor is getting
from the relationship that they would really
rather not get. The value being exchanged isn’t
necessarily positive, and you capture both
wanted and unwanted value.
1.3â•‡ Assess current fit

There are three elements to assessing fit: how much you are part of the herd,
whether predominantly you drive the change or are driven by the relation-
ship and the kind of change that is driven in the relationship.
We generally start with differentiation because that will help fix the
other elements. Differentiation has three different possibilities: herd, edge or
individual. Organisations have many characteristics, so if you think that
White or Black is edge or individual, which of their characteristics are defining
them as edge or individual? Very few organisations are edge/individual on
all major factors. If you think that White or Black is edge, is that leading edge,
with no one ahead of them, or lagging edge with no one behind them?
We usually look next at drive, with its three possibilities of shape,
co-evolve and react. Each organisation will be changing somewhat. When
both organisations are driving an equivalent number and impact of changes
through the relationship through time, then this is co-evolve. If one organ-
isation is co-evolving, then the other must also be. If one of the
342
organisations is consistently driving more change in the other, then class

this organisation as shaping and the other as reacting. For one of the actors
to be assigned as shaping, then you need to be able to clearly identify which
actions triggered reactive change in the other actor. In particular, shape
really does need to be shape and not just the most recent change in a
co-evolve relationship.
The final element of fit is stretch, with options of incremental, radical,
disruptive, paradigm shift and confound. For each actor, assess the amount of
stretch it is undergoing. This could be a proactive stretch to achieve a partic-
ular goal, or it could be a reactive stretch in response to a shaping move by the
other organisation. Whether internally chosen
or externally driven, model stretch as the type
of change that that actor is undergoing. Not all
parts of the organisation will be undergoing the
same degree of stretch. Confound is different in
kind, and this is a change in you that puts you
into a state of confusion, that causes your initia-
tives to act against one another. In one sense, confound is a stretch too far.
1.4â•‡ Assess current power and time

Having assessed fit, the next stage is to look at the other two elements: power
and time. These can be done in any order.
Power has strength and concentration. For strength, the options are
stronger, balanced and weaker. Assessment of strength is based on which
organisation is stronger in the critical aspects of the situation being consid-
ered. If one organisation is balanced, then the other must also be. If one actor
is stronger, then the other must be weaker. Two organisations can be balanced
if each is stronger than the other in one particular aspect, and these different
strengths balance one another out.
For concentration, the options are single, multiple and diffuse. Each
organisation will be allocating its resources to one, several or many objectives.
If the organisation is mostly focused on only one objective, then the
Â�concentration is single. If it’s deploying resources to several objectives, then
concentration is multiple. It’s diffuse where resource is spread across many
objectives. In some cases, you may need to compare the two actors, to assess
which is multiple and which diffuse. If one organisation is deploying resource
in two or three (multiple) areas, and the other is in ten, then categorise the
second as diffuse.
The final element is time, with options of faster, synchronised or slower.
Each organisation will be performing different activities at different speeds.
343
Some of these will be distinguishing and some

will not, so this is about which critical activities
are faster or slower. If one organisation is
synchronised, then the other must also be. If one
actor is faster, then the other must be slower.
1.5â•‡ Assess default trajectory

Having modelled the starting positions for the two actors, we explore these
positions thoroughly and critically. This is at the heart of the Patterns of
Strategy approach. It’s the dynamic interdependence of the two actors in the
relationship that drives the strategic direction and the strategic options avail-
able. Short-changing this part of the discussion is like falling back into a
mode of thinking that you can achieve what you want to, without hindrance
from other players in the arena. Having established the current positions of
the two organisations, examine the attractiveness of the totality of the paired
elements. How does your position look to you? To the leadership of the
Black organisation? How does their position look to them and to you? Then,
examine the trajectory, the inertial momentum that will carry you both
forwards from the status quo. If neither organisation makes any substantive
change but continues much as things are – the ‘default future’ – then what
are the implications of that? What does that turn you into? And how do you
feel about that?
A critical aspect of this is strategic risk. We define this as risk that the
organisation could fail, which happens when one or more critical struc-
tural couplings fail. That involves looking at what scenarios implicit in the
current situation could break the structural coupling. There are two aspects
to this: one is the set of risks that are inherent from being in the coupling,
and the second is the set of risks that threaten the viability of the coupling.
Both are real, constantly present and poten-
tially lethal.
Assessing the risk inherent in the coupling
involves spotting whether one of the factors in
the relationship has shifted significantly: is this
relationship slipping ever so gradually from
co-evolve into react? Is the balance of power
shifting? Is this competitor starting to move
from multiple into diffuse without trumpeting
the change? Is this a cunning plan being put into
operation, or is it just strategic drift? For every
small shift in one of the dimensions of the
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relationship, when do the tiny changes amount to something you should take
action on, and what action should you take?
The second set of risks are risks to the coupling. Here you are looking
outside the coupling to identify external factors that could come in and disrupt
it. These can be industry factors, wider geopolitical or economic factors or
actions by identifiable third parties. Once again,
what you’re interested in is how these external
changes could disrupt your structural couplings,
where the effect is likely to be detrimental (and
there is almost always a risk that it could), how
you can tell and what you should do about it.
2â•‡ Develop your strategy

Let’s go back to our definition of strategy: Changing our fit with the environment
to our advantage by differential use of power and time. Strategy is formed by the
aggregation of changes across one or more structural couplings. AÂ€coupling is
changed through one or more manoeuvres, a shift in one or more of the six
elements. An aggressive strategy may change most of the elements more or
less simultaneously, utterly destabilising the competitor. AÂ€collaborative
strategy needs agreement on which elements to change and at what speed;
unilateral change is normally anti-collaborative.
Having assessed your current position and its trajectory, there are
broadly three options for each existing coupling. You may be happy with the
relationship and its default direction, in which case you don’t need to make
any changes to it. You may want (or need) to sustain the relationship but want
to change one or more of the elements so that it is more favourable. Or you
may want to terminate the coupling. An additional option is to actively create
a new coupling.
2.1â•‡ Develop options

Where there is to be change of any type in a structural coupling, the next step
is to model the sequence of manoeuvres – changes in elements – that are avail-
able to each actor in the strategic arena and the effect those will have on each
relationship, on the other actor and on you. It’s about exploring different
ways of achieving fit that are attractive to you. In a competitive situation,
obviously you want to create a situation that is attractive to you and
Â�unattractive to the competitor. In a collaborative situation, it is important to
identify where ‘matching’ is important in the elements in order to enable the
345
collaboration and where difference is acceptable or advantageous. Typically

you should explore:
● How will you have to change, to effect a manoeuvre?

● What new capabilities will you need to carry out that manoeuvre?
● What enablers will you need to build that capability?
● What can you observe of the other actor’s strategy?
● If you carry out a manoeuvre, what effect will that have on them?
● How will they react?
Some of these changes are logi-

cally linked – if you move to
shape the relationship, for
example, it follows that the other
party in that relationship has
moved to react – they are now
being shaped. Faster−slower
and stronger−weaker also work
this way. Where appropriate,
adjust the elements of the related
Black organisation (if you are
now faster, that organisation
becomes slower, for example).
Working out other changes will
require some imagination or
may produce a range of possible
outcomes.
To alter the power differentials, you can alter your
strength or concentration by shifting resources, and/or you
can deploy one or both of the power enablers: agility and
critical mass. To alter your position regarding time, you can
deploy one or more of the enablers: foresight, cycle time and
rate of change. Stretch can be changed directly. Achieving a
desirable outcome may require changes in differentiation
and drive. Tempting as it might be, from a herd position, to
say something like, “Well, we want to be individual now,”
differentiation and drive can’t be altered directly and result
only from changes in power, time or stretch, and this is where the sequencing is
significant. If, for example, you want to move from being a member of the herd
to a leader of the herd, then you only achieve that by being different from the
rest in some material way: you have to be faster, or stronger, or more
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innovative, or more agile, orÂ€.Â€.Â€. The move to ‘edge’ as a posi-

tion of leader naturally follows the manoeuvres you will
need to execute to become more differentiated. Critically,
becoming a leader requires a move on the part of the herd
because if they aren’t starting to follow (react), then by defi-
nition, you aren’t leading, you’ve just walked into an exposed
position on an edge of the herd that isn’t the leading one.
Each option for a particular structural coupling
contains one or more sequenced manoeuvres. The manoeu-
vres, or changes in Patterns of Strategy elements, have
inherent sequence, first this (White), then this (Black), then
this (White), then that (White) and so on. The sequence may be unique for
each strategy, but understanding the sequence for your strategy is
important.
Each of the changes in a Patterns of Strategy element requires a change in
capability to deliver it. Taking each change in the strategic positions through
the sequence of manoeuvres, work out what change in capabilities each would
require, what resources would this require, what new skills etc. For a serious
strategy exercise, this should be detailed enough to define the key features of an
implementation plan. It’s important to be clear on what specifically in your
organisation you need or want to change and by how much. For example, if
you need a faster cycle time, what change, in what cycle, by how much, would
be needed to achieve that?
2.2 Select options

Next, stop and explore these positions
thoroughly and critically. Switch from one
Â�
perspective (Black or White) to the other and
explore the impact and implications of each set
of changes (White or Black) on the other actor.
In particular, look at the impact on the value
exchanged between the actors. In a competitive
situation, you want to gain more of the value you want and give less. In a
collaborative situation, you may want to balance the value exchange differ-
ently or alter the value types being exchanged.
From White’s perspective, what changes could the Black organisation
make that would be visible to you, and what could you infer of their total
strategy from the visible changes? What could that mean for you? And if you
were the strategy team of the Black organisation, what would you do next?
What pre-emptive (shaping) moves could you have been making while the
347
White organisation were considering and making theirs? Or what might you
do, given the manoeuvres that the White organisation has now made? Just as
you have for your own White organisation, you
map out the possible changes in the elements
that the Black organisation could realistically
achieve, defining which enabling capabilities
they could deploy and at what pace.
Then go back to the initial value exchange
between the two actors and look at the improve-
ments you were seeking to make in that, either
for yourself (competitive situation) or for one or
both actors (collaborative situation). Examine
the value exchange that would now be available post-manoeuvres and assess
its attractiveness.
3â•‡Plan
The plan has four main elements: the capability changes required, validation
that the required resource can be made available, development of a measure-
ment system and communication of the strategy to the organisation in order
to achieve alignment.
3.1â•‡ Plan capability changes

The changes in elements lead directly to changes
in capability that you need to make in order to
execute your strategy. Each of these capability
shifts goes directly into the implementation plan,
and the sequence of manoeuvres dictates the
order in which the capability shifts need to be
delivered. So the articulation of strategy straight-
forwardly generates the execution plan as a
sequence of manoeuvres, changes in capabilities
and actions. For example, the apparently simple manoeuvre of going from
slower to synchronised for an automotive supplier actually meant changing
their operating cycle time from what it was to match their customer’s cycle
time, and in real life that meant a shift of operational pace from large batches
once a month to smaller batches once a day. This means very concrete, defin-
able and measurable changes in capability. You can quickly identify which
operations are affected, how they will need to change and how fast the
strategy will need that change to happen.
You may need to include specific actions to make sure you are gener-
ating all the value types you want or need to give and also to make sure you
are able to utilise all the value types you now hope to get.
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3.2â•‡ Plan resource requirements

You will have formed a view on the resource required to execute this strategy,
alongside the business-as-usual delivery you need to sustain. As you develop
a high-level plan, it’s important to check the profile of resource required
through time and validate that both operational capacity and management
capacity are available when required, without unduly compromising today’s
performance.
3.3â•‡ Plan measurement approach

One of the major advantages of the Patterns of Strategy approach is that you
can scenario-plan strategies and strategic situations really quickly and often
simply by using the information a strategy team holds in their heads. When
you get down to serious planning, though, that needs to be based on more
solid information. We’ll talk more about the information you need to have to
ensure that the strategy is working in the next chapter, but even at this stage
you need five sets of information for planning:
1 what is happening in the strategic environment;

2 your organisation and its capabilities;
3 whether the strategy is working;
4 your ability to change the organisation; and
5 the links and dynamics between the first four information sets.
The first two of these help to test the strategy, so

we’ll pick those up in SectionÂ€4 of this chapter,
but you also develop indicators for yourself and
for the other actor in the relationship as these
are intrinsic to both the plan and its communi-
cation. Each manoeuvre has at least one associ-
ated metric. These provide insight on the effect
that making the manoeuvre has, both on you
and the other actor. For White, it’s important to
be able to monitor the progress of the capability
shifts (output indicators), as this is directly
within your control, and also the impact those capability shifts have exter-
nally (outcome indicators or effects in the environment). It’s important to
monitor two types of outcome indicator about Black. Your Patterns of
Strategy discussions should expose potential manoeuvres that Black could
make, and some of those could be important enough that you want to actively
monitor for the initiation of any action on their part. This is especially impor-
tant where a particular move could constitute a strategic risk for you.
349
Additionally, measure Black being forced into reacting to delivery of the

White strategy.
Either way, as the White leadership team, it’s vital that you actively look
for changes in Black’s execution. If not already covered by the outcome
measures, it’s important to measure both parts of the value exchange, what
you give and what you get, so that you can make sure it is shifting in the ways
you want and need. You also should include measures on key relationships
that you’re not in that would indicate emerging strategic risk. Overall, this
measurement system lets you know how your strategy execution is going.
3.4â•‡ Plan communications

After the strategy discussion, it’s important to be able to describe it to others,
in an easily communicable form. The elements of Patterns of Strategy them-
selves make this very straightforward.
There are five main steps to the strategy statement:
1 Define the desired state of the relationship(s), as it/they will be after the
manoeuvres have been completed.
2 Define the changes in the Patterns of Strategy elements.
3 Define the capability shifts required to alter the Patterns of Strategy
elements.
4 Define the metrics you will use for both Black and White.
5 Turn steps 1–4 into plain English.
For our pressing and assembly automotive components company example:
1 Secure our relationship as preferred first-tier supplier to ANO

Automotive in order to maintain and grow revenue long term.
2 By changing Patterns of Strategy elements:
● synchronising operational cycle times with ANO Automotive
(time – cycle time).
● adopting the same or higher-order type of change as ANO
Automotive and our peers (stretch – incremental → radical).
● collaborating on manufacturing development initiatives (drive –
react → co-evolve).
● increasing our agility and manufacturing capacity to cope with
increasing variety of demand (strength – weaker, increase agility).
● while remaining in relationships with other automotive customers
(concentration – multiple).
● no change required in differentiation (herd).
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3 By capability shifts in:
● restructuring manufacturing operations (time – cycle time,

strengthÂ€– increase in line with growth, agility).
● creating and running process improvement and innovation teams
(stretch – radical).
● developing increasing skills levels in order to be able to collaborate
on manufacturing development initiatives (stretch – varied).
4 Which we’ll measure by:
● output indicator you: successful introduction of changes in time.

● outcome indicator you: confirmation of preferred supplier contract,
position vis-à-vis peers.
● outcome indicator them: contract, trust, engagement in develop-
ment, pressure switching to other suppliers.
5 So, putting that into plain English:
Our strategy is: To secure our relationship as a preferred first-tier supplier to

ANO Automotive, so that we can maintain and grow revenue in the long term and
we’re going to do this by:
1 synchronising our operations with theirs (so that they get what they need when
they need it).
2 being more innovative than we have been – at least matching the innovation
rate of our peers and what ANO are expecting from us.
To do those two things, we’re going to have to restructure some of our operations to
improve innovation and agility so that we can respond to changes in demand more
easily. And to do all that, we’re going to invest in people and change, both new tech-
niques and skills and structural change.
And we’ll know this has worked if we get the new contract confirming us as a
preferred supplier, ANO’s trust in us increases and they start chasing other suppliers
to bring them up to speed. And while we’re doing all that, we will need to keep our
other customers on board.
4â•‡ Test the strategy

In SectionÂ€3.2, we talked about doing a basic sanity check on whether you
have the capabilities to carry out the proposed strategies. Testing at this stage
needs to be more robust and cover more facets of the strategy. If testing is
your last step, then you have the advantage of having thought through all the
351
plans and their implications and can hold those in your mind as you test the
strategy. It’s also possible to reverse these last two steps and test before
spending time to develop the plan. Delusions at the planning stage can be
fixed; once you have committed to executing the wrong strategy, they’re
much harder to remedy. So whichever sequence you choose for these last
steps, test and test again; then you can proceed with confidence.
4.1â•‡ Reality test

It’s useful to conduct a thought experiment at this point by holding a pre-
mortem. The White strategy team imagine themselves 12 months into the
future, having implemented the strategic manoeuvres they have just outlined.
It was a disaster. Why? What went wrong? With this learning in mind, do
your proposed changes still make sense, or do your new insights prompt you
to act differently in any way?
Assessing your proposed strategy in these time frames (looking forwards
from now, looking backwards to now from the future) and from different
perspectives (both Black and White leadership teams, considering the poten-
tial actions of the other) helps you to risk-proof your manoeuvres. Our experi-
ence is that leadership teams generally do have a tacit sense of what the other
organisation is capable of doing and what aspects of their own strategies are
weak, but they fail to expose them fully. These approaches make that thinking
explicit for testing and designing strategic solutions.
Part of developing strategic manoeuvres is a dialogue between strategic
options and the current organisational capability. From an organisational point
of view, an understanding of your capabilities enables you to explore what
strategic options are possible. And from the Patterns of Strategy end, if you
want to exploit a particular strategic opportunity and achieve a particular fit,
how capable do you need to be? What rate of change does that require? What
type of stretch would that need? Can you do it? Does this require your organ-
isation to excel in Patterns of Strategy elements where it hasn’t historically
been strong? In the past, has your organisation been good at transforming itself
to deliver new challenges? This is a critical reality check: is this strategy/plan
achievable, or is it a step too far? Better to be realistic than shoot for the stars
and fail; you can always do that next time round when you have more learning.
4.2â•‡ Test coherence

Obviously you’re likely to model the organisation’s strategy against a range
of different relationships with a number of different actors, as you defined
earlier. It’s important to go through all of the elements in step 2, for each of the
structural relationships you want to explore.
352
Having done this and having noted what positions your organisation
would need to hold against each of the six elements in each relationship, you
look for inconsistencies. Think of it like playing chess with multiple players
rather than just two. If you change like this to create an advantage in one rela-
tionship, how will that move affect this other relationship, and how might
they react? Does this set of moves require the organisation to be fundamen-
tally different in how it faces off to the two or more relationships? Is this
difference achievable internally? The organisation may be similarly posi-
tioned across some of the elements, for example synchronised in all its major
couplings or with a stretch of incremental or radical. But what if it is attempting
to hold significantly different positions in one element across its different
couplings? Suppose it is herd in one coupling and individual in another? Or
single in one and diffuse in another?
This brings about two types of tension, one internal and one external.
The internal tension is about having to create and demonstrate different intent
and behaviours from within the same organisation. Treacy/Wiersema’s value
disciplines (product leadership, customer intimacy, operational excellence)
demonstrate that it can tear an organisation apart to seek superiority simulta-
neously in disciplines that require opposing beliefs and skills to operate. So it
is for structural couplings, and this can create tension in the organisation with
an ‘invisible’ source.
The external tension is about presence. Your markets, customers and
competitors interact, they discuss, they observe actions and interpret nuances
of your actions, they hold the power and coherence of your brand in their
hands. When an organisation appears one way to one player in the market
and another way to another player in the market, the dissonance is noticeable.
Holding substantially different positions with different couplings could still
be the right thing to do, but it does carry risks and challenges, both internal
and external. Being different in different structural relationships is perfectly
possible for organisations, but it requires a fairly sophisticated management
team who understand what the difference means and why it matters.
Patterns of Strategy can help management teams to understand the
value of difference in strategic relationships. Several of the strategies in
ChapterÂ€17 (Cunning plans) involve showing different faces to the world. You
may need to compromise your approach in one or more relationships on one
or more of the elements to develop a position that is coherent internally to
your organisation and externally to the environment.
4.3â•‡ Red team test

