Achiles Heel: Identifying and Leveraging a Competitor s Weakest Point

Transcription

1 Achiles Heel: Identifying and Leveraging a Competitor s Weakest Point Presented By: Dr. Eldad Kollenscher and Prof. Boaz Ronen Tel Aviv University Faculty of Management Leon Recanati Graduate School of Business Administration Date: June TOCICO. All rights reserved. 1

2 The Tacoma Narrows Bridge, 1940 Bridge collapsed after 4 months Resonance effect 2

3 Achilles Heel Thetis, anxious to make him immortal, dipped her son Achilles in the River Styx She held him by his heel which remained dry and became his vulnerable spot Trojan prince Paris shot an arrow into Achilles heel and killed him Even the most powerful opponent has vulnerabilities 3

4 TOC: Managing Our Constraints 3 2 * 70 /m 50/m TOC : Focus on Bottleneck to increase Throughput 1 100/m 4

5 The Focusing Steps 1. Identify the system s constraint 2. Decide how to exploit the system s constraints 3. Subordinate the system to the above decision 4. Elevate the system s constraint 5. If a constraint was broken, go back to step 1. Do not let inertia become the system s constraint 5

6 TOC Strengthens the Constraint. But What About the Adversary? 3 70 /m 2 * 50/m 1 100/m 6

7 The Need for a New Attack Strategy Military experience is the root of Attack Business Strategy Current business strategies are still based on Clausewitz attrition warfare Competitive-Business-Strategy focuses on product/market, ignoring the competitor s internal vulnerabilities The result: lose-lose attrition battles based on product/market For example, Porter s 4 generic strategies 7

8 Achilles Heel for Law Enforcement Agencies The use of Achilles Heel methodology for: Car theft Money laundering Drug trafficking 8

9 The Roots of Achilles Heel Methodology 1. Military Operational Theory Developed in the USSR by Marshal Tukhachevsky and his colleagues in the 1920 s focuses on attacking the enemy's weak points a strike at the enemy s rear will create a shock, disrupting its operational ability and driving the enemy off-balance 2. The Theory of Constraints The Focusing Steps and their underlying tools 9

10 Definitions Achilles hill: The organization s weakest point. Once hurt, will cause severe damage. Paris arrow: a competitive move that attacks the opponent's weak point effectively. * The use of this methodology should follow law and ethics rules 10

11 Achilles Heel Strategy: the Last Resort A win-win solution Market segmentation and product differentiation Viable Vision solution Blue Ocean strategy If everything else fails, consider attacking the adversary using the Achilles heel strategy 11

12 Should We Attack the Adversary? Risk assessment: think of the day after Cost/benefit analysis Timing is everything 12

13 Achilles Heel Methodology 1. Identify the adversary's Achilles heel, then generate Paris arrow by: 2. Overload and confuse the adversary's Achilles heel 3. Isolate and starve the adversary's Achilles heel 4. Attack and neutralize the adversary's Achilles heel 5. Return to step 1 if the adversary's Achilles heel has moved elsewhere avoid inertia 13

14 Step 1 Identify the adversary's Achilles heel 14

15 Identify: Classification of Achilles Heel 15 Regulators (regulations, protectionism) Customers (sole customer) The supply chain (sole supplier) Internal resources: Value chain (critical stages) Policy constraints (silos, performance measures, pricing) Physical Resources (bottlenecks, talents, human resources) Processes/Structure (bureaucracy) Reputation and culture The distribution chain (long chain, sole distributor) Management and board of directors Business associates

16 Identify: Identification Tools The Arena model Focused CRT KPI analysis Bottleneck analysis Flowchart SWOT analysis Inter Stakeholder Analysis (ISA) Financial statement analysis And, above all, Common Sense 16

17 Step 2 Overload-and-confuse the adversary's Achilles heel 17

18 Overload-and-Confuse TOC: Increase the constraint s throughput Achilles heel: drive the adversary to ineffectively manage its Achilles heel. 18

19 Overload and Confuse: iphone Case Overloading the adversaries distribution channels Apple's iphone was sought after by mobile phone operators Outside the US Apple did not provide exclusivity to any operator and included a clause committing them to the distribution of large quantities of iphones over a period of three years As a result Apple increased its market share on the expense of competitors such as Motorola, Sony-Ericsson and Samsung Achilles heel: limited distribution capacity Paris arrow: choke the distribution channels 19

20 Step 3 Isolate-and-starve the adversary's Achilles heel 20

21 Isolate-and-Starve TOC: Subordination to the constraint Achilles heel: Preventing the adversary from diverting resources to assist its Achilles heel 21

22 Isolate-and-Starve: The End of Life Component A US government agency published a tender for a complex Hightech system One player recognized that a component that was required in the contract was declared as "end-of-life The player bought the manufacturer s whole stock of components thus preventing its larger competitors from bidding Achilles heel: the obsolete component Paris arrow: buying the whole stock 22

23 Step 4 Attack-and-neutralize the adversary's Achilles heel 23

24 Attack-and-Neutralize TOC: Elevate the constraint Achilles heel: Decrease the capacity of the weakest point 24

25 Attack-and-Neutralize: Logica/CMG VAS (SMS, voic , etc.) developer Logica merged with CMG For a small competitor the kneejerk reaction was to treat this merger as a threat The underdog took advantage of the decision making chaos (due to the merger) in the new company and aggressively provided bid offers to Logica-CMG customers 50% decline in Logica-CMG's valuation during the two quarters following the merger. The underdog tripled its value Achilles heel: long decision making process Paris arrow: aggressively provided bid offers 25

26 Step 5 Return to step 1 if the adversary's Achilles heel has moved elsewhere avoid inertia 26

27 Avoid Inertia Huawei Case Huawei, a Chinese telecom supplier, identified the reluctance of incumbent competitors to pursue legal action against large Chines companies Huawei was encouraged to ignore IP rights However, in 2003 Cisco wan a major lawsuit against Huawei for infringing Cisco s source code In 2004 during a SuperComm Show a Huawei employee was suspected of industrial espionage at the Fujitsu booth. Achilles heel: ignoring NDA s Paris arrow: lawsuit for illegal 27 use of source codes

28 Achilles Heel Implications 1. How to make the adversary s Achilles heel weaker 2. How to protect our Achilles heel from the adversary s attack 3. How to improve our value offer to our customers so they will better protect their Achilles heel 28

29 Summary Achilles heel strategy enables small companies to compete with large adversaries It has helped law-enforcement agencies in their never-ending war against crime It helps differentiate your value offering by defending the customers Achilles heel. 29