To achieve success:

  • Eliminate the possibility of defeat
  • Wait for an opportunity to defeat the competition

Eliminate the possibility of defeat by defensive tactics. Such tactics require that a company obscure as much knowledge about itself from the competition, such that it may respond to competition in an unexpected manner.

The Mark of Genius

There is no genius in responding to the obvious. True greatness in defeating the competition requires that the actions of competitors be balked and foiled in such a manner, than when success is achieved; that a minimum of expense will have been undertaken. Yet the skilled CEO will gain little recognition, reputation, or credit for his success against the competition, for it will have been gained without obvious signs.

  • Japanese firms have systematically acquired the majority of manufacturers of silicon wafers and PC foil. In times of critical demand, they can give preference in shipments to their own fabrication plants, over their competitors.

The Importance of Avoiding Mistakes

Your company must adopt either a defensive or offensive strategy. Your decision should be based upon your resources. If your resources are inadequate, you should adopt a defensive posture. If you have an abundance of resources, you can take an offensive strategy with the objective of penetrating a market.

Success of a marketing campaign is achieved by not making mistakes. When the competition makes a mistake, success is achieved against a competitor which has already conceded the market.

  • Consider Atari and Sega. Atari used to own the electronic game market. But it made many mistakes and many thought the market for such products had disappeared. Nintendo carefully studied the mistakes made by Atari, and proved highly successful in achieving success in the market.

Five Elements of the Art of Business

The five elements of the art of business are:

  • Measurement of distances and types of terrain
  • Estimation of quantities
  • Calculations
  • Comparisons
  • Chances of success

Before making decisions on how to implement a strategy, you must make certain that you understand the nature of the market you intend to enter, the characteristics of the primary competitors in this market, the difficulty and cost of entering the market. Only after having determined that you can be successful in entering the market should you start to allocate people and resources to this effort.

How to Prevail over your Competition

The opportunity of prevailing against the competition is provided by the competition.

  • American semiconductor manufacturers decided that it was more profitable for them to use their fabrication capacity to manufacture higher valued parts than to compete against Japanese companies making “commodity” DRAMs.
  • Xerox neglected the low end copier market. It created a window of opportunity for Japanese vendors to enter the market.

Your objective as a CEO is to create the situation in which your people have no other other alternative but to succeed.

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