Where to look for your real competition?

Recently I read “The Silent Deep”. This book vividly and in great detail describes the UK submarine service since 1945.(1) The Royal Navy had to be ready 24/7 to defend the realm against the Soviets. The Soviets were their single most important reason for existence. It was simple: the Royal Navy had to be ready to be up against the Soviets.

When the enemy is below you, not above

The book implicitly also shows how since 1945 the UK economy on a global scale declined in relative importance. Britain gradually lost its former imperial and leading economic status. The US economic and – by implication – military power became ever more overwhelming. In short: there was a numbers issue. Compared to the two leading cold war powers, Britannia had to rule below the waves with a relatively ever smaller submarine fleet. In the cold war years of 1945 – 1991 Britain’s global economic market share declined and with it declined the projected power of the Royal Navy that Britain could afford.

When “The Silent Deep” was published, the Cold War had ended some 25 years earlier. The authors therefore also had the opportunity to describe the Cold War’s aftermath. After 1991, there suddenly was a remarkable cordiality between a new and temporarily open Russia and a stunned West. The military top brass of former Cold War adversaries suddenly visited even each other’s most secret submarines. Stories were exchanged. Archives were opened on both sides. Vodka and whisky were shared.

During one such encounter, one UK officer simply couldn’t resist to ask his former Russian adversary this one burning question: what did the Russian Navy think of the Royal Navy’s submarine fleet as their adversary during the Cold War? The answer by the Russian admiral was as honest as it was shocking to the Brits. In my own words, he said that during the Cold War the Russian Navy considered the British submarine service highly professional but otherwise irrelevant. The Soviets had only worried about the US Navy. Russia had noticed the British – and respected what they saw – but had only worried about the Yankees. After having just read 591 pages describing toil and tears this was a tough message. The UK’s former adversary basically said that all these efforts had not made much of an impact actually.

What makes it worse is when you realize that the only time the UK’s post-1945 submarine service did have a decisive military impact was in the Falkland War. But the 1982 conflict that related to who governed what the Argentinians call the Malvinas islands in the South Atlantic, was neither a Cold War battle nor was it fought against a Soviet (sponsored) adversary.

Argentina had never played a major role in British naval planning. Amazingly enough the enemy had been below the Royal Navy, not above, in terms of ranking in military size and capabilities.

 

Why do we always look up when we should look down?

 Using metaphors or analogies has its share of risks but is so tempting that I do it anyway. What we saw above is that the Royal Navy looked up to outwit the Soviet fleet rather than looked down to the Argentinians, that while being overlooked, suddenly occupied/liberated the Falklands/Malvinas.

How often don’t we see a similar pattern in business. An A-brand company is focused on the segment leader in its global category from which it aims to win market share, while it meanwhile loses share to low-priced/decent quality private labels or cheap C-brand offerings. You can’t really impress the leader and eat his share but meanwhile become vulnerable to the cost cutters below you.

Like the Soviet Navy, the industry leader ignored its contender – the Royal Navy – because it feared an even stronger competitor itself – the US Navy – while the contender was attacked by smaller rivals – the Argentinians. Think of a company like Malaysian Airlines that about a decade ago still desperately wanted to win from a much larger and more reputable player like Singapore Airlines, whilst being hurt in its core business by a low-cost-carrier such as Air Asia.

 

Keep an eye on cheaper, disruptive offerings by unexpected players

Harvard professor Clayton Christensen in his book “The Innovator’s Dilemma” comes up with many similar examples2. All too often, cheaper, disruptive offerings by unexpected players surprised companies that were all too focused on their existing and usually larger competitors they knew so well.

We seem to have a habit to look at companies that we aspire to become rather than at companies that through innovative approaches or plain surprises aspire to have our business for lunch. There is nothing wrong with looking up to competitors that today may be larger, smarter and or more inspirational – but do it only when you first locked your back-door to competitors that are after you and that tend to come from ‘the Silent Deep’ below.

 

Notes

1. Hennessy, P. and Jinks, J. [2016], The silent deep – the Royal Navy Submarine Service since 1945, Penguin Books, London.
2. Christensen, C.M. [2000], The innovator’s dilemma, HarperCollins, New York.

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