1. Three Maneuver Strategies January 15, 2016 © 2016 Phillips/Verjovsky. All Rights Reserved.

2. 1 Maneuver Strategy Maneuver strategy is an alternative to attrition. Both are well-understood in the military but only attrition has been adopted in business contexts. Companies using attrition seek to match product for product, feature for feature in a bloody struggle over market share. With attrition, a competitor either quickly eliminates a rival or two or more rivals settle in for a long slog to win incremental market share points no matter what the cost With Maneuver, competitors seek to win at the lowest possible cost

3. 2 Maneuver As the name suggests, maneuver relies on speed and agility far more than size and strength. Rather than simplify identifying a competitor and matching offerings feature for feature, maneuver relies on gathering insight, interpreting information and making rapid, intelligent movements. There are three maneuver strategies which we’ll define here: 1.Preemption 2.Dislocation 3.Disruption

4. 3 Preemption: Identifying and taking a valuable, unoccupied position, and building defenses to block fast followers. Preemption requires a close examination of a competitive space, to identify valuable locations, positions, channels or customers that are overlooked or ignored, and moving into that position before competitors can react. Any firm, of any size, can execute preemption. New entrants or adjacent competitors are more likely to conduct preemption than existing competitors. Preemption

5. 4 Preemption Example Airbnb vs major hotel chains If we think about hotel chains (Marriott, Hilton, etc) as primarily service organizations that provide reservations for clean, safe and affordable rooms, then we can ask the next question: does the room have to be owned or leased by Marriott or Hilton? In other words, could Marriott or Hilton have served the customers that Airbnb is serving? We believe that the answer is YES, if the hotel chains had thought about themselves as a reservation system rather than thinking about themselves as a real estate company.

6. 5 Preemption Example Airbnb preempted the hotel chains Airbnb moved into a valuable, unoccupied space that the hotel chains overlooked or ignored. We know the space is valuable because of the growth and profitability of Airbnb. The hotel chains have two options – attempt to follow Airbnb and compete for those customers (which may impact their branding and image) or fight Airbnb. They are choosing to fight, on the grounds that Airbnb is unconventional and perhaps not in alignment with regulations

7. 6 Did Airbnb enter a valuable space?

8. 7 Airbnb competing on speed

9. 8 Dislocation In some cases preemption may not be possible. If you must attack a competitor, it makes sense to avoid attacking them head on, feature to feature, unless you are certain to overwhelm the competitor and remove them from competition. The second maneuver strategy, which is useful when you face an incumbent competitor, is dislocation. Dislocation seeks to identify important vulnerabilities. Once a competitor’s vulnerabilities are identified, dislocation seeks to attack in such a way that the competitor cannot bring its full strength against the attacker.

10. 9 To attack a competitor using dislocation, you must first identify vulnerabilities. These typically exist in one of four areas: 1.Strategies 2.Tangible requirements 3.Intangibles 4.Offerings Finding a weakness opens up opportunities for dislocation Dislocation

11. 10 Dislocation example Zara vs Fashion houses and retailers A classic dislocation attack is occurring right now, in every mall and shopping location. Zara, an upstart in the fashion industry, is dislocating leading fashion houses and retailers in two dimensions. First, it produces and turns its collections far more quickly than haute couture designers, forcing them into a rhythm the designers cannot sustain. Second, Zara uses integrated store and sales data more effectively than any other fashion retailer.

12. 11 Zara leading in the fast fashion industry “The secret of fast fashion retailing is the ability to generate quick turnover of merchandise in the stores. New fashion designs are shipped at a rapid rate, there are few basics and reorders are rare. The customer knows that she should buy an item she likes when she sees it. The Inditex Group prides itself to deliver quality merchandise in as little as three weeks from its own factories. Designers develop new models daily – sometimes three or four a day – which are then reviewed and are put into production. It is no wonder that versions of new designs by fashion designers in Paris are in Zara stores within a very short time of appearing on the runway.” from Forbes, March 2015 Is Zara successful?

13. 12 If preemption isn’t available, and you face a competitor with few exposed vulnerabilities, maneuver still offers an option to compete. Rather than attack a specific weakness, the last strategy, disruption, seeks to attack in dozens of small attacks, a “death of a thousand cuts” mentality, which forces a competitor to delay plans, distracts the management team and disrupts efficient operations. Disruption

14. 13 While disruption is probably the “weakest” attack, it has the broadest application potential. We can disrupt any of the four factors (strategies, requirements, intangibles and offerings) that we choose. For example, food trucks disrupt established restaurants. They show up just when customers go to lunch, and leave when the crowds die down. They are subject to the same requirements, and have many of the same offerings. As another example, consider Amazon Prime and its new delivery features and potential offerings, like delivery by drone. This distracts and disrupts plans by Fedex and UPS, which rely on Amazon for a significant portion of their business. Examples of Disruption

15. 14 The good news is that there is a maneuver strategy for every setting. If you are fortunate enough to identify a valuable, unoccupied position, preemption is the course to follow. If you face an incumbent competitor, assess its strengths and weaknesses. If one or more significant vulnerabilities exist, attack those in a way that forces the competitor to respond from a position of weakness (dislocation). If neither of these are true, harass, annoy, distract and delay your competitor with disruption techniques. Maneuver for every setting