Groups working on strategy development face a significant hurdle: how to
ensure the rigour and thoroughness of their thinking. For the strategy to be
353
effective, the group should have explored a range of options for their own
organisation and should have done this in an open-minded way without
attachment to a particular option early in the process. They also need to
explore the environment in which their organisation operates, researching the
capabilities of other actors, synthesising the possible manoeuvres those other
actors could make and the potential impact of those. Remember, crashing
your strategy doesn’t require any malevolence from other actors; it can
happen just by them going about their business without even considering
you, just as drivers on a motorway are likely to crash into one another if they
aren’t aware what others are doing and are about to do.
One way to do this is to bring together a mixed, cross-functional group.
The strengths of this approach are that a number of different perspectives are
brought to strategy development, and the cross-fertilisation of the different
domains can be very powerful. The risk of this is that different functions have
different cultures, language, ways of working and perception of the issues and
opportunities, and these different tacit models can make collaboration difficult.
The very activity of developing strategy can expose these mental models and
assist the development of high-quality shared models to underpin quality
discussions and decision taking – and having a high-quality model of the
organisation is a key requirement for strategy development. But it takes time to
develop such a model and for a group to mature into a team, and it is likely that
at least some strategic manoeuvres need to be selected and executed swiftly.
Another way to overcome this hurdle is to use an established core
strategy team. Its strength is its shared guiding concept, which directs and
focuses the organisation’s activities at all levels. Such a team is also likely to
have well-developed antennae, an intuitive ability to sense the tipping point
in a situation, either internally or externally. But through its very maturity,
the strategy team runs the risk of developing the blindness of groupthink.
Both of these approaches to strategy development have strengths, but
neither is sufficient. Enter the Red Team. In the military, war games usually
start with a storyboard, where two teams – Red for bad guys, Blue for good
guys – are presented with a fictional scenario and face off in a simulated
conflict over some time period (today or ten-plus years from now), where Red
thinks up ways to attack, and Blue thinks up ways to counter those attacks
and defend interests. This is analogous to a competitive White−Black scenario
using Patterns of Strategy. The Red Team is an independent group whose
role is to challenge assumptions and inferences. They can also reframe or redi-
rect the issue or opportunity that the strategy team is looking at, as well as
offering new ways of looking at situations. In particular, the Red Team can
explore the data that is being used to inform the strategy evolution. What was
the rationale behind the selection of that data set? Why those information
elements and not others? What biases on the part of the strategy team are
354
exposed by the information they have chosen to inform their work? An effec-
tive Red Team can question the interpretations that the strategy group have
put on the information and data they are using.
A strong Red Team increases the rigour and thoroughness of the strategy
evolution through challenge and enquiry. In the context of Patterns of
Strategy, the Red Team can be highly effective by challenging the informa-
tion, interpretation and decisions of the ‘home,’ or White, organisation in both
competitive and collaborative scenarios. Importantly, it can also bring huge
value by playing the role of the Black organisation in a competitive scenario
and by providing provocative and varied responses to potential manoeuvres
that the White team proposed, as well as the proactive manoeuvres that Black
could be preparing right now – true scenario development in action. You
could split your leadership team, with half playing the leadership of the Black
organisation and half playing the leadership of the White organisation. In
practice, there are likely to be several structural couplings under review, and
so several Black organisations. One of our colleagues uses the term ‘Rainbow
Team’ rather than ‘Red Team,’ to denote the range of Black actors and their
different characteristics, goals and constraints, as a reminder to explore all the
Black perspectives and options.
Using a Red Team can ensure that the strategy discussion explores
multiple scenarios and uses multiple perspectives. Evolving a robust strategy
is one of the highest-leverage activities that senior executives do, so it’s worth
investing the time and effort to explore possible scenarios thoroughly and to
develop shared insights and decisions as a result.
Strategy development cycle time

A last word on the process of strategy formulation. Traditionally, strategy is
developed on an annual cycle or even longer but, of course, the reality of
Â�strategic actions by us and others don’t fit so conveniently into an annual
timetable. The most difficult aspect of this to change is the annual budgeting
cycle, the timing of which constrains the rate at which resource can be
Â�redeployed to effect a strategy – literally, a rate-limiting factor.
Whenever each player makes a change that affects the strategic position,
it is important to review and refresh our strategy and renew our execution,
based on what we now know about the environment and the disposition and
actions of other actors in it. One of the advantages of Patterns of Strategy is
that it enables us to do that really quickly so that it becomes possible to
develop strategy on a much shorter cycle time – and we need to. As von
Moltke says: “The tactical result of an engagement forms the base for new strategic
decisions because victory or defeat in a battle changes the situation to such a degree
that no human acumen is able to see beyond the first battle.”
355
20
P UTTING
STRATEGY INTO
ACTION
In ChapterÂ€1, we talked about just how few strategic plans actually get carried
out and suggested that a major reason for this is that they didn’t take into
account what other actors are doing who are operating in the same field.
Another reason, though, is that often the translation of strategy into action is
difficult. As David Norton (2011) pointed out, “Logic says that we have to manage
Strategy. But, in many organizations, there is no process to manage it, and the need
for such process hasn’t dawned in the minds of those executives, because they never
had it, hence they can’t missÂ€it.” So, whilst the last chapter was about going from
strategy to a plan, this chapter is about moving beyond the plan and actually
putting it into action.
There are two main aspects to this. One is the flow of action, the sequence
and pattern of actual change, and the other is the flow of information neces-
sary to manage your strategic process. These two are interdependent, and
although we describe both as a sequence, it’s always the case that each is a
loop and often the case – particularly for the information loop – that its parts
are conducted simultaneously rather than sequentially.
The action loop

The action loop has four components: the action of the environment, our
organisational operations, our strategic manoeuvres and organisational
change. The first three are directly linked and directly change one another. So
our operations form a fundamental part of our structural coupling to our
environment and are therefore having a strategic effect all the time. That
Â�strategic effect may be gradual, and it may not be immediately obvious, but
it’s there and is the ‘strategic momentum’ of the organisation, taking it in a
particular direction unless something acts to change things – rather like
Newton’s First Law of Motion that “an object either remains at rest or continues
Putting strategy into action
to move at a constant velocity, unless acted upon by an external force.” Similarly,

some of our strategic manoeuvres act directly on our environment, for
example, if we choose to collaborate with another organisation. Reciprocally,
of course, actions in the environment, both at the operational level and stra-
tegic manoeuvres by other actors will have a direct effect on us, both on the
organisation and on the strategy.
The fourth component in the action loop is organisational change, and
this forms another link between organisation and strategy (FigureÂ€20.1). Some
strategic manoeuvres can simply be executed without any organisational
change, but many will need some sort of change in the organisation – a
Â�redirection of existing capabilities, increasing or decreasing some existing
capabilities or the building of new capabilities.
There is, of course, a huge practical difference in strategies we can
execute with the resources we already have at our disposal and those Â�strategies
where we need to change the organisation to execute – and, of course, that
difference is specific to each organisation. In other words, which strategies are
likely to be easy for your organisation are particular to your organisation. We
can make some generalisations about which strategies are harder than others
but not about whether you already have the capabilities necessary or need to
build them first.
Particularly relevant here are foresight and agility, both of which are
capabilities that are needed early on in many strategies. This is absolutely
unsurprising; foresight helps you understand your future environment, and
agility gives you the resource to at least initiate the strategy and sometimes
execute it as well. These are two core capabilities that many organisations
need for strategy but not necessarily for ‘business as usual.’ This means that
Figure 20.1
The action loop
357
many organisations see these as a luxury and, as a result, don’t have them
sufficiently – or even at all. The problem is that when you need them, you
really need them, and it is really hard to develop them quickly.
For many organisations and in many situations, the question of which
strategies we have the capability to deliver without having to do major organ-
isational change is one of the most important selection criteria. If you need to
do organisational change to execute strategy, then that necessarily means
execution is likely to take longer and is less certain of success. We have written
elsewhere on how to do organisational change effectively (see The Fractal
Organization 2008), so we won’t repeat that here. Suffice it to say that this is
another area where conventional approaches consistently fail; however, it can
be done at scale, quickly and effectively.
So how do we look at the connections between these components of the
action loop? Well, the interaction of the organisation and the environment is
dealt with by your initial modelling of your structural coupling, when you
map out the existing positions in the relationship and ask, “Where is this taking
us, and is that somewhere we want to go?” The interaction of the strategy and the
environment is mapped out when you model both your and the other actors’
strategic manoeuvres and decide whether that is likely to get you to a position
of advantage or at least one with which you are comfortable. The link between
organisation and strategy runs both ways. As discussed in ChapterÂ€19, the
‘organisation,’ through the capabilities you can make available, constrains the
range of strategies available to you, and the strategy acts primarily through
the ‘muscle’ that is the organisation. In our levels of strategy, this is the inter-
action between level 2, Capability and Infrastructure, and level 4, Strategy.
That leaves the part of the loop connecting the strategy to organisational
change and connecting organisational change to the organisation for us to
deal with.
Many strategies will require not just that the organisation does essen-
tially the same thing only with just a shift of focus but also some organisa-
tional change. Doing this is very much easier if you have a good model of
your organisation. By that, we don’t mean a hierarchy chart or organogram
but one that shows what the organisation actually does, who in the environ-
ment it engages with in doing that, and what capabilities, both organisational
and operational, are available. This sort of organisational model isn’t that
hard or expensive to build, but few organisations do it. Assuming you do
have an organisational model that is sufficiently rich, then it is relatively
simple to run through the sequence of manoeuvres in your strategy and work
out what shifts in capability each of them will need – which need boosting,
which need creating, which you can beg, borrow or in-source from partners,
suppliers or consultants. So, for example, if you’re moving into a new market
358
area that is structured differently from the ones you are familiar with and you
need a network of agents, do you need to create a new internal capability for
recruiting and managing those agents?
The list of capability shifts that your strategy needs form the set of
change packets of your organisational change plan. You then define for each
of those:
● What capability needs to change and by how much;

● What resource is required to carry out the change and whether there is a
resource payback from doing it;
● How long it will take to execute;
● What constraints need to be dealt with before you can do this change
packet and what constraints on subsequent change packets it will make
easier; and
● The probability of success of this change packet.
The amount of change you can do in any given length of time is a function of
how much spare resource you have available to execute change (hence the
importance of agility – which means you have spare deployable capacity, and
foresight – which increases the time you have to act). Armed with an under-
standing of how much spare resource you have available and therefore how
much you can change at any one time, along with your list of well-defined
change packets, there is usually a fairly clear sequence for linking change
packets into a manageable organisational change programme with an indica-
tive timeline. And, of course, one element of the sequencing of change will be
dictated by when each change is needed for the sequence of strategic manoeu-
vres. You can then check the timeline for organisational change against the
strategic window that is available: can you carry out the organisational change
fast enough to allow you to execute the strategy fast enough to do what you
need it to do? If you can’t, then go back to the drawing board (or rather to
Patterns of Strategy) and either come up with an alternative strategy or find
a way to speed up your organisational change. Of course, in an ideal world,
you will have planned and built your Capability and Infrastructure with a
view to the sorts of strategies you are likely to want to execute, in which case,
all that is needed is to wheel out your latent capability, dust it off and launch
the strategy. Sadly, that is rarer than it needs to be.
Ultimately, what we’re looking for in most strategies is a change in the
value exchange that sits between the organisation and the environment. If the
strategy is successful, then the value you receive in this exchange will change
(measurably) either from what it is now to something better or, in a defensive
strategy, from what it would otherwise have been to something more
359
acceptable. Even in a collaborative strategy, one party can ‘feel’ things to be

out of kilter (when the value exchange is not as expected) long before any
contractual conditions kick in, so rapid feedback on changes in value exchange
is really important.
The information loop

Any enterprise CEO really ought to be able to ask a question that involves connecting
data across the organization, be able to run a company effectively, andÂ€especially to be
able to respond to unexpected events. Most organizations are missing this ability to
connect all the data together.
Tim Berners-Lee (2007)
In writing this section, we’re acutely conscious of the fact that most organisa-
tions are awash with management information. The vast majority of that
information is not only of almost no use for guiding strategy but may actu-
ally blind and confuse strategists by focusing attention on short-term and
historic detail rather than on strategic futures. All decision making relies on
balancing an understanding of the current internal reality with the future
and external possibility, and strategic decision making puts the need for that
balance into sharp relief. But our information systems are overwhelmingly
biased towards internal rather than external information and towards
historic or current rather than information about future states. As a result,
what we outline here as a set of information to support strategic decision
making and execution may seem like a tall order, but in reality this is really
not hard to achieve with modern technology. You may choose to walk
through your strategy without this information – that is quite literally your
business – but we believe undertaking strategy without it is unnecessarily
risky. If it’s not that hard to get the information for something so vital, why
would you not?
Taking the action loop as the template, the information structure to
support strategy maps directly onto that. Each part and link in the action loop
has its own information type and, together, these tell us about the dynamics
of the strategy and whether the execution is working and, more importantly,
whether the strategy is likely to succeed if it is executed. We’ll start on the left-
hand side of the action loop model with our understanding of the strategic
environment.
1â•‡ Information on the environment

