Outthink the Competition

I recently read Krippendorff’s book, Outthink the Competition, which largely contrasts two approaches to gaining competitive advantage: the first approach is to do the same thing as everyone else more efficiently; the second is to do something different than everyone else that is more effective.

While this book champions the second approach, it does not entirely invalidate the first: there is a great deal of room for improvement in the efficiency of existing business processes, and only few categories in which there exists a champion who has so perfected every process that it seems impossible to challenge.  However, not much needs to be said about this approach as it is the one that is most often taught in business schools and most often attempted in the field, to the virtual abandonment of innovation.

Particularly for smaller firms entering established fields, competing on efficiency or economies of scale is simply not an option.   While it is not entirely impossible, it would be highly impractical for a small firm with an unknown brand to take on Walmart or Macdonald’s and attempt to beat them at their own game: these firms are already established, have massive economies of scale, and a long head-start in developing efficient processes for their operations.  So rather than attacking the giants by fighting in their field, using the tactics they invented, and accepting their rules, a smaller firm must find a different approach.

All of this is easier said than done, and Krippendorff comes up short on the details in many instances, but the basic theorem is sound: recognize that practices have become standardized, find an option that others ignore, implement it quickly, and do whatever you can to prevent your competition from copying you.

What’s lacking in all of this, which the reader is left to consider on his own, is the evaluation of this “different” way of doing things.   Not all new ideas are good ideas, and simply deviating from standard practices does not create competitive advantage unless the different approach is superior in some way that customers value.   So I regard this book as a rallying cry, but a great deal more market-specific and industry-specific research is necessary to put the author's advice to good use.