Perfect Biz Match | Transform | Taking Control of the Battleground

Taking Control of the Battleground

Through smart and aggressive marketing, you wrest the great majority of market share from the last few competitors in a battleground market. Or, alternatively, your company simply acquires some or all of the remaining significant players.

Battlegrounds are always difficult to survive, let alone thrive, in. If your margins consistently erode for a year or more, and there seems to be no way to stem the tide, the product or product line (or even the entire business) simply may no longer be viable. In other cases, a product's usefulness or demand may steadily decline to the point where something significant must be done.

Typical strategic responses to such situations include:

Trying to increase the perceived value of the product(s)
Lowering prices
Attempting to enter new markets in the jungle - or, occasionally, in the frontier, as Hewlett-Packard has done

Occasionally, however, a company will put together a series of moves that nets it a ruling position in a kingdom market. Usually this involves one or more mergers, acquisitions, or strategic partnerships. Ford has begun implementing a gutsy and ingenious plan that it hopes will transform the company from a warrior to a ruler. Ford is well aware that consolidation in the auto industry is occurring at a rapid rate, as cars become more resilient and useful for longer periods. The business of selling new and used cars thus has become difficult to grow, since the business of replacement is steadily slowing.

Ford has decided to address this problem by acquiring the ability to provide owners of all makes of cars with tires, after-market parts and supplies, light engine maintenance, collision repair, auto insurance, and parts recycling (i.e., auto junkyards). The company is working aggressively to do this throughout the world and, thus, to dominate the industry as the foremost full service car company. Instead of sharing the new and used car market with GM and the dozen or so Asian and European companies, Ford hopes to set itself apart as the premier source of everything connected with automobiles. The company would, in effect, become king of the hill by redefining the products it markets and the customers it markets to. Ford will soon compete on an unequal basis with the after-market companies, tire replacement shops, the auto accessories stores, the minor repair facilities, and the body shops throughout the world. As Ford implements its strategy, it will face off against all these smaller companies - all of which are, of course, vulnerable to price erosion and limited in their financial resources. Ford believes that, at some point in the future (though it may be decades hence), Ford will have accumulated a critical mass under its corporate umbrella, at which point it will be able to rule the market and set prices more or less as it wishes. If Ford succeeds, it will find itself in the enviable position of being able to control margins on a wide variety of products other than cars.

In terms of overall culture and structure, there is probably a closer likeness between warrior companies and ruler organizations than there is between any other pair of archetypes on the grid. Warriors and rulers both have generally vertical structures, and therefore are no strangers to bureaucracy and top-down management. Both types of businesses are driven by volume, and both are deeply involved in managing access to their products.

However, warriors are concerned primarily with constantly increasing their number of sales outlets or access points; in contrast, rulers want to limit and control them. Warriors share shelf-space with a few competitors; rulers want to be the only one on the shelf. (When possible, they will try to own the shelf itself.) These are crucial distinctions, and they have profound cultural and organizational ramifications for companies that need to make the transition from warrior to ruler.

Key Issues
After years of living with small margins and needing to sell millions of units in order to create worthwhile profits, managers in a warrior-turned-ruler organization will usually heave an enormous collective sigh of relief. They feel that they can at last relax a bit and take a few breaths. However, very quickly a new sort of vigilance needs to be put in place. Your organization will need to be ever on the lookout for other players that hope to make inroads into the market and take over the kingdom.

While it is by no means easy to knock a ruler organization off its throne, this can and does happen. In fact, it is not unusual for a competitor to quickly (sometimes within a few months) acquire the ability to deliver a product similar to the ruler's, at a significantly lower price.

This is exactly what happened in the early 1980s with the videotape manufacturing business. At the time, 3M had ruled this market for several years. Then, suddenly, Japanese-made video cassettes started appearing on shelves around the world. They had the same standard of quality, but were only one third the price. 3M management thought this was a ploy - that manufacturers could not make money at that price, and that they would eventually have to raise their prices. But 3M was wrong. It soon became clear that a new manufacturing process had been developed in Japan, and, as a result, Japanese companies could make a tidy profit from their cut-rate cassettes provided millions of people bought them. And, of course, millions did. By 1995, 3M was entirely out of the videotape manufacturing business, and its kingdom market had reverted to a battleground.

