Effective Strategy is often indirect - Printable Version

Effective strategy is often indirect

Originally published in

Sun Tzu said: “I go where he is not.”

Sounds good. But what does this mean in ‘real’ terms? Let’s look at Toyota’s entry into the Indian market. It entered late, when the other auto majors were already shipping passenger cars from their plants. Toyota owned brands which enjoyed very high equity with the Indian high-end-product consumer, and so had a lot going for it to make a dent in the passenger car market.

But what did Toyota Kirloskar Motor (TKM) do instead? It entered the multi-purpose vehicle(MPV) segment with Qualis. The only comparable competition was Tata Sumo. The segment had great all-India potential, including the hallowed rural markets. Was there a better way of spreading distribution reach, building infrastructure, developing vendors and creating mass-market consumer awareness of the brand? It was the ideal foundation for the subsequent passenger car market entry. And a low risk strategy to boot, due to low investment and lower expectations from the customer.

What did all the other carmakers entering India do? Home on to the obvious, passenger cars, and struggle as the expected bloodbath erupted.

Interestingly, each had an MPV in its product stable. Of course, if TKM had been the first one off the block, perhaps the best approach would have been a passenger car segment entry. To put things in context, Toyota’s Indian market entry was a triumph of hope over experience. Remember LCVs from DCM-Toyota? As an aside, it was equally a tribute to the wooing skills of Vikram Kirloskar who persisted for seven years to convince Toyota to plunge into its second Indian marriage.

The choice TKM had was between a tenuous toehold in a glamourous segment or planting both feet firmly in another. It chose the latter, and worked on consolidating successes and moving incrementally in a step-by-step approach. TKM secured a flank, ensured its hold over the MPV market, put the supporting infrastructure in place before entering the main battle of the passenger car market, where both Corolla and Camry are doing quite well for themselves today.

As always, a strategy is only as good as the results. And TKM’s results say it all -- profitable in three years and set to wipe off accumulated losses by 2006.

In hindsight, this strategy seems fairly simple and straightforward. In 1997, when TKM was incorporated, it was anything but that. The dilemma which TKM faced while taking this decision was probably gut-wrenching and divisive. It appears otherwise only because things worked out.

‘I go where he is not.’ Sounds simple. But is tough in practice because it is counter-intuitive. It requires a very different way of thinking. A mindset which can also look at issues indirectly, beyond the obvious and not always as a structured linear progression.

Also, this approach to strategy is meant for those with a much longer time-horizon. Of course, the results are equally long-lasting. You might have to walk slow, but like Abraham Lincoln, you’ll never walk backwards! This is not a glamourous approach. Definitely more practical.

To offer another example from the field which has given us the concept of strategy and contributed everything we know about it, including Sun Tzu’s work -- the Military. During the Kargil war, the attacks by the Indian Army which succeeded were the ones that followed, what is referred to in military jargon as, ‘the least likely approach’ (from the defender’s perspective). In practical terms, it meant climbing vertical cliffs. It was tough. Excruciating. But it got results.

Similarly, following an indirect approach in business strategy is fairly tough. But yes, it surely gets results.

To put things in perspective, an indirect approach is merely a means to an end and not an end in itself. ‘I go where he is not’ -- does not mean that you go where you don’t need to! If you go and stake your claim to a desolate spot where a presence doesn’t make sense, you’re only using up precious time and resources. Being different for the sake of being different is best left to teenagers and rock stars.

To clarify, at times, being present at the topmost end of a market is not profitable, but the positive rub-off on the products present in the mid-market or the lower-end is enormous. In such circumstances, though you are present in an unprofitable spot, it still helps you achieve your aim!
Moving down to the tactical level, ‘I go where he is not’ is just another definition of ‘positioning’.

After all, positioning a product is about being singularly defined in the consumer’s consciousness and excluding the competition from that space. When Ries and Trout first wrote about their concept of positioning in 1969, they also highlighted that you can never win ‘head-on’ against the market leader. You do not pitch what your competitor is already perceived to be. If you do, then you’re just a me-too. Instead, you emphasize yourself to be what he is not. Sounds like Sun Tzu talking?

You can also use this dictum to shape your leadership journey much more effectively. But as a warning, please don’t jump to the conclusion that you need to be different. It will only get you into trouble! More on that in another column.

Finally, an indirect strategy, above all, has to be aligned to your aim. It helps you get to your interim objective(s), making the move forward to your ultimate goal easier. As demonstrated vividly in the case of TKM, the MPV segment was merely the first step towards ensuring a successful passenger car market entry, which had always been the intent. You go where he is not in order to get where you finally want to.

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This article was originally published in Businessworld, in Wide Angle, the monthly guest column by Mohit Malik of Anoova Consulting’s Strategy and Leadership Practice.

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