Although there are several aspects to this, we generally start in one of two
places. The first normal starting point is with mapping out the relevant
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structure of our strategic environment. This can be based around the market
structure with its relevant value propositions, by segment and niche, the
customers for those value propositions occupying those segments and niches,
and competitors. Alternatively, you can choose to model this as a business
ecosystem that also brings in a wider group of players than a purely market
model, such as influencers, regulators, adjacent markets and the like. Which-
ever approach you pick, the key issue is to identify who has agency – the
ability to have an impact.
If Patterns of Strategy is about achieving an advantageous strategic fit,
then choosing what we want to fit depends on exploring a range of choices,
each with its own longevity and attractiveness. The longer and more attrac-
tive the fit, the better; the more the organisation has the potential to grow and
to grow stronger. The more strategic options the organisation has available,
the less dependent it is on any one key relationship, and so the less vulnerable
it is. An array of factors affect the choice over where in the market/ecosystem
we want to improve our fit. These include the overall size of current demand
and its size relative to us, its sustainability and the defensibility of it – how
hard would it be (or could we make it) for a competitor to build fit? The best
fit is likely to call on existing capabilities and provide stepping stones to other
opportunities for fit over time.
Within the structure of our environment, different segments may be
subject to different levels of turbulence. There’s a lot written about demand
and supply, as though they turn up as a nicely matched pair. But, of course,
nothing could be further from the truth, and understanding the pattern of
demand, in particular rates of change in demand, is critical for effective
strategy formulation. This includes the market size, the market size relative to
you and its trajectory. Without these, there is no basis at all for planning
internal supply. Turbulence relates to the frequency and violence of upswings
and downturns in demand, as well as to the rate of change in the type of
demand. The more volatile the environment, the greater the acceleration of
change the organisation needs to have, the more nimble it needs to be and the
higher its agility needs to be. This gives you a way of assessing the range of
stability for the organisation in its environment. There is nothing inherently
good or bad about turbulence; if you are able to cope with it better than your
competitors, then a highly turbulent environment will give you competitive
advantage.
Besides the market or ecosystem structure, the second place we often
start is with an environmental radar – scanning for wider sources of change
that could impact our sector. In our experience, it’s rare for organisations to
have anything like an adequate futures radar that can be used for scanning for
strategic risks as well as opportunities. It’s also our experience that this isn’t
361
that hard; almost all strategic risks can be seen coming if you are looking for
them. Instead, organisations are commonly run as if they were ships with the
radar turned off, with no adequate charts and nobody on lookout. It’s no
wonder there are quite so many sinkings.
Tracking external sources of risk to a coupling is a radar exercise. This
starts with selecting search sectors on your radar – aspects of the environment
where we anticipate the drivers of risk may start. Getting these right is critical;
as Allan and Beer (2006) pointed out, 35% of fatal strategic risks to organisa-
tions came from a direction that hadn’t even been considered a risk until then.
Since by definition we cannot be aware of our own blind spots, it’s important
to watch out for factors that lie outside our search sectors. Having decided on
search sectors, next you identify factors within those sectors that could desta-
bilise your structural couplings. Factors are hard to spot and watch, so for
each you harden this up into a set of tangible changes that would tell you that
the threat is becoming more real, that it is getting closer or that it is dimin-
ishing or has stalled. And to back up the tangible milestones of the risks’
Â�progress, you design some indicators – things you can actually measure to
monitor progress. Monitoring then involves keeping an eye on the progress of
the risks you’ve identified, looking for new ones and planning ways to deal
with the ones that look most likely to materialise.
A critical issue here is working out the event horizon for the change,
whether that is a risk or opportunity. This is the point by which you need to
have done something to deal with it. After the event horizon, you’re too late,
and all you can do is plan for the effects and hope for the best. The event
horizon is determined by the rate the risk or opportunity is travelling towards
you in time, relative to the time you will need to take action. Two critical
Patterns of Strategy components come into the equation: foresight (how far
off can you see risks coming?) and agility (how fast can you realign the organ-
isation or the situation?). Obviously there is a payoff here: the longer your
foresight, the less agile you need to be since you have a longer time to act.
Conversely, the less your agility, the more foresight you need.
2â•‡ Information on the organisation

Despite the fact that organisations tend to have lots of information about
some aspects of their operations, our experience is that overwhelmingly this
information is quite generalised and not specific to particular capabilities.
Arguably that is fine as long as the situation remains stable, but what this
means is that it’s extremely difficult to tell specifically what the organisation
is good at and what it isn’t, or just how good it is and at what. This informa-
tional deficit brings with it two problems. Firstly, it can easily blind you to
362
your weaknesses and strengths, which is dangerous if you are responding to

a strategic challenge. We have seen organisations go out of business simply
because their information systems had deluded them about where they were
strong and where they were weak, so they failed to react to threats. Secondly,
if you can’t tell how well different capabilities perform, it’s hard to know
whether they are capable of executing a strategic move. If you don’t know
how long it takes you to make a widget or the proportion of defects, then
trying to work out how much you need to up your game to match the new
demands of a strategically important customer becomes a matter of
guesswork.
So a good information system will be able to provide performance infor-
mation on all the organisation’s relevant capabilities, both operational and
those to do with decision making and change. Bizarrely (because it is often
unclear what the data organisations have about themselves actually refers to),
it is often harder to get good information about your own organisation than it
is about your strategic environment. If you have good well-structured perfor-
mance information, then you are in a good position to understand both what
your organisation is capable of now and what it might be capable of in the
future – how much each capability can be stretched or reduced and, critically,
which ones will need to be changed if the strategy is to be carried out. Armed
with that, the strategist has a good handle on the range of possible strategies
that the organisation might be capable of executing and which it can’t.
3â•‡ Information on the strategy

As described in the last chapter, for each strategic manoeuvre and each stage
of ‘the plan,’ there should be metrics that show whether the strategy is
working, and these will be a mixture of output and outcome metrics. So some
of these will be measuring changes in your organisation: “We shortened our
development-to-product-launch cycle time from 2.5Â€years to 6.5 months.” Some will
be measuring the effect of those changes in the environment: “We increased our
first-to-market ratio by a factor of three.” Some will be measuring the effect on the
counterparty in the structural coupling: “They launched four products prema-
turely and lost x% market share in our target segment.”
4â•‡Information on the links between environment,

organisation and strategy
The first part of the strategy modelling exercise maps out the structural
coupling relationship as it currently stands and looks at the state of differen-
tials between the two actors and asks what the default trajectory of the
363
coupling is. This tells you about the ‘natural’ status of the link between the
organisation and the structurally coupled entities in its environment. And
you can easily put measures on the development of this ‘natural trajectory’
that will tell you how fast you are both travelling down that path and how
predictably. Where the natural trajectory involves significant strategic risk, it
is crucial to understand the rate at which the risk is getting closer, compared
to the rate we are diverting onto a new course taking us away from it.
Your strategy is about moving away from that natural or default trajec-
tory and onto a new (more advantageous) path. The outcome measures for
the strategy tell you how well that is working. But, when you start to execute
the strategy, the default pressures don’t just stop, so by measuring both the
progress of the default future and the progress of your shiny new designed
strategic future, you can measure not just how well the strategy is working
but how much inertial drag the old trajectory is still exerting on you. Even
with ‘successful’ strategies, failure to take this into account can mean that the
coupling goes back to its old path as soon as the initial strategic effort is
relaxed.
The links between the strategy and the organisation go both ways. The
conventional view is that strategy drives organisation, both in terms of its
direction and also in that the organisation should be designed to fulfil the
strategy. So even where there is no need for changes to organisational capa-
bilities, the strategy directly drives the organisation on a new course. Less
obviously, the organisation drives the strategy. This happens in two ways.
Firstly, the organisation’s capabilities constrain the strategies that are possible
to execute. In addition, though, and rather more subtly, the information,
communication and decision-making structures of the organisation also
constrain what information the organisation can hear and process and what
decisions it is likely to be able to take. Senior management teams like to believe
that their thinking is unfettered, and consultants go to great lengths to expand
the range of strategic options being considered, but the harsh reality is that
what we are capable of thinking is mostly constrained by what we know,
which in turn is constrained by the information we’re fed by and through the
organisation.
5â•‡ Information on organisational change

The strategy determines which organisational capabilities will need to change,
and this list of capability shifts goes into the organisational change plan,
sequenced to make implementation as easy as possible whilst delivering the
capability shifts as they are needed in a timely way for the unfolding strategy.
This makes it relatively simple to measure the rate of organisational change in
364
fairly specific terms; we can define which parts of the organisation need to
change in what way in order to execute what strategic manoeuvre. Once
changes are this specific, then measuring both whether they have happened
and whether they have been effective in delivering the desired outcome is
fairly straightforward.
Decision–action cycle time