Warriors are traditionally concerned with getting access to as many different points of sale as possible. When they attain ruler status, however, they must learn to expend an equal or greater amount of energy and resources on undermining potential competitors wherever and whenever they emerge. Similarly, in a battleground, an organization responds to heightened competition by fighting harder - pushing for stronger sales, more points of distribution, and greater market share. As a ruler, however, it must learn a different form of aggression. A ruler organization can most effectively deal with market encroachment by temporarily undercutting competitors' prices, luring away their most valued people, and buying up competing organizations outright. The success of such efforts depends, in part, on continued vigilance and the ability to strike immediately when signs appear that a serious competitor wants to enter the market.
Warriors live by a few essential doctrines. One is volume. Another is lowest possible cost to us; and a third is brand value. As a warrior transmutes into a ruler, however, these corporate values need to change - and the changes will not happen automatically. They need to be carefully planned, implemented, monitored, modeled at the top, and supported on all levels.

First and foremost, the value of lowest cost to the company needs to replaced with highest price acceptable to customers. This value will drive many decisions and activities in the organization, including a commitment to support the innovation necessary to merit a higher price.

Volume should remain important to a ruler, but in the context that there should be a never-ending high demand for the company's product(s). Volume now needs to be induced not only by ever-increasing points of distribution, but also by the regular introduction of new forms of the product(s). These new product versions, in turn, must be backed by significant innovation - or, at least, enough innovation to increase customers' desire to secure any new forms of the products.

Microsoft's office products are an ideal example. Though Microsoft advertises continually, it does not make the same huge advertising investments that, say, warrior companies such as Nike or Miller Brewing do. Microsoft also makes sure that each version of each of its products is sufficiently new to customers to keep them coming back for more. (It is a function of a kingdom market that customers keep buying those new versions in huge quantities even when they are rife with bugs and glitches.)

Another substantial cultural change that needs to be made involves people's attitude toward innovation. In a battleground, innovation is basically about appearances. By definition, the product is a commodity which varies very little from one manufacturer or producer to another. The way to grow and retain customers, therefore, is to appear different enough to get them to choose your brand over the others. Innovation in battleground markets thus tends to be about appearance, convenience, or perceived effectiveness, not about new products or even a significant change in a product.  Indeed, a significant innovation can even cause a product to move out of the battleground and into a jungle, thereby requiring a change in the organization's whole approach and culture.

But as your company takes its place as a ruler, the rules change. The very reason your organization has become a ruler is that customers perceive its products to be significantly different from (and better than) all of its competitors. This perceived difference is the key to the company's future success, and therefore it must be carefully and thoroughly nurtured.

Now that your company has attained ruler status, its primary objective is to keep its products from becoming (or, at least, being perceived as) commodities again, things that are available from more than one source. This means that you can no longer think of new packaging or configurations as innovation. Your company has to get very serious very quickly about innovating by offering significant changes in its products; furthermore, it must provide the resources necessary to create and support such innovation. This means, among other things, enhancing each product in such a way that your customers feel a need to buy the new versions because they think that it will provide them with something that actually works better.

Lastly, the allocation of resources in your organization will need to change dramatically as you assume the mantle of an industry ruler. The amount of authority, status, and clout wielded internally by the functional departments (marketing, sales, manufacturing, research, etc. ) will also need to change, by increasing quickly and dramatically.

In a warrior company, these functions all share the same goal: to move as much product into the hands of customers as quickly, efficiently, and expeditiously as possible. This very goal needs to be substantially altered if your corporation is to maintain its ruler status. The new goal should be for each function to become the best in the industry. Each should exist in its own right, with its own mission and goals. Each needs to be strongly supported by all levels of the organization, especially at the very top. This means allocating human and financial resources to each department at levels that would be unheard of in a warrior organization. It also means having much higher expectations of each department: each should be expected to grow steadily stronger, and to add ever more value to the organization.)

