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Changing Industry Rules
By Mark McNeilly

Sun Tzu says that you must continually change how you attack the competition, because if your actions are predictable, your opponent can easily defeat you.

Sun Tzu says that you must continually change how you attack the competition, because if your actions are predictable, your opponent can easily defeat you. "Therefore, when I have won a victory I do not repeat my tactics but respond to circumstances in an infinite variety of ways."

The same is true in business. One cannot continue hoping that the same business model and strategy will always bring success. Creativity and a willingness to change industry rules are essential! Companies that have successfully done so include Sears, which many years ago moved from catalog-based sales to retail sales, NBC, which moved from radio broadcasting into television, and more recently, Microsoft, which is moving from desktop dependency to the Internet and servers.

Your company must do the same. As a strategist you need to look around at the unwritten guidelines which drive the industry and the behavior of the competitors. What are their assumptions about how the industry operates and how one best competes? Are they trapped by these beliefs and unwilling to change? If so, you have the opportunity to "change the rules" on them by coming up with a new means of competing. For example, companies such as CarMax Auto Superstores and Republic's Auto Nation are changing the way cars are sold, challenging smaller, one-brand dealerships by selling Ford and Chrysler cars together.

Signs that industry rules are waiting to be broken include the introduction of new technology in the industry, changes in buyer wants and needs, unhappy buyers or very high profitability. Look for these signals....then win by changing the rules!

Information Warfare

With the rise of the Internet, the expanded use of computers, the increasing reliance by business on communications & information, the movement of government spy agencies into economic espionage and the increasing fragmentation of the world into special