Following Boyd (and Wellington and Sun Tzu), the speed of executing the
decision-action cycle is critically important to many strategies. You can see
the whole of our cycle from environmental scanning through strategy formu-
lation to planning and through to execution as one big decision-action cycle
but, of course, within this overall cycle, each stage can be seen as a decision-
action cycle in its own right. Knowing how fast you can both take decisions
and move from decision to execution is really important. Improving the
quality and speed of decision making is one of the highest leverage changes
you can make to improve your strategic capability, not least because it may
not require the whole organisation to change; usually improvements to infor-
mation availability and changes in managers’ decision processes can both
improve the quality and shorten the time for decision making dramatically. If
you only have one investment to make in upping your strategic capability,
this is likely to be it.
365
AFTERWORD
We started this book with some critiques on the state of play in strategy from
some of the eminent figures in the field. They commented on apparently
different aspects and issues, but in reality these are all intimately connected.
Starting with Henry Mintzberg’s observation that strategy is emergent,
it follows that unless and until you have a way to model the systemic forces
that drive emergence, then you can’t (to quote Gary Hamel) “have any theory
of strategy creation” – well, not one that works, anyway. By definition emer-
gence is an effect that comes from underlying systemic forces and if you don’t
know what those are you can’t have a theory of how strategy is created. Simi-
larly with David Norton’s comment – “Logic says that we have to manage
Strategy. But, in many organizations, there is no process to manage it, and the need
for such process hasn't dawned in the minds of those executives.” The reason he
ascribes to this is that “the need for such process hasn't dawned in the minds of
those executives, because they never had it, hence they can't missÂ€it,” and whilst this
is probably true, if you accept the emergence argument, then it also follows
that any “process to manage strategy” has to be capable of handling how
Â�emergence works.
Patterns of Strategy gives you a way to understand, unpick and manage
the drivers of emergent strategy, so it does provide a “theory of strategy
creation” and it is also possible to build “a process to manage it.” In Patterns of
Strategy, it is the management of structural couplings which is central, either
adding or decoupling relationships, or altering the characteristics of existing
relationships. The elements within fit, power and time provide the levers of
change to alter the structural couplings to your advantage
Leaving theory behind and focusing instead on practice, developing
strategy for businesses this way has proved fast, flexible and, dare we say it,
fun. Modelling is clearly linked to the real world, both internal and external,
and that makes the work immediate and significant, and the realness brings
out the emotion from the execs – they are very, very engaged by it. The speed
of modelling is important: it makes it possible to review strategy regularly,
and to quickly build a strategy in the face of external changes. Given the stra-
tegic importance of a rapid decision–action cycle, it’s a huge advantage to
366
Afterword
have a strategy development process that is fast. And it’s provided break-
through strategies in some tight corners and a range of alternatives with very
different levels of risk and ambition where the field of opportunity was wider.
There are different ways to use Patterns of Strategy. The most bespoke
is to take the elements of differentiation, stretch, drive, time, strength and
concentration and do the modelling, specific and tailored to the context and
couplings you want to manage.
Alternatively, instead of developing a bespoke strategy tailored precisely
to your situation, you can take one of the 80 “ready to wear” strategies and try
it on for size – “if we did this would it work for us?” And you can use the
Â�groupings of the chapters to shortlist those that are relevant to you and your
situation. But in choosing you don’t need to restrict yourself to just one of the
80 strategies, it’s possible to develop a wide range of potential strategies by
working through all 80 in an options exercise, by saying, “This is our situation,
which of these 80 could we use and what would each look like for us?” One of our
clients had three options for strategy, all similar and low stretch, and in a
couple of hours we pulled out an additional 25 from the 80 that we thought
were actionable for them in their situation. It gave them a mix of defensive
strategies to shore up their threatened position, alongside growth strategies to
build a new future. Importantly, these provided a range of ambition and risk,
from easy/low reward to “if it works you’ll grow 10x.”
The diagrams at the start of each of the strategy chapters in Part Three
also give you a sense of navigation between strategies: given where you are or
have just been, which strategies are easily accessible? Those same diagrams,
combined with the catalogue of strategies, also provide an indication of the
difficulty of achieving each strategy, and its intrinsic defensibility. There are
easier but less valuable strategic positions, or more difficult but more
rewarding and defensible strategic positions.
Patterns of Strategy can also be used predictively both at the level of
your individual organisation and more widely. You can use the 80 patterns to
model a business ecosystem, as we did with the energy sector in ‘Rock, paper,
scissors.’ This gives a powerful insight into the players in your sector, what
they are doing or could do, and importantly the trajectory and momentum
of the herd, and also the path that any regulator is favouring. It’s easy to
examine the strategies of those who are coupled to you, and the pressures and
opportunities which that could bring, and also look at the structural couplings
of those who are not directly coupled to you: what are they doing (or might
they do) which could have a second order effect on you?
The 80 classic strategies in Part Three are far from exhaustive and we
continue to see and model many others, both in client projects and reported in
the business press, so our list of exampled and repeated sightings is currently
367
Afterword
over 100 and there’s lots of scope for further development. These old favou-
rites make it even easier to develop a strategy or a range of strategic options,
and develop the strategic repertoire of the strategist: it’s a very real and prac-
tical prompt to go beyond the familiar and reflexive approaches and think
and discuss more widely and richly.
We hope you are now motivated to use Patterns of Strategy. For further
information and for Patterns of Strategy resources which you can use to
develop strategy in your organisation, see www.patternsofstrategy.com or
use [email protected].
And as we said at the beginning of the book: Bon voyage!
368
CATALOGUE OF
STRATEGIES
Eighty strategies follow. For each, we’ve shown the purpose, the chapter in
which it is found, the Patterns of Strategy dimensions that are required for its
execution (fit, time, power, or FTP) and the degree of management challenge
(low, medium, high or LMH).
Alliance. Create coupling between organisations, so that all can Collaborative

gain more market share than alone. FT M
Augmentation. Refresh coupling to market by adding new features Market
to hold market share. T L
Authority. Influence trajectory of sector through coupling based on Herd
deep expertise. FP M
Autolycus. Exploit coupling of larger player to their market by Small
filling gaps in their value proposition. T M
Bowling Alley. Create couplings with actors with different Growth
problems in different sectors to demonstrate your value. FTP H
Brand Reputation. Strengthen coupling through brand reputation Defensive
aligned to customers’ values to maintain share. FP L
Broadcast. Test many products in the marketplace to find the big Growth
hitters where you can build a strong coupling. P L
Bubble. Create intense energy in coupling from product to market, Market
drive rapid price escalation, then exit. FT L
Camouflage. Reduce your apparent strength in your coupling to Cunning plans
the market in order to avoid competitor attention. FP M
Cartel. Build couplings with others in order to create a powerful Collaborative
combined market coupling. FP H
Change the Game. Change the market by at least a disruptive Defensive
change in the coupling. FP H
369
Catalogue of strategies
Cluster. Build couplings to nearby and complementary Collaborative

organisations to drive innovation. F M
Core. Focus on the essential value proposition in coupling to Defensive
market to maintain position. P L
Crusader. Supplant the coupling between herd and market with a Market
new value type for higher purpose. FP L
Disintermediation. Create coupling direct to market by removing Market
intermediary and reducing costs. FP M
Divestment. Eliminate part of the coupling to the market to reduce Defensive
costs. FP L
Diversification. Create new couplings in new markets or with new Growth
products to smooth revenues and reduce risk. P M
Downsizing. Reduce strength in coupling to reduce costs. Defensive
FP L
Dragonfly. Maintain coupling to market through heritage or Defensive
traditional offering. FT L
Easy Entry. Attract customers to a service by a short-term Defensive
commitment to a coupling. FT L
Expert. Build dominance and evolve coupling to market through Suppliers
sustained innovation. FTP H
Falcon. Use stored energy to attack and exploit the other’s coupling Competitive
to the market to capture market share. TP H
Fast Follower. Rapidly build coupling in market to exploit efforts of Competitive
the first to market. TP L
Feint. Only pretend to change coupling in order to avoid difficult Cunning plans
challenges. F L
First Mover. Be first to create coupling in market to capture market Small
share. FT L
Frigate Bird. Increase your apparent strength to create new Small
coupling opportunities. FP L
Frontal Attack. Directly attack competitor through coupling to Competitive
shared market for advantage. FP L
Go-Between. Enable coupling between others to create market. Collaborative
FT M
Gorilla. Overwhelm others by the massive dominance of your Defensive
coupling. FP L
Guerrilla. Destabilise competitor by constantly reconfiguring Cunning plans
coupling. FTP L
370
Harlequin. Break or transform couplings to reinvent yourself and Cunning plans

reach different markets. F H
Horizontal Integration. Integrate units coupled at a single point of Defensive
the value chain to reduce costs. P M
Independent. Create highly differentiated coupling to the market. Small
F L
Intermediation. Create intermediary coupling between supplier Market
and market in order to add value to customers. FP M
Islands of Sanity. In chaotic times, be first to define and create Herd
stability and key couplings. FTP M
Jeeves. As supplier, covertly and benignly influence the coupling in Suppliers
your area of expertise. FT H
Jigsaw. Create highly leveraged value to a coupling through Collaborative
specialist expertise. FTP M
Keeping up with the Joneses. Match your product range to that of Defensive
the herd or competitor you are coupled to. F L
Keiretsu. Create formally inter-coupled set of companies for power Collaborative
and defence. P M
Knight’s Move. Concentrate power on coupling with segment, Competitive
then adjoining segments to take market. FTP M
Leader. Set herd trajectory through changes in your coupling to the Herd
market. FT M
Linus. Strengthen couplings within the herd to maintain its Herd
cohesion. F L
Lock In. Hold customers in coupling by making it hard or Defensive
unappealing to switch. TP L
Loki. Destabilise others’ couplings and exploit the chaos that Cunning plans
follows. FT L
Long Tail. Maintain and milk coupling in a declining market. Defensive
TP L
Marketect. Restructure market through your products and Market
couplings to your advantage. FTP H
Market Maker. Create a new market and couple to it. Market
FTP H
Masquerade. Create two couplings to present two brands for the Cunning plans
same offering to the market. FP M
371
M&A for Economies of Scale. Merge organisations to reduce the Defensive

cost of servicing the coupling. P H
M&A for Synergy. Merge organisations to create new couplings or Growth
value propositions. FP H
Mouse. Stay small to keep market coupling below competitor’s Small
radar. FP L
Musk Ox. Herd coalesce to mitigate attack on coupling to market. Defensive
FTP L
Niche. Concentrate on coupling to targeted slice of the market for Market
localised advantage. FP L
Organic Growth. Gradually build couplings to adjacent markets Growth
through reinvestment of profit for growth. P L
Outsource. Build a coupling to a third party delivering capabilities Suppliers
that allow them to focus on their strengths. FTP M
Paradigm Attack. Fracture others’ couplings and seize their ground Competitive
with innovative value proposition. F M
Parasite. Abuse coupling with customer for your goals. Suppliers
F L
Pied Piper. Deceive competitors about nature of your coupling so Cunning plans
the herd follows a false lead to your advantage. FT H
Piggyback. Couple to someone else’s value proposition to exploit Small
its market and growth. F L
Puppeteer. Degrade others’ couplings to the market by influencing Herd
the actions of a third party. F M
Rapid Refresh. Maintain the vitality of your coupling. Market
FT M
Remora. Tighten coupling to larger customer in order to grow. Suppliers
FT L
Rumpelstiltskin. Create a new market and coupling by Market
repurposing something worthless. FTP L
Scapegoat. Create a separate coupling to distance a ‘toxic’ part of Cunning plans
an organisation from the rest. FP M
Scorched Earth. Deny access for competitors to build couplings to Defensive
key resources. FTP M
Settlers. Exploit other’s coupling to the market with similar but Growth
cheaper offering. FTP L
372
Sheepdog. Ensure adequate consistency of herd couplings to Herd

market. FTP L
Standard Bearer. Regulate the trajectory and speed of change in Herd
the coupling between herd and market. FTP L
Stitch in Time. Create coupling based on a preventative offering, Competitive
supplanting the existing coupling. FTP M
Strategic Partner. As supplier, use your expertise to develop Suppliers
coupling for shared risk and reward. FTP M
Streets Ahead. Further develop a leading coupling to be even Competitive
further ahead of the herd in order to protect your advantage. FTP M
Time Bandits. Strengthen coupling by adding services before or Growth
after existing offering. FT L
Tornado. Drive the rapid capture of a growing market through your Growth
coupling. FTP H
Troublemaker. Destabilise others’ couplings for your own goals. Competitive
FT L
Troubleshooter. Restore stability to another’s coupling to their Suppliers
market. FTP H
Veneer. Conceal negative value given to the market through the Cunning plans
coupling. F M
Vertical integration. Create couplings between organisational Growth
units along a value chain to ensure delivery, quality and cost. FTP H
Wait Out. Resist change in the coupling until conditions are more Defensive
favourable to you. TP L
Wolf. Acquire laggards who are weakly coupled to the herd to strip Herd
out their value. FTP M
Zebra. Maintain coupling as a herd member whilst pretending to Cunning plans
be different. F L
373
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377
INDEX
Page numbers in italic indicate figures.
Aardman Animations 170 Bateson, Gregory 8, 29; on structural

