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Judo Strategy


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Judo Strategy

  1. 1. Judo Strategy: Introduction <br />Judo strategy uses movement, balance and leverage to win<br />Typically used by smaller companies who value skill over size and strength. Large companies use it to unite superior skill to move into areas where powerful opponents exist.<br /> Judo strategy used when competitor has a size and strength advantage and you’re unlikely to win by going head to head. <br />By choosing a smaller market incumbent accommodates you and does not fight you<br />
  2. 2. Judo Strategy: About Movement<br /> Movement – throws your competitors off balance and neutralizes their initial advantages. This buys time to strengthen your position. <br />
  3. 3. Judo Strategy: Movement Strategies<br />Don’t invite attack: enlarge your window of opportunity by delaying a competitor’s attack <br />Example: Capital One became a top credit card company by using the ‘puppy dog ploy’ by laying low/escaping the notice of competitors. Initial years marketing was direct mail, telephone solicitation. Celebrations were in –house. Rivals may have seen mails but could never understand strategy.<br />Define the competitive space-Intuit entered the personal finance software market by defining a new competitive space. It could not out-feature the competition so built a product with few features which most frequently used (like write checks) but made it fast and easy to use. Rival lost to Intuit.<br />Follow through fast: Ariba, a B2B e-Commerce software market used speed to win markets controlled by Oracle. Focused on getting many buyers and acquired many companies. Automated partnership integration by developing tools and training programs. Ariba had 160 buyer-side e-procurement deals compared to thirty for Oracle over 9 months. Moving too fast like Netscape can also fail. Have to sequence growth. Use partnerships to leverage resources.<br />
  4. 4. Judo Strategy: About Balance<br /> Balance- helps you engage with the competition and survive an attack.<br />
  5. 5. Judo Strategy: Balance Strategies<br />Grip your opponent: Amazon went into business with the competition when it started in the toy market. Worked with Toys “R” Us by working on a cobranded site. Grew and signed a 10 yr partnership with Toys “R” Us owning inventory and Amazon handled customer service. Joint ventures, partnering and selling your services to rivals are some ways to grip your opponent. <br />Avoid tit for tat: eBay preserved its balance despite repeated attacks from competitors- Yahoo, and Amazon. Yahoo launched its own auction using the same model as eBay and even let sellers list for free (eBay charged sellers). eBay reacted by setting a SWAT team that studied every step of Yahoo’s auction and studied what was good (and not good) to leapfrog Yahoo. Did not react tit for tat by making seller listing free. eBay matched Yahoo on other innovations such as more pictures, faster registration, etc.<br />Push when pulled: Drypersfought P&G in the diaper business. Drypers offered diapers at a lower price so P&G reacted by offering $2 coupons. Drypers did not have the resources to campaign so told customers that the coupons of P&G can be used at its stores. In the Walmart and Kmart competition, Kmart did not retaliate with lower prices but weekly specials. <br />
  6. 6. Judo Strategy: About Leverage<br /> Leverage: Using given resources to magnify an outcome -helps you bring your opponents down. Find what’s most important to your opponents and then force them to choose between destroying those assets and responding to your attack. Usually they will not destroy assets.<br />
  7. 7. Judo Strategy: Leverage Strategies<br />Leverage your opponent’s assets: Charles Schwab decided to remove the IRA account fee of $22/year for all accounts over $10,000 to win people over from Fidelity and Merrill Lynch. Fidelity had an IRA customer base 5 times the size of Schwab. Schwab thus used the size of opponent’s assets to hold Fidelity hostage. Fidelity would not be able to do the same as it would lose a lot of money. Schwab on the other hand would lose $9 million but would gain it back in 2 years from new customers. Schwab did get the new customers within the first year and Fidelity was forced to follow suit after waiting for 2 years but by then Schwab had achieved its goals. <br />Leverage your opponent’s partners: Sony gave free reign to its partners (software developers) by charging no royalties and providing an open source platform for its PlaySation thus gaining leverage over Sega and Nintendo who charged royalties. Outpartner your opponents by showing other companies that they can do better working with you. Force your opponents into unpleasant choices by pitting them against their partners. <br />Leverage your opponent’s competitors: Bring your opponent down by collaborating with competitors. By adding value to competitor’s products, by building coalitions with competitors and by serving as a distributor for competitors. JVC was making VCRs in VHS format and competing with Sony who made VCRs in Betamax format. JVC could not compete with Sony (better marketing, distribution and manufacturing abilities) so built coalitions with Matsushita, Hitachi, Mitsubishi, Sharp and Sanyo (all rivals of Sony). Due to this JVC won the standards war. <br />