Judo Strategy - How to Compete Like a Judo Strategist

by David B. Yoffie and Mary Kwak

Several best practices, as explained by past and current masters of judo strategy, can help you reach the top of your game. While there are no substitutes for mastering the concepts of judo strategy and carefully studying your industry and your competition, keeping these five rules in mind will help you become a better judo strategist.

Whether we are talking about Palm Computing, Intuit, or even big companies such as Charles Schwab, the most successful judo strategists have the discipline to maintain their focus. No matter how attractive outside opportunities appear, one lesson should remain to the fore: The more you focus, the easier it becomes to channel and make the most of your resources. Once your business begins to sprawl, it becomes much harder to direct your energies into a concerted attack.

As Halsey Minor learned after nearly sinking CNET by diverting essential resources into Snap!, "Know your limits. Only enter markets where you have a strong competitive advantage. Don't ever risk your core, unless you have to." "Singularity of focus," in the words of eBay CEO Meg Whitman, is often critical to success in judo strategy. "Our strategy," she notes, "is as much the art of exclusion as it is the art of inclusion, or what you are going to do."

Successful judo strategists also stay on the offensive. "Be a leader and stay a leader," as Donna Dubinsky (CEO of Handspring, Inc.) says. Once a smaller or weaker firm starts to play defense, the game is usually over. So "play offense and play to win," is the advice of Intuit founder Scott Cook. "If you play defense, you get a defensive mentality, and you start merely following your competitor," Cook points out.

But staying on the offensive does not mean taking on competitors head-to-head. "Life is too short," Cook says. "I really try to avoid a frontal assault against an established competitor." "You don't do frontal assaults against armies that are ten times your size. Those are suicide missions," echoes David Peterschmidt, Inktomi's CEO.

It is a common fallacy that fast-moving companies like the ones we describe live only by their wits. The most successful judo strategists plan two to three years into the future, looking beyond today's pressures and problems to the challenges that lie ahead. Executives at Inktomi, eBay, and Palm all maintain that long-term planning is necessary, even when competing at Internet speed. No matter how fast you're moving, you need to anticipate competitors' moves and customers' needs and make long-term investments that will not necessarily pay off in a matter of weeks.

While planning for the long term, however, good judo strategists must also be prepared to "pivot," as Rob Glaser (chairman and CEO of RealNetworks) says. "When we make trade-offs between short-term gain and long-term sustainability, we make sure that we are focusing on the long term in all the fundamental ways," Glaser explains. "At the same time, we are prepared to pivot dramatically in those select cases where you have to pivot in order to maintain your advantage." In a rare display of agreement between the two companies, Microsoft CEO Steve Ballmer concurs, emphasizing the importance of being prepared to "pulse" or flexibly engage new issues as they arise. By being constantly prepared to make quick adjustments in response to new competitive situations, Ballmer believes that Microsoft, a company with 30,000 employees, has proven on many occasions to be as a nimble as any start-up.

In order to exploit leverage, you have to critically examine your competitors' greatest strengths and find opportunities to turn them into sources of weakness. Consequently, judo strategy draws much of its power from counterintuitive thinking. As Scott Cook says, "The big asset of younger people and smaller organizations is they can think outside the box. They can see the world in an entirely different way. When you do that, the big competitors often will never respond. They will never get it. They'll never see it. Or by the time they do, it doesn't matter." But older and larger companies need not despair. By asking new questions, challenging conventional wisdom, and encouraging a steady flow of new ideas, established firms like Charles Schwab have demonstrated their ability to think creatively as well.

Finally, many judo strategists begin with good intentions but end up exhausting their resources on losing battles—especially in the Internet era, as new technologies and competitors create better ways to compete. But as David Pottruck, co-CEO of Charles Schwab, says, "If you're going to have to face the music eventually, why wait?" Pottruck and his team made the tough decision to cannibalize their successful discount brokerage business in favor of Internet trading and ultimately integrated their first Internet effort, eSchwab, into the main business at considerable risk to the company's bottom line. "Nothing good comes from waiting," Pottruck believes. "If you're going to change your business model, face the music. Delaying just erodes your position and gives your competitors a chance to spin from their position."

Excerpted with permission from Judo Strategy: Turning Your Competitors' Strength to Your Advantage, Harvard Business School Press, 2001.

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Mary Kwak is a research associate at Harvard Business School.