Ackoff, Russ 18 coupling 19â†œ–â†œ20
action loop 356â†œ–â†œ60 Beer, Stafford 85
actors 9â†œ–â†œ11 Berners-Lee, Tim 360
Adaptive Materials 126 best practices 45â†œ–â†œ6
agility 102 Bharti Airtel 198
Airbus 322 blockbuster products 153â†œ–â†œ4
Akzo Nobel 332 Blue Ocean Strategy 4, 254, 256
Alliance strategy 77, 95, 134, 136, 150â†œ–â†œ5, Boeing 131â†œ–â†œ2, 225â†œ–â†œ6, 321, 322
322, 324, 329 Bowling Alley strategy 98, 228, 229,
America’s Cup 211 230, 231â†œ–â†œ5, 246, 323, 324, 329
AOL 122 Boyd, John 87â†œ–â†œ7, 89, 300, 365
Apple Company 54â†œ–â†œ5, 291â†œ–â†œ2, 326â†œ–â†œ7 Brand Reputation strategy 93, 200,
archetypes, patterns as 29 201, 224
Art of War, The 299 British Petroleum 257
AstraZeneca 149, 225 British Telecom 240
asymmetry, information 303â†œ–â†œ4 Broadcast strategy 99, 228, 229, 230,
Augmentation strategy 73â†œ–â†œ4, 162, 245â†œ–â†œ6, 325, 328
164, 250, 251, 268â†œ–â†œ70, 272, 323, Brompton Bicycles 58
324â†œ–â†œ5 Bubble strategy 74, 250, 251â†œ–â†œ2, 273
Authority strategy 93, 192, 276, 278, Business Model Canvas 15
292, 293â†œ–â†œ4 Business Model Generation 4
Autolycus strategy 79, 158, 159, 160â†œ–â†œ3,
173, 323, 324â†œ–â†œ5, 326 Camouflage strategy 94, 298, 303, 313
automotive industry 55, 100, 162â†œ–â†œ3, capability/infrastructure level of
323â†œ–â†œ4; car makers 64, 180, 235, 324; strategy 32â†œ–â†œ3, 320â†œ–â†œ2, 330, 358â†œ–â†œ9
supply chain, structural coupling capability 340, 346â†œ–â†œ51, 358â†œ–â†œ64; changes
in 21 plan 348â†œ–â†œ9; decisions about 330, 359
Cartel strategy 55, 95â†œ–â†œ6, 134, 136, 136,
Bakken, Earl 129, 130 156â†œ–â†œ7, 328
balanced 95; in collaboration 95â†œ–â†œ9; in change rate 79
competition 96 Change the Game strategy 66, 200,
Barnard, Christian 129 201, 224
378
Index
cheng and chi concepts 299â†œ–â†œ300, 301â†œ–â†œ2 132; Knight’s Move 23, 97, 110, 111,
Clausewitz, Carl von 31 112, 113â†œ–â†œ17; landscape 110; Paradigm
clippers 167â†œ–â†œ8, 220, 327 Attack 110, 128; Stitch in Time 66, 76,
Cluster strategy 65, 134, 135, 136, 110, 111â†œ–â†œ12, 132; Streets Ahead 57,
146â†œ–â†œ9, 323 110, 111â†œ–â†œ12, 130â†œ–â†œ1; Troublemaker 66,
co-evolve 63; in collaboration 62â†œ–â†œ3; in 110, 112, 128
competition 63â†œ–â†œ4 concentration 97; in collaboration
coherence, test 352â†œ–â†œ3 100â†œ–â†œ1; in competition 101â†œ–â†œ2
collaboration: balanced in 95â†œ–â†œ6; co- confound 66; in competition 68
evolve in 62â†œ–â†œ3; competition and Core strategy 98, 200, 201, 224â†œ–â†œ5, 328
11â†œ–â†œ13; concentration in 100â†œ–â†œ1; edge critical mass 102
players as leaders and laggards in Crusader strategy 58, 250, 251, 273
56â†œ–â†œ7; faster-slower in 72â†œ–â†œ3; herd in cultural fit 41â†œ–â†œ2
55â†œ–â†œ6; individual organisations in cunning plans: Camouflage strategy
59; shape and react relationships 94, 303, 303, 313; cheng and chi
in 60â†œ–â†œ1; strategies landscape 134; concepts in 299â†œ–â†œ300; deception
stretch-incremental paradigm in about size in 301â†œ–â†œ2; deception and
66â†œ–â†œ7; stronger-weaker in 92â†œ–â†œ3; 299; Feint strategy 62, 303, 303,
synchronised organisations and 76â†œ–â†œ7 314â†œ–â†œ15; Guerrilla strategy 66, 73,
collaborative strategies 135â†œ–â†œ6; Alliance 303, 303, 309â†œ–â†œ12; Harlequin strategy
77, 95, 134, 136, 150â†œ–â†œ5; Cartel 55, 59, 81, 303â†œ–â†œ4, 317â†œ–â†œ18; information
95â†œ–â†œ6, 134, 136, 156â†œ–â†œ7; Cluster 65, 134, asymmetry and 303â†œ–â†œ4; landscape
135, 136, 146â†œ–â†œ9; Go-Between 73, 77, 303; Loki strategy 66, 303, 303, 318;
104, 134, 135, 141â†œ–â†œ5; Jigsaw 61, 134, Masquerade strategy 99, 303, 318;
135, 137â†œ–â†œ40; Keiretsu 95â†œ–â†œ6, 134, 136, OODA in 302; Pied Piper strategy
157; landscape 134 66, 278, 303, 303, 304â†œ–â†œ8; Scapegoat
Commander’s Intent 88 strategy 66, 99, 303, 318â†œ–â†œ19; surprise
commercial aerospace industry 320â†œ–â†œ2 in 300â†œ–â†œ1; Veneer strategy 303, 303,
communications, plan 350â†œ–â†œ1 315â†œ–â†œ16; Zebra strategy 65, 303, 303,
competition: balanced in 96; co- 316â†œ–â†œ17
evolve in 63â†œ–â†œ4; collaboration and cycle time 83
11â†œ–â†œ13; concentration in 101â†œ–â†œ2; edge
players as leaders and laggards dark matter of strategy 23
in 57â†œ–â†œ9; herd in 56; individual Darwin, Charles 12, 18, 19, 80, 85
organisations in 59â†œ–â†œ60; shape versus Dawkins, Richard 331
react in 61â†œ–â†œ2; stretch-confound in deception 299, 301, 303; about size
68; stretch-incremental paradigm in 301â†œ–â†œ2; cheng and chi and 299â†œ–â†œ300,
67â†œ–â†œ8; stronger vs. weaker in 93â†œ–â†œ5; 301â†œ–â†œ2
synchronised organisations in 77â†œ–â†œ8 decision-action cycle time 71, 73,
competitive advantage 111 84â†œ–â†œ7, 365
competitive strategies: Falcon 73, 110, defensive strategies 200, 201: Brand
111â†œ–â†œ12, 118â†œ–â†œ22; Fast Follower 75, Reputation 93, 200, 201, 224; Change
82, 111â†œ–â†œ12, 123â†œ–â†œ7, 148, 166; Frontal the Game 66, 200, 201, 224; Core 98,
Attack 23â†œ–â†œ4, 101, 110, 111, 112, 121, 200, 201, 224â†œ–â†œ5; Divestment 99, 200,
379
Index
201, 225; Downsizing 99, 201, 225â†œ–â†œ6; DreamWorks 170

Dragonfly 76, 200, 201, 213â†œ–â†œ16; Easy drive 46, 51, 60â†œ–â†œ4
Entry 74, 226; Gorilla 93, 104, 105, Drucker, Peter 7, 87, 197
130, 200, 201, 222â†œ–â†œ3; Horizontal Dunnhumby 140
Integration 55, 150, 200, 201, 226; Dyson, James 257â†œ–â†œ8
Keeping up with the Joneses 62, 200,
201, 226â†œ–â†œ7, 325; Lock In 74, 75â†œ–â†œ6, 200, E.E. MuirÂ€& Sons 313
201, 221â†œ–â†œ2, 226; Long Tail 75, 157, Easy Entry strategy 74, 200, 226, 324
200, 201, 213â†œ–â†œ15, 217â†œ–â†œ20; MergersÂ€& eBay 145
Acquisitions for Economies of Scale ecosystems, sector 327â†œ–â†œ31
66, 93, 200, 201, 227; Musk Ox 96, 200, edge 46, 53â†œ–â†œ5, 56; as leaders and
201, 202â†œ–â†œ6; Scorched Earth 61â†œ–â†œ2, 200, laggards in collaboration 56â†œ–â†œ7; as
201, 207â†œ–â†œ12; Wait Out 75, 201, 227 leaders and laggards in competition
de Havilland Comet 127, 131, 321 57â†œ–â†œ9
Dell Computers 77, 274 EE (telecom) 227
Deming, W. Edwards 32, 234â†œ–â†œ5 elements of Patterns of Strategy 28â†œ–â†œ9;
development and execution: assessing concentration 100â†œ–â†œ2; differentiation
current fit in 342â†œ–â†œ3; assessing current 45â†œ–â†œ6, 50, 53â†œ–â†œ60; drive 46, 51, 60â†œ–â†œ4;
power and time in 343â†œ–â†œ4; assessing speed 47â†œ–â†œ8; strength 48; stretch 46â†œ–â†œ7,
default trajectory in 344â†œ–â†œ5; assessing 51, 64â†œ–â†œ8, 343
value exchange in 342; current emergence and structural coupling
situation and 339, 340â†œ–â†œ2; options 22â†œ–â†œ4
345â†œ–â†œ6; plan in 348â†œ–â†œ51; selecting enablers 48â†œ–â†œ9; agility 49, 357â†œ–â†œ8; change
options in 347â†œ–â†œ8; of strategy 345; rate 48, 70, 73, 77, 79â†œ–â†œ82, 152, 161,
strategy development cycle time in 214, 218, 310; critical mass 49; cycle
355; strategy failure and 6â†œ–â†œ8; testing time 48, 83â†œ–â†œ4, 355; foresight 48, 71,
the strategy in 351â†œ–â†œ3 78â†œ–â†œ9, 357â†œ–â†œ8
differentiation 45â†œ–â†œ6, 50, 53â†œ–â†œ60 Enerco 195
diffuse 99 Enterprise Resource Planning 222
dimensions of strategy 14, 28â†œ–â†œ9, 45, environment, information on the
339; fit 45â†œ–â†œ7, 50â†œ–â†œ1, 53â†œ–â†œ68, 343; power 360â†œ–â†œ62; links between information
48â†œ–â†œ9, 96â†œ–â†œ102; time 28â†œ–â†œ9, 47â†œ–â†œ8, 69â†œ–â†œ87, on the organisation, strategy and
351â†œ–â†œ3 363â†œ–â†œ4
Direct Line Group 318â†œ–â†œ19 European Union 31
Disintermediation strategy 65, 250, event horizon 71, 362
251, 271 exchange of value 15â†œ–â†œ16
disruptive 47, 65â†œ–â†œ6 Expert strategy 58, 174, 175, 192â†œ–â†œ5
Diversification strategy 99â†œ–â†œ100, 228,
229â†œ–â†œ30, 241â†œ–â†œ4, 329 failure of strategy development 6â†œ–â†œ8
Divestment strategy 99, 200, 201, 225 Falcon strategy 73, 110, 111â†œ–â†œ12, 118â†œ–â†œ22
doctrine level of strategy 31â†œ–â†œ2 Fast Follower strategy 75, 82, 110,
Downsizing strategy 99, 200, 201, 111â†œ–â†œ12, 123â†œ–â†œ7, 148, 166, 231, 324â†œ–â†œ6,
225â†œ–â†œ6, 322, 324, 328 321, 329; faster 74; faster-slower
Dragonfly strategy 76, 200, 201, 213â†œ–â†œ16 collaborations 72â†œ–â†œ3; faster vs
380
Index
slower-faster wins 73â†œ–â†œ4; faster vs Diversification 99â†œ–â†œ100, 228, 229â†œ–â†œ30,

