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“And the meek shall inherit the earth” – Matthew 5:5, The Bible

The 1997 Quadrennial Defence Review (QDR)^[i], which reviews future US military force and structure, was where I read about the term “asymmetric strategies” for the first time. It was however first written about in 1975 by Andrew Mack in his book — “How Big Nations Lose Small Wars”. Its definition speaks volumes of the time of its writing:

“Asymmetric strategies attack vulnerabilities not appreciated by the target or capitalise on limited preparation against the threat. They rely primarily on concepts of operations fundamentally different from those of the target and/or from those of recent.”

The concept is not new in warfare or strategy. Anyone who has read Sun Tzu^[ii], understands the Maratha ganimi kava^[iii] or Mao‘s approach to warfare^[iv], will cotton on to the concept quickly. For the uninitiated, it says, “Never fight them on their own terms“. The QDR expects future enemy attacks to be in the realm of cyber, economic, and information warfare, where there is more parity between the US and enemy capabilities. 

A review of the concept by Ivan Arreguin-Toft, in his 2005 book, “How the weak win wars — a theory of asymmetric conflict”, analyses the data of asymmetric conflicts in the 200 years’ period from 1800 to 2003 and comes up with this startling trend of Davids winning more often than the Goliaths. The overall win percentage, sure enough, is still in favour of stronger actors but it has changed in recent years.

The major reason behind this is what Toft calls ‘strategic interaction’. Toft breaks down warfare strategies into — direct and indirect. In his analyses, he visibly demonstrates, through examples, that if the strategies adopted by both David and Goliath are the same, then invariably Goliath wins.  It is only when the strategic interaction is direct-indirect or indirect-direct, do the odds tilt in David’s favour. Slingshot vs muscles!     

An adaptation of this concept in the business world has been increasingly common in recent years, driven by a revolution in technology and communications. Innovation in process and technology, agility in implementation, and flatter organisation structures have also added to the arsenal of available options for smaller organisations to compete with larger organisations. 

Take the example of Netflix vs Blockbuster – a classic cautionary David-Goliath business tale. When Netflix started in 1997, Blockbuster was an $8 billion USD giant with 2800 VHS video rental retail stores around the US. Its profits were based on a late fees model that was very unpopular with customers. The DVD by mail subscription service started by Netflix was the first disruption. But it was a child of the dot-com era and had its eyes firmly fixed on the coming changes in the online world and faster download speeds. The evolution of its streaming service coincided with these changes and by 2010 it was well on its way to becoming the $203 billion USD giant that it is today. To think that it had once proposed a merger with Blockbuster for $50 million USD in 2000! Within ten years of that, Blockbuster was bankrupt and had ceased to exist.

With the growth of digital disruption in every industry, asymmetric business models have become a point of focus. There are several definitions crystallising around this theme. One of them, for example, is focused on growth by asymmetric means. To grow asymmetrically means branching out into a new market with the intention of not turning huge profits within that new market, but rather to drive profit in the core market. E.g. Apple creating the app ecosystem to sell more mobile devices (core business: hardware). Similar examples exist with Amazon and Google who have grown into behemoths in a short span of time.

Needless to say, this strategic approach is extremely useful for small and medium enterprises who usually have to compete with larger and well-capitalised companies. In this uneven fight, a few principles for adopting this approach are as follows:

