If we create a simplistic dichotomy between attrition and maneuver, we can say that attrition is a direct attack on an existing incumbent competitor, while maneuver always sees to win at the least cost while avoiding a direct attack. Attrition by its very nature is expensive, difficult work, because the incumbent competitor anticipates a direct attack and fortifies itself for such an attack.
Maneuver relies on three strategies to avoid a costly, direct attack. These include preemption, dislocation and disruption. Over the course of the next three posts we’ll highlight one of these strategies and describe it in more detail. Today’s focus is on PREEMPTION, or what we call the “gold standard” of maneuver.
First, let’s define our terms, to define what preemption is and why it matters. We define preemption as
moving to a valuable, unoccupied space before competitors in such a way as to win a new opportunity, segment or market, and in doing so build defenses to thwart fast followers from entering the space.
There are a couple of key points here. First, preemption is moving into a valuable and unoccupied space. This means identifying positions, channels, business models, service offerings or other empty but valuable spaces that competitors are overlooking or ignoring, or where these spaces are about to emerge. For preemption to work, the space must be unoccupied (no existing incumbent) which does not necessarily mean that there aren’t service options. Southwest demonstrated that there were fliers that he major airlines missed or overlooked, for example. Second, it’s only interesting if the space, channel or so on is valuable – can generate interesting revenues and profits. A space may be unoccupied because it does not offer value to the winner.
Differences between preemption and ‘first mover’
In a sense one could say that preemption is simply first mover advantage, taking the opportunity to move into a new space before others do. That is simply looking at half of the equation. Moving early is valuable, but only if you can create barriers to entry that stymie fast followers. Preemption is valuable because you can take a valuable position, but more importantly hold the position until you decide to move again. First movers are often the first losers, because lower cost fast followers enter the space on their heels once the market or customer base is validated. The first mover bears the cost of developing a market or space but rarely reaps the returns. A preempter is a first mover, but with the savvy to create barriers to entry for the fast followers who would seek to capitalize on an overlooked or emerging market.
Preemption relies on position
Preemption is based on identifying a valuable, unoccupied space – that is a market, a channel, an industry, a segment, a position that no one else occupies, but when the space is occupied its value becomes apparent. Other maneuver strategies can be implemented using a variety of tactics, but preemption can only be implemented by the concept of a valuable, unoccupied position. At it is this idea of a valuable, unoccupied position that allows a maneuver strategist to “win on the cheap”. Attacking an incumbent competitor who expects the attack is probably the most costly way to compete, while simply moving in and taking an unoccupied position that allows you to generate revenue with little or no competition is inexpensive.
Is preemption possible in a highly competitive industry?
The final question we’ll address today is one that executives and managers are bound to ask: is preemption a viable strategy in my industry? We believe that preemption opportunities exist in every industry, in every geography. Apple preempted Sony and other music labels with iTunes. Southwest Airlines preempted Delta and American Airlines in the low cost airfare market segment. Preemption is always possible, but it may require you to expand your definition of your industry or identify emerging segment or industry needs.