slower-slower wins 74â†œ–â†œ6 241â†œ–â†œ4; landscape 228; MergersÂ€&
Federer, Roger 95 Acquisitions for Synergy 66, 228, 229,
Feint strategy 62, 298, 303, 314â†œ–â†œ15 230, 236â†œ–â†œ40; Organic Growth 63, 228,
Fever Tree 173 229, 230, 239, 248; Settlers 76, 228,
First Mover strategy 57â†œ–â†œ8, 73, 75, 82, 229, 230, 245; Time Bandits 76, 228,
111â†œ–â†œ12, 123â†œ–â†œ7, 158, 159, 164â†œ–â†œ8, 192, 229, 230, 249; Tornado 82, 93, 222â†œ–â†œ3,
207, 281 228, 229, 230, 231, 246â†œ–â†œ7; Vertical
fit 50; assessing current 342â†œ–â†œ3; Integration 77, 99, 223, 228, 229â†œ–â†œ30,
differentiation 45â†œ–â†œ6, 50, 53â†œ–â†œ60; drive 248â†œ–â†œ9
46, 51, 60â†œ–â†œ4; elements of Patterns of Guerrilla strategy 66, 73, 298, 303,
Strategy 28â†œ–â†œ9; stretch 46â†œ–â†œ7, 51, 64â†œ–â†œ8, 309â†œ–â†œ12, 328
343; types of 51â†œ–â†œ3
fitness landscape 106 Hamel, Gary 6, 366
Five Forces 4 Harlequin strategy 59, 81, 298, 312â†œ–â†œ12
Foerster, Heinz von 38â†œ–â†œ9 herd 55; in collaboration 55â†œ–â†œ6; in
Ford, Henry 162, 255 competition 56
Ford Motor Company 53, 162â†œ–â†œ3, 324 herd management strategies 277â†œ–â†œ8;
foresight 78 Authority 93, 192, 276, 278, 292,
Forrester 294 294â†œ–â†œ5; Islands of Sanity 56, 276, 277,
Forte group 296 285â†œ–â†œ9; landscape 276; Leader 57,
Frigate Bird strategy 94, 158, 159, 171â†œ–â†œ3 169, 276, 278, 290â†œ–â†œ2; Linus 65, 276,
Frontal Attack strategy 23â†œ–â†œ4, 101, 110, 277, 296; Puppeteer 61â†œ–â†œ2, 74, 276,
111â†œ–â†œ12, 121, 132 278, 279â†œ–â†œ84; Sheepdog 100, 276, 277,
Fuji 157 292â†œ–â†œ3; Standard Bearer 59, 276, 278,
292, 294â†œ–â†œ5; Wolf 58, 276, 277, 296
Galbraith, John Kenneth 54 Honda 98, 262â†œ–â†œ3
game theoretic models 11 Horizontal Integration strategy 55, 150,
Gartner 294 200, 201, 226
General Electric 82, 100, 244 Howard, Nigel xvi, xvii
General Motors 100, 324
Gibson, William 79 IBM 32, 33, 67, 162, 325â†œ–â†œ6
GlaxoSmithKline 99, 154â†œ–â†œ5 IKEA 98â†œ–â†œ9
Go-Between strategy 73, 77, 104, 134, Imperial Chemicals Industries (ICI)
135, 141â†œ–â†œ5, 328 225, 244, 332â†œ–â†œ4
Google Glass 224 incremental 65
Gorilla strategy 93, 104, 105, 130, 173, Independent strategy 59, 158, 159,
200, 201, 223â†œ–â†œ3, 323â†œ–â†œ8 169â†œ–â†œ70, 290, 291â†œ–â†œ2; Apple and 327
Granada 296 individual 59; in collaboration 59; in
grand strategy 33 competition 59â†œ–â†œ60
Greenpeace 311â†œ–â†œ12 information: asymmetry 303â†œ–â†œ4;
growth strategies 229â†œ–â†œ30; Bowling environment 360â†œ–â†œ2; on the links
Alley 98, 228, 229, 230, 231â†œ–â†œ7, 246; between environment, organisation
Broadcast 99, 228, 229, 230, 245â†œ–â†œ6; and strategy 363â†œ–â†œ4; loop 360â†œ–â†œ5;
381
Index
on the organisation 362â†œ–â†œ3; on Louis Vuitton 224

organisational change 364â†œ–â†œ5; Luxottica 224
strategy 363
infrastructure level of strategy McDonald’s 99
32â†œ–â†œ3, 359 Manoeuvres 13â†œ–â†œ14, 30, 356
Intermediation strategy 65, 250, market-changing strategies 251â†œ–â†œ2;
251, 274 Augmentation 73â†œ–â†œ4, 162, 164,
iPad, Apple 54â†œ–â†œ5, 291, 327 250, 251, 268â†œ–â†œ70; Bubble 74, 250,
Islands of Sanity strategy 56, 276, 277, 251â†œ–â†œ2, 273; Crusader 58, 250, 251,
285â†œ–â†œ9, 328 273; Disintermediation 65, 250, 251,
IT industry 325â†œ–â†œ7 271; Intermediation 65, 250, 251,
274; landscape 250; Marketect 66,
Jeeves strategy 61, 93, 174, 175, 186â†œ–â†œ1 111, 250, 251, 253, 259â†œ–â†œ63; Market
Just In Time 178, 180, 308 Maker 62, 141, 250, 251, 253â†œ–â†œ60;
Niche 98, 137, 250, 251, 264â†œ–â†œ7; Rapid
Kanban system 84 Refresh 65, 73, 164, 250, 251, 268,
Keeping up with the Joneses strategy 272â†œ–â†œ3; Rumpelstiltskin 66, 160, 250,
62, 200, 201, 226â†œ–â†œ7, 324 251, 274
Keiretsu strategy 95â†œ–â†œ6, 134, 136, Marketect strategy 66, 111, 250, 251,
136, 157 253, 259â†œ–â†œ63, 324, 329â†œ–â†œ30
Kennedy, John F. 98 Market Maker strategy 62, 141, 250,
Keynes, John Maynard 59 251, 253â†œ–â†œ8, 323
Kiechel, Walter xv Masquerade strategy 99, 298, 303, 318
Knight’s Move strategy 23, 97, 110, 111, Maturana, Humberto xvi, xvii, 19
112, 113â†œ–â†œ17 Meadows, Donella 303
Median Kliniken 266â†œ–â†œ7
Lanchester, Frederick 97, 101 Medtronics 129â†œ–â†œ30
leaders and laggards: in collaboration memes 331â†œ–â†œ2
56â†œ–â†œ7; in competition 57â†œ–â†œ9 MergersÂ€& Acquisitions for Economies
Leader strategy 57, 276, 278, 290â†œ–â†œ2, 329 of Scale strategy 93, 200, 201, 227,
Lean (system) 234â†œ–â†œ5 324, 328
Lehman Brothers 205â†œ–â†œ6 MergersÂ€& Acquisitions for Synergy
levels of strategy 30â†œ–â†œ5; capability/ strategy 66, 228, 229, 230, 236â†œ–â†œ40
infrastructure 32â†œ–â†œ3; doctrine/policy Metcalfe’s Law 141, 145
31â†œ–â†œ2; fitting together 35; grand Microsoft 121â†œ–â†œ2, 162, 291, 318, 326
strategy 33; planning 34; strategy Mintzberg, Henry 6, 13, 23, 366
33â†œ–â†œ4; tactics 34â†œ–â†œ5 Moltke, Helmuthvon 7, 355
like and strategic fit 41â†œ–â†œ2 Moore, Geoffrey 323
Linus strategy 65, 276, 277, 296 Morgan Motor Company 216
Lock In strategy 74, 75â†œ–â†œ6, 200, 201, motorcycle market, US 23â†œ–â†œ4
221â†œ–â†œ2, 226, 268, 324, 329 Mouse strategy 94, 158, 159, 173â†œ–â†œ4
Loki strategy 66, 298, 303, 318 multiple 99
Long Tail strategy 75, 157, 200, 201, Musk Ox strategy 96, 200, 201,
213â†œ–â†œ15, 217â†œ–â†œ20, 323, 328 202â†œ–â†œ6, 278
382
Index
National Health Service, UK 314â†œ–â†œ15 of Patterns of Strategy; emergent

Netscape 121â†œ–â†œ2 strategy in 23; exchange of value in
Niche strategy 98, 137, 250, 251, 264â†œ–â†œ7 14, 15â†œ–â†œ16; four stage process 339â†œ–â†œ40
Nokia 318 Patton, George 57
Northern Rock 205â†œ–â†œ6 Pepsi 274
Norton, David 356, 366 Pied Piper strategy 66, 278, 298, 303,
notations: fitness landscape 106; 304â†œ–â†œ8, 324
manoeuvres 106â†œ–â†œ7 Piggyback strategy 63, 158, 159, 173
Novartis 155 plan: capability changes 348â†œ–â†œ9;
nuclear industry 21â†œ–â†œ2 communications 350â†œ–â†œ1;
measurement approach 349â†œ–â†œ50;
OfWat 293 resource requirements 349; strategy
Ohno, Taiichi 84 execution 351â†œ–â†œ3
On the Origin of Species 12, 18 planning level of strategy 34
OODA (observe, orientate, decide, act) policy level of strategy 31â†œ–â†œ2
loop 85â†œ–â†œ7; in cunning plans 302; for Porter, Michael 111
implicit and explicit decision taking Porter’s Value Chain 4, 15
87â†œ–â†œ9 Porter’s Value Curve 4, 15
operational cycle time 71, 834 power 90; assessing current 343â†œ–â†œ4;
operations, organisational 356 concentration 49, 96â†œ–â†œ102; different
Options and strategic fit 38â†œ–â†œ9, 340 types of 91; elements of Patterns
Oracle 211 of Strategy 28â†œ–â†œ9; enablers 49;
Orange (telecom) 227 strength 48;
Organic Growth strategy 63, 228, 229, power enablers: agility 45, 49, 91, 94,
230, 239, 248 102, 346â†œ–â†œ7; critical mass 45, 49, 91,
organisational identity 331â†œ–â†œ5 102, 346
organisations, information on 362â†œ–â†œ3; Primary Care Trust 314â†œ–â†œ15
links between information on the ProctorÂ€& Gamble (P&G) 53
environment, strategy and 363â†œ–â†œ4 product refresh rates 47â†œ–â†œ8
Organization of the Petroleum Puppeteer strategy 61â†œ–â†œ2, 74, 276, 278,
Exporting Countries (OPEC) 279â†œ–â†œ84, 328
156â†œ–â†œ7, 328
Osterwalder Alexander 15 Quorn 225
Outsource strategy 77, 174, 176, 197â†œ–â†œ8
radical 65
paradigm 47, 64, 66â†œ–â†œ7, 213, 232, Rank Hovis McDougall 225
254, 305 Rapid Refresh strategy 65, 73, 164, 250,
Paradigm Attack strategy 47, 66, 110, 251, 268, 272â†œ–â†œ3
112, 129â†œ–â†œ30 rate of change 48, 71, 79â†œ–â†œ83
Parasite strategy 63, 174, 175, 198 react 62
Patterns of: differences between reality test 352
conventional approaches and 9, Red Adair Inc. 196â†œ–â†œ7
366â†œ–â†œ7; dimensions in see dimensions Red Team 300; test 353â†œ–â†œ5
of strategy; elements in see elements Remora strategy 61, 174, 175, 186â†œ–â†œ7, 191
383
Index
resource requirements, plan 349 strategic fit 14â†œ–â†œ15, 28â†œ–â†œ9, 36â†œ–â†œ42, 50â†œ–â†œ3,
Ries, Al 54 343â†œ–â†œ4
risk and strategic fit 39â†œ–â†œ41, 344â†œ–â†œ5 Strategic Partner strategy 61, 77, 174,
Rolls Royce 31â†œ–â†œ2, 33 175â†œ–â†œ6, 179, 181â†œ–â†œ5, 184, 247
Rothschild’s 141, 144 strategic risk 16, 69, 79, 119, 186, 344â†œ–â†œ5,
Rowling, JK 246 349, 361, 362, 364,
Rumelt, Richard 20â†œ–â†œ1 strategy, definition 28
Rumpelstiltskin strategy 66, 160, 250, Strategy Maps 4
251, 274 Streets Ahead strategy 57, 110, 111â†œ–â†œ12,
130â†œ–â†œ1
Saab 100 strength 92
SAB Miller 248 stretch 46â†œ–â†œ7, 51, 64â†œ–â†œ8, 343
Sainsbury’s 212 stronger 93
Savile Row 267 structural couplings 19â†œ–â†œ21; automotive
Say’s Law of supply and demand 253 supply chain 21; defining 340â†œ–â†œ1;
Scapegoat strategy 66, 99, 298, 303, dynamics of empire 22; emergence
318â†œ–â†œ19, 328, 329 and 22â†œ–â†œ4; nuclear waste 21â†œ–â†œ2; used
Scorched Earth strategy 61â†œ–â†œ2, 200, 201, to understand strategic direction
207â†œ–â†œ12, 237, 279, 283 24â†œ–â†œ7
sector ecosystem 327â†œ–â†œ31 Sun Tzu 30, 67, 299â†œ–â†œ300, 365
Settlers strategy 76, 228, 229, 230, 245 supplier strategies 175â†œ–â†œ6: Expert
Shakespeare, William 160 58, 174, 175, 192â†œ–â†œ5; Jeeves 61, 93,
shape 61 174, 175, 186â†œ–â†œ91; landscape 174;
Sheepdog strategy 100, 276, 277, 292â†œ–â†œ3 Outsource 77, 174, 176, 197â†œ–â†œ8;
single 98 Parasite 63, 175, 198; Remora 61, 173,
slower 75 174, 175, 177â†œ–â†œ80, 181, 186, 187, 191;
Slywotzky, A. 25 Strategic Partner 61, 77, 93, 174, 175,
small players strategies 159; Autolycus 179, 181â†œ–â†œ5, 186, 198; Troubleshooter
79, 158, 159, 160â†œ–â†œ3; First Mover 57, 59, 174, 175, 196â†œ–â†œ7
58, 73, 75, 82, 111â†œ–â†œ12, 123â†œ–â†œ7, 158, surprise 300â†œ–â†œ1
159, 164â†œ–â†œ8, 192; Frigate Bird 94, 158, synchronised 76; in collaboration 76â†œ–â†œ7;
159, 171â†œ–â†œ3; Independent 59, 158, 159, in competition 77â†œ–â†œ8
169â†œ–â†œ70; landscape 158; Mouse 94,
158, 159, 173â†œ–â†œ4; Piggyback 63, 158, tactics level of strategy 34â†œ–â†œ5
159, 173 Taoka, Nobuo 97
Smith, Delia 212 Taylorism 32
Snowden, Edward 128 technology adoption life cycle 323
speed 47â†œ–â†œ8 tempo 71
Spencer, Herbert 12, 18 Tesco 140
Spotify 270 test, strategy: coherence 340, 352â†œ–â†œ5;
Standard Bearer strategy 59, 276, 278, reality 352; Red Team 353â†œ–â†œ5
292, 295â†œ–â†œ6, 329 time 70; assessing current 343â†œ–â†œ4;
stimulation and strategic fit 41 different types of 70â†œ–â†œ1; elements in
Stitch in Time strategy 66, 76, 110, Patterns of Strategy 28â†œ–â†œ9; enablers
111â†œ–â†œ12, 132 48; speed 47â†œ–â†œ8
384
Index
Time Bandits strategy 76, 228, 229, value and strategic fit 37â†œ–â†œ8
230, 249 value exchange 342
time-enablers: change rate 48, 71, Veneer strategy 298, 303, 315â†œ–â†œ16
79â†œ–â†œ83; cycle time 48, 83â†œ–â†œ84; foresight Vertical Integration strategy 77, 99,
48, 71, 78â†œ–â†œ9 223, 228, 229â†œ–â†œ30, 248â†œ–â†œ9
T-Mobile 227 Virgin Active 226
Tornado strategy 82, 93, 223â†œ–â†œ4, 228, VORSL (value, options, risk,
229, 230, 231, 246â†œ–â†œ7 stimulation, like) 36
Total Quality Management (TQM) 235
Toyota 82, 324; Toyota Production Wait Out strategy 75, 200, 201,
System 82, 84, 308 227, 329
traditional strategy: differences Waterstones 249
between Patterns of Strategy weaker 93
approach and 9; failure rates of 6â†œ–â†œ8, Welch, Jack 82
18; as pattern in stream of actions 13; Wellington 16, 70, 78, 365
as pattern in stream of decisions 13 Wolf strategy 58, 276, 277, 296
trajectory 344â†œ–â†œ5 WorldCom 240
Troublemaker strategy 66, 110, 112, 128,
328, 329 Xerox 224
Troubleshooter strategy 59, 174, 175,
196â†œ–â†œ7, 292, 294, 328 Yamaha 98, 262â†œ–â†œ3
Trout, Jack 54 Yo-Yo model xvi
Unilever 52â†œ–â†œ3, 58, 244 Zara 272â†œ–â†œ3

US National Security Agency 128 Zebra strategy 65, 298, 303, 316â†œ–â†œ17, 324
385

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Dimensions of Strategy

Patterns of Strategy makes a refreshing addition to the strategy literature. Aimed at

In helping us understand how we differentiate, Patterns of Strategy gives a different

Patterns of Strategy is a revolutionary approach to developing business strategy

Patrick Hoverstadt and Lucy Loh

List of figures xiii

â•‡1 Why Patterns of Strategy?3

â•‡ 2 How this is different .Â€.Â€. 9

â•‡ 3 The dark matter of strategy 18

â•‡ 4 From concept to strategy 28

â•‡ 5 What is strategic fit? 36

â•‡ 6 Designing fit 50

â•‡ 7 Using time 69

â•‡ 8 Using power 90

â•‡ 9 Competitive strategies 111

10 Collaborative strategies 135

11 Strategies for small organisations 159

12 Supplier strategies 175

13 Defensive strategies 201

14 Growth strategies 229

15 Market-changing strategies 251

16 Herd management strategies 277

17 Cunning plans 299

18 Rock, paper, scissors 320

19 Patterns of Strategy – the development process from

20 Putting strategy into action 356

1.1 Conventional strategy approaches 4

13.1 Defensive strategies landscape 200

the position of their organisation, as well as specialists in strategic or enter-

Patterns of Strategy uses a completely different approach to business strategy

The consultancy experience

The effect on organisations and individuals was disorientating and desta-

In fact, even categorising the different strands of this particular strategic

The conference experience

Failure of strategy development

communicated or practicable. But at least one reason for ‘resistance’ to

Your organisation is changing, purposefully or not, and so are the other

Almost nothing about the Patterns of Strategy approach is the same as

1 multiple interdependent actors,

Multiple interdependent actors

Competition and collaboration

are fundamentally competitive in nature remains an important principle in

biologist Humberto Maturana identified ‘structural coupling’ and not compe-

talked about survival of the fittest,

1â•‡ The automotive supply chain

2â•‡ Nuclear waste

the other, and in reality

3â•‡ Dynamics of empire

Structural coupling and emergence

Using structural coupling to understand strategic direction

1 What structural coupling relationships are we in?

Answering those questions is what the Patterns of Strategy approach does.

Dimensions, elements and strategies

● differentiation (how similar or different each actor is);

The power elements are:

● strength (relatively stronger or weaker than the other actor); and

The time element is which actor is faster.

Momentum and manoeuvre

To frame the approach, we’d like to locate it within a typology of organ-

3â•‡ Grand strategy

List of figures xiii

â•‡1 Why Patterns of Strategy?3

â•‡ 2 How this is different .Â€.Â€. 9

â•‡ 3 The dark matter of strategy 18

â•‡ 4 From concept to strategy 28

â•‡ 5 What is strategic fit? 36

â•‡ 6 Designing fit 50

â•‡ 7 Using time 69

â•‡ 8 Using power 90

â•‡ 9 Competitive strategies 111

10 Collaborative strategies 135

11 Strategies for small organisations 159

12 Supplier strategies 175

13 Defensive strategies 201

14 Growth strategies 229

15 Market-changing strategies 251

16 Herd management strategies 277

17 Cunning plans 299

18 Rock, paper, scissors 320

20 Putting strategy into action 356

1.1 Conventional strategy approaches 4

13.1 Defensive strategies landscape 200