With the rise of Internet-based competition, David and Goliath battles between companies are becoming more and more common. Fast, flexible entrants are taking on dominant incumbents, not only in high-tech sectors such as software and networking equipment, but also in traditionally low-tech industries like retail. Well-known examples include the conflicts between booksellers Amazon.com and Barnes & Noble; toy retailers eToys and Toys R Us; and, most notably, Netscape, an upstart Internet-software maker, and Microsoft, the most powerful software company in the world.
Many of these companies use a competitive approach that we call judo strategy.1 In the martial art of judo, a combatant uses the weight and strength of his opponent to his own advantage rather than opposing blow directly to blow. Similarly, smart Internet start-ups aim to turn their opponents’ resources, strength, and size against them. Judo strategy is based on three elements—rapid movement, flexibility, and leverage—each of which translates into a competitive principle. The first principle requires judo players to move rapidly to new markets and uncontested ground, thus avoiding head-to-head combat. The second principle demands that players give way to superior force when squarely attacked. Finally—and most important—the third principle calls for players to use the weight and strength of opponents against them.
A judo combatant uses the weight and strength of his opponent to his own advantage rather than opposing blow directly to blow.
What judo strategists try to avoid are sumo matches. In a sumo match, combatants wrestle each other directly; the goal is to force the opponent either to the ground or out of the ring. Agility and brains matter, but weight and strength matter far more. If a small challenger gets into a sumo match—in other words, if it goes head-to-head against a large player with deep pockets—it is generally bound to lose.
What judo strategists try to avoid are sumo matches, in which combatants go head-to-head.
Judo strategy is a useful mind-set for any small company competing with a large, better-established one, and it’s especially well suited to turbulent, technology-driven Internet competition. However, judo strategy can be a powerful tool for any company—new or old, high-tech or low-tech, large or small. In fact, one irony of the Netscape-Microsoft story is that giant Microsoft has turned out to be just as skilled a judo player as Netscape—and maybe a better one.
Judo strategy is especially useful for any small company competing with a large, better-established one.
In the following pages, we will discuss the principles of judo strategy, as well as some of its limitations, using the battles between Netscape and Microsoft as an illustration.