1. Know your core strengths:  Have a clear understanding of your capabilities and where you pack a punch. Whether it be technology, organisation, design capabilities, or industry knowledge, an asymmetrical strategy demands a foundational capability that proves to be the main differentiator. Amazon’s opening of an online bookstore played on its technological capabilities rather than the actual book publishing or retailing business. It used its technological prowess to add value in every segment of the book business from authors to consumers.^[v]
2. Choose your battleground: This builds on Toft’s ideas of ‘strategic interaction’ and demands a clear understanding of the competition and how to keep them off-balance. The Obama Presidential campaign of 2008 didn’t have any of the resources Hillary Clinton did, to begin with — not cash, not experience, not a brand, nor relationships. Yet he achieved resource parity rather rapidly using asymmetric strategies which included things like handing over voter lists — a normally closely guarded secret — to volunteers who used their own laptops and unlimited night and weekend minutes of their cell phones to contact them and build a dedicated political organisation. Similarly, instead of large donations, the campaign encouraged micro-donations from supporters in a crowdfunding approach. Interestingly, the Obama campaign also refrained from the negative commentary of the opposition in a classic asymmetric approach to avoid a damaging like-for-like response from them.
3. Build customer trust and hold on to it: While this might sound the most obvious bit, building customer trust is vital in this era of institutional trust deficit. In asymmetric approaches, the ultimate role of the customer is that of a product/service evangelist. Having a direct line to the customer, providing an ever-increasing roster of value-added services, and soliciting feedback are among the key bits of building trust with a customer. Apple, Amazon, or Netflix are often touted as examples of how customer communities have been created using robust customer reviews and interaction. Domino’s Pizza has harvested the power of online communities on social media to reorganise its processes and products[vi]. KakaoTalk, a popular South Korean messaging application, has become a one-stop shop for its over 48 million monthly active users by introducing several products like banking, taxi booking, etc. These have been extremely successful as a result of inherent customer trust in the app’s platform and resultant customer evangelism.
4. Know your Financial Formula for Survival and Growth: Napoleon rightly said that an army marches on its stomach. He was referring to the supply lines of the Grand Army. In the case of a small business carving out its space in a competitive market, financial fortitude is vital to execute its strategy over a period of time. In the early days of Amazon, while it was competing with brick and mortar behemoths, its financial formula for survival and growth was clear. It did this by collecting payment from buyers well before it paid suppliers, and by initially declining to carry any inventory itself. This way it could slash prices on popular titles and still make money through the “float” interest it earned on the money paid by users for purchases.
5. Invest in asymmetric marketing tactics: The opportunity to use social media as a way to market products and services is quite easy and cheap today for several small businesses. But it needs to evaluate carefully from a ‘strategic interaction’ perspective. Large businesses also play the same game very effectively and are invested in the medium. So, a combination of tactics needs to be used to ensure maximum eyeballs on the product being marketed. In today’s world, data and analytics are a key foundation for these tactics. We can all hark back to Michael Lewis’s bestseller “Moneyball” on how the Oakland Athletics baseball team, used analytics rather than conventional wisdom to assemble a team competition to take on the likes of the New York Yankees, even though the Yankees’ payroll was more than three times the size of their salary budget. Data enables a small business to push the dial in targeted marketing in many ways. For example, propensity modelling, which attempts to predict the likelihood that customers will perform certain actions, is gaining increasing traction among marketers that use data proactively. Finally, leveraging elements of your brand that are often looked over, like packaging^[vii], can drive increased marketing opportunities at cheaper costs.
6. Adapt to change rapidly: While this is easier said than done, smaller firms have the advantage of structural agility that allows them to adapt to change rapidly. The important element in this is to foster a learning environment and culture that is not hostile to change and is comfortable with ambiguity. The infamous German Mittelstand, consisting of small and medium enterprises of up to 500 employees, has responded to the COVID-19 pandemic in an optimistic manner despite accepting current hardship^[viii]. Their tactics to combat the crisis starts with thinking and planning counter cyclically (going beyond firefighting). They have increased customer contact, renewed digital transformation initiatives, introduced flexible working options, and have started partnering in ecosystems that enhance their capabilities among other initiatives.
7. Build a motivated workforce around a rousing objective: The secret sauce to the success of asymmetric strategies is finally a motivated workforce that believes in what they are doing. Think Thermopylae and the 300 Spartans! The vision and values of the organisation should be more than words on a wall and should inspire commitment to every individual. To enable this, leadership has to walk the talk and invest in an open and transparent culture backed up by sound policies. The American retailer Trader Joe’s popularity and reputation is proof of the positive impact that focusing on your employees can make[ix]. For three years in a row, the retailer was named the most popular grocery store in the US. But customers didn’t say that because of Trader Joe’s convenient locations, low prices, great discounts, or broad selection. Instead, they cited cashier courtesy, fast check-out, and the store’s atmosphere and cleanliness. All of these attributes depend on committed employees. Trader Joe’s produced committed employees by offering competitive compensation, great benefits, and plentiful opportunities for advancement.

The SME sector of India is a huge unseen part of the economy, contributing to 45% of the industrial output, 40% of India’s exports, employing 60 million people and creating 1.3 million jobs every year.  As it grapples with the impact of the COVID19 pandemic, there is a need to understand how to tap into its massive potential in the coming days and make it even more competitive. While an initial financial injection can help stabilise it during this pandemic, the challenges of the future require an agile and asymmetric response to thrive. A leaf from the book of military strategy might just be the tonic required for this.

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References

[i] https://www.rand.org/content/dam/rand/pubs/monograph_reports/MR1387/MR1387.ch4.pdf

[ii] https://en.wikipedia.org/wiki/The_Art_of_War

[iii] Essays, UK. (November 2018). Guerrilla Warfare of Shivaji. Retrieved from https://www.ukessays.com/essays/history/guerrilla-wafare-of-shivaji-history-essay.php?vref=1

[iv] https://en.wikipedia.org/wiki/On_Protracted_War

[v] https://interestingengineering.com/a-very-brief-history-of-amazon-the-everything-store

[vi] https://blog.hubspot.com/blog/tabid/6307/bid/5426/how-dominos-is-using-customer-feedback-and-social-media-outreach-to-reinvent-its-brand.aspx

[vii] https://www.nielsen.com/us/en/insights/article/2016/uncommon-sense-asymmetric-marketing-small-investments-for-big-returns/

[viii] https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/how-the-german-mittelstand-is-mastering-the-covid-19-crisis#

[ix] https://www.cnbc.com/2020/03/09/psychology-behind-how-trader-joes-became-a-favorite-grocery-store.html

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Sandeep Hota is the Strategy Partner of Marg Advisory Services based in Bhubaneswar, Odisha. He worked in PwC UK and Canada’s Operations Practice for several years. He has over 14 years of business and technology consulting experience in diverse industries including infrastructure, higher education, retail, healthcare, IT services, energy, and telecom. Sandeep has strong project management skills and experience of working in cross-cultural teams across the world. 

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Disclaimer: The views, thoughts, and opinions expressed in the content belong solely to the author, and not necessarily to the author’s employer, organization, committee, or other related groups or individuals, including Marg Advisory Services.