However, depending on the type of products your company produces and industry in which it does business, one particular function should be the most influential. All functions are not (and should not be) created equal. For example, manufacturing companies will (and should) have more influence coming from manufacturing or engineering.

Pharmaceutical companies will naturally be heavily influenced by marketing and/or research. (Usually some tension arises regarding the amount of influence these functions have, and often considerable political jockeying takes place because of it. All of this activity, properly handled, can eventually create the energy needed to get products to market in a timely fashion. Handled poorly, however, it can slow down the processes of innovating and selling.)

Common Difficulties
Making the change from a warrior culture to a ruler culture means steering through several rather difficult transitions. Your company will need to create new skill banks, new organizational structures, new power systems, and, really, a whole new approach to business.

Here are the more specific dilemmas that your organization is likely to face:

Replacing the goal of maintaining or growing market share with the goal of continuing to dominate
Rulers donâ€™t (and shouldn't) share anything. They work incessantly to make sure there are no other serious competitors. They take no hostages. If they cannot dominate, they acquire. This attitude is quite foreign to employees and managers who have functioned in a battleground, where sharing the market is one of the most basic facts of life. Everyone is your organization is going to have to make this big shift in viewpoint, attitude, and expectations.

Moving from lean and mean to strong and capable
Warrior companies have cultures that are passionate about keeping costs down. So all the trappings that traditionally go with a ruler culture, such as rewards for success and specific achievements, may seem extravagant, wasteful, or even foolish to some of your people at first. Yet now that your organization can afford these rewards, they can and should be used to motivate people to take on more and more leadership. In fact, in order for your company to maintain its ruler status, it makes sense for it to spend whatever it takes to get the best of whatever it needs. Cost is no longer the issue; value to the organization is. In the past, focusing on low costs has meant compromising on other things. Now there is no need - and no good reason - to compromise when it comes to doing and being the best. (Of course, it still will be necessary to convince management that something is the best.)

But as a ruler, your company needs to be fervent about pursuing its important goals, even when this gets expensive. Innovation, for example, is very costly if you want to create new products that add real value to customers' lives. Acquiring the best minds is also expensive. But ruler companies can and should invest in both - as well as in keeping them away from potential competitors.

Changing the focus from small gains to big scores
Warriors are rewarded for advancing markets by small percentage points and gaining incremental amounts of market share. In a ruler organization, however these kinds of gains should be considered trivial. Ruler managers should be rewarded only for knockouts - e.g., when a potentially major competitor is thwarted or gobbled up. This means not merely dramatically changing the reward system, but getting your people to redefine their own views of achievement, success, and personal accomplishment.

Supporting a different kind of innovation
Warrior organizations need to come up with ways to differentiate their products from the very similar offerings of competitors. They have to show how their products are different from - and better than - the others ones that everyone knows about. (Saturn, for example, invented a new way for customers to interact with dealers without hassles or haggling.)

As a ruler, however, your company faces a different challenge. You need to show that each of your products is the only one around that does exactly what it does. The classic example here is Microsoft's Windows operating system.

Both of these types of innovation require talent, but they are worlds apart in what is innovated. In a ruler organization, every innovation the company comes up with must create clear added value, while a warrior company simply needs to differentiate itself from the competition.

Once your organization becomes a ruler, its big challenge is to create a culture that values and supports this added-value innovation. For many people in the company, this may mean making a big conceptual turn. Indeed, the very word "innovation" will need to be redefined as something that drives the company, rather than as a form of product differentiation and market posturing.

At first, people throughout the company simply may not believe that all the new talk about innovation is anything but lip service. The expectations of your research and development department will change dramatically; the department will need new people, new thinking, and new skills. To the old warrior people in R&D, management will seem to have gone mad. A similar perception may arise in sales and marketing if top management asks these departments to innovate the way the company's products are sold or distributed. Yet it is crucial that management make and maintain a very serious commitment to this new, tougher, more expensive, and vastly more valuable type of innovation.

Managing as monarchs instead of as generals
Because of their need to keep costs down and move large volumes of product, warrior organizations need a military-style leadership and power structure. Management gives orders, and employees need to follow those orders without questioning, interpreting, or changing them.

But a ruler organization cannot function particularly well in this way, just as a country run by a military dictatorship can never truly thrive.) What was a military chain of command now needs to become more like a benevolent monarchy, with a king or queen, an inner circle of ministers, a collection of ministries, and a body politic. Similarly, leaders of a ruler organization need to manage largely by generating collective political energy - that is, buy-in - rather than by simply issuing orders. This requires a huge change in the way both managers and employees think about leadership, roles, and their organization's culture. It also requires a whole new take on the meaning of time, since getting this buy-in is a time-consuming task. (The issue of speed is not as critical for ruler companies as it is for warriors.) Such a change in mindset can be made, but never quickly, easily, or without a considerable investment of time, energy, and resources.

Fostering independence rather than dependence
People who work in warrior companies are trained to follow orders and move products quickly through systems. Decisions are made at the top, and everyone is expected to abide by them more or less without question. This arrangement will no longer work in a ruler organization, however, since by its very nature these behaviors stifle innovation, independent thinking, and creative problem-solving.

If your company is to make the transition to a ruler culture, its people need to be given more flexibility in doing their jobs - and more support for making case-by-case decisions. There may be times when a customer may be better served by breaking a rule or two. This would be unthinkable in a warrior culture, and the errant employee would normally be punished or fired. Now, however, this type of behavior needs to be encouraged.

Some people in your organization will be intensely uncomfortable with this at first; a few may even feel it's a set-up, a trick, or a test of loyalty. In addition, since warrior organizations naturally attract people who like clear rules and black-and-white distinctions - and since such people have a particularly difficult time adapting - there will need to be some personnel changes. Unfortunately, this may mean getting rid of some of the company's most loyal and committed workers.

Executives and middle managers will have some serious adapting of their own to do. Essentially, they must learn - as Colin Powell and Dwight Eisenhower did - to become effective politicians rather than talented generals. They must learn how to create buy-in rather than demand compliance. (One general manager of a warrior-turned-ruler told me, with some pain in his voice, that he was under the impression that when his immediate reports agreed on something, that decision would then automatically move down through their departments. As a veteran warrior manager, it was difficult for him to grasp that, in a ruler company, important business decisions have to be systematically and carefully sold to people throughout the ranks.)

Solutions
It is absolutely critical that management understand that the transition from a warrior culture to a ruler culture simply cannot be made quickly or easily, no matter what consultants you hire and no matter how concerted your efforts may be. The scope of the change is roughly akin to transforming a military dictatorship into a benevolent monarchy. The success of such an effort will depend on having a wise and popular leader at the helm, and on people's ability to stay focused and patient throughout the turbulence and discomfort of the change effort.

Here are some specifics that will help your company make such a change successfully:

Make good use of your warrior ability to meet demand
As a new ruler, your company's big challenge will be meeting demand. While this presents a variety of difficulties, your organization will probably be in pretty good shape, because meeting large-scale demand in a kingdom market is not that different from meeting demand in a battleground. Indeed, many of the processes are similar. Because warriors are particularly good at moving product to the customer, with some tweaking this ability can be used to further dominate your market.

Learn the art of raising prices effectively
As a ruler organization, you not only can get away with raising prices, but you will have to, because you will need significantly higher margins in order to support the extensive research and development efforts that are now required. These R&D investments will pay off in significant innovation and creation of new, more valuable versions of your products, which in turn will increase sales.

But raising prices is an art, not just a technical skill. It requires careful research, proper timing, good judgment, and strong relationships with your distributors. Price-raising is a marketing skill that can be acquired only through practice and by taking significant risks. For this reason, do not depend on former warrior marketers to miraculously develop these skills. Instead, bring in some experienced ruler people to inculcate this skills in others.

Build crucial resources
Take pains to ensure that every unit, department, and person in your organization has the resources it needs to do business well. A high standard of competitiveness and quality is necessary if your company is going to continue to dominate. Fortunately, your company can afford to do this because, as a ruler, it now has both the margins and the market share to pay for continued quality and performance.

Microsoft, for example, realized early on that technical people were its most important assets. Since then they have gone to great lengths - some would say to extremes - to get the most talented people to join the organization. This has included hiring top-notch recruiters and setting up sourcing areas around the world.

It makes no sense for a ruler company to cut corners. Getting rid of fat and dead weight is smart, but doing things on the cheap just to save a buck will only hurt margins or reduce market share in the long run. Your whole organization needs to go from lean and mean to well-fed, well-designed, and well-managed.

Adaptation Issues
Managing the transition from warrior to ruler takes time, courage, money, and patience. It's a particularly complex transition because of the size of the organizations involved and the huge differences between them in how effort is focused and power is wielded. In particular, attend to the following:

Build a new overall identity for the organization
In order for groups with diverse organization cultures to come together, there needs to be a clear overall strategic goal that everyone in the organization can buy into - and that everyone will be rewarded for achieving. In addition, people throughout the new organization need to forget about the power systems they have been parts of, and build new allegiances and alliances that can hold the new system together.

Develop an overarching business strategy
For many companies, a business strategy is little more that a set of sales and profit projections for the coming year. This is particularly true of warrior organizations, since they live by cutting costs and increasing sales volumes. For a ruler, however, such a bare-bones business strategy won't do, since there is no longer such a bare-bones goal as moving as much product as possible as efficiently as possible.

In a kingdom environment, leaders need to create a specific and detailed strategy that people throughout the organization can follow and rally around. Furthermore, in making essential choices about products, markets, investments, resources, and systems, it is important to involve as many levels of the organization as possible. This not only helps leaders to make wise decisions, but it creates and supports cohesion among units, departments, and employees.

Set up vigilance processes
Counter-intelligence groups need to be set up to act as devil's advocates with the organization. Their job will be to surf the markets, investigate the competition, and look intently for where the organization may be vulnerable (or already in trouble). These counter-intelligence groups should report to top leaders, and their findings and recommendations must be taken very seriously (particularly at the highest levels) and communicated throughout the organization. This is quite a change from the typical warrior attitude, in which commands are issued and people are expected to carry them out without any questioning or hesitation.   Strong leadership is needed to bring the ideas of this groups to the front and to honor the people who bring them forth. Furthermore, it is essential that there be a visible way for these people to present their ideas and information without having them be rejected because of political issues. Open forums for presenting and discussing such information can be helpful. I also recommend that people with serious internal clout be appointed to manage (or at least head up) all projects that result from such investigation, counter-intelligence, and open discussion.

Lead the organization-wide change from the top
A ruler organization simply cannot function effectively without a strong, highly visible, and widely-respected king or queen. This person may be benevolent, and may have a roundtable of trusted people to advise them, but they must still personally rule the organization.

An effective queen or king encourages employees and managers to develop loyalty and faith in the whole organization. They also personally oversee he the entire transition process from warrior to ruler. As necessary, they should give extra attention to those parts of the new organization that may be in trouble (or that may be having a rough time making the cultural transition). It is crucial that none of this be relegated to a subordinate, no matter how much clout they might have.

In short, the leader of any ruler company cannot be a financial analyst who lives by numbers. Intelligence is critical. So is the ability to, explain, to connect, and to motivate. Charisma, while not an absolute requirement, is extremely helpful as well. Jack Welch at General Electric was a classic ruler CEO.

The bottom line is that a CEO can make or break a ruler company - and this is particularly true of a ruler that is emerging from its longtime warrior cocoon.

If there is any one crucial element behind becoming a successful ruler organization, it is the ability of its key people to neither resist nor underestimate the all-encompassing nature of the organizational transition. The company's entire culture must be turned inside out and upside down. There will be resistance, fear, and, very likely, outrage. But the enormous effort required is well spent nevertheless - for, when the smoke clears, your company will have transformed itself from a respected competitor to the market's one and only acknowledged leader.