Source: Harvard Business Review
In an interview, Cisco CEO John Chambers once remarked on his intimate knowledge of rival CEOs. He claimed that based on this insight he could anticipate their market moves one or even two steps in advance. I thought he might be exaggerating, making good copy but lacking substance.
I decided to test his claim by interviewing current and former C-suite executives, including Bob Crandall, former CEO of American Airlines; David Norton, former CMO of Harrah’s casinos; Will Ethridge, CEO of Pearson Education; and Pat O’Keefe, former CEO of Watts Water Technologies. From plumbing equipment to casinos, these executives all agreed: what Chambers said was not only true but almost an understatement. In fact, I began to see four different strategies for keeping track of — and out-maneuvering — rivals:
Look for weaknesses that present opportunities. “It’s important to understand your rival’s weak spots and strategy,” says Will Ethridge, Pearson Education’s former CEO. “I knew one rival whose CEO was focused on driving profitability and bringing up margins. I knew that meant he would be relatively focused on short-term results while mostly ignoring product development. I also realized he would go after our top sales people to meet those short-term sales goals. So we worked extra hard to protect our key sales people. At the same time, we continued to invest in long-term product development and overseas markets, knowing it was unlikely he could follow us in the short term.”
Play to your strengths, not your rival’s. David Norton, former CMO and SVP of Harrah’s/Caesars points out that you must appreciate your counterpart’s competencies and weaknesses, as well as your own. Gary Loveman, then CEO of Harrah’s, was an MIT-trained economist. He had recruited other quant experts, such as Norton, formerly of American Express. They saw the casino business as a great numbers experiment. Among their rivals was Sheldon Adelson, CEO of Las Vegas Sands Corporation, who they believed operated from gut feel. He made a killing by opening casinos in Macau and Singapore.
Adelson’s bold move in Asia had outflanked Harrah’s. But Norton says the executive team didn’t conclude that they should abandon their quantitative strengths in favor of big rolls of the dice. Instead, Loveman decided to apply their deep quantitative knowledge of customer behavior in casinos and double down on U.S. expansion, out-maneuvering Adelson in the domestic market.
“We used data to personalize our marketing and become more efficient in attracting and holding onto customers,” says Norton. “And when it came to expanding our presence in the U.S. market we knew no one else would go to the extent we did, investing heavily in analytics, training and so on to build a comprehensive loyalty program.”
Encourage employees to monitor rivals, too. Former American Airlines CEO Bob Crandall, like Chambers, watched his counterparts, but more broadly he encouraged the entire corporation to watch the competition at all levels.
“It’s like running a national intelligence network,” he says. “If you are running it right, everyone is aware that anything and everything is important, and lots of information trickles up to management. For example, if a ticket agent in Chicago hears from an agent at another airline that the rival airline is looking for additional gate space, she should tell the local manager, who calls the division head who feeds it up the line. Senior management could then make some guesses about what the rival is up to, and could either add flights to use existing gates more intensively or take other action to blunt the success of whatever the rival might do.”
Meet the competition in person. You don’t have to watch your rivals from afar – or engage in deception to get close to them. In fact, face to face contact can pay off in unexpected ways. Pat O’Keefe was CEO of Watts Water Technologies, a global plumbing, water safety, and control equipment company. According to O’Keefe, his mandate was to grow Watts, largely through acquisitions. He spent most of his time seeking out and learning about acquisition candidates.
“I was personally obsessed with looking at our competitors,” said O’Keefe. “I wanted to know more about them than other bidders, when and if the time came to make them an offer. But there was no point in deceiving them. Their CEOs all knew who I was and they would very willingly show me their products. I visited them regularly to ask if they might like to join the Watts family of companies.
No matter the industry, John Chambers is right. CEOs not only can, but should, be watching their counterparts closely, assessing their strengths, weaknesses and predilections, and developing counter-measures accordingly.Read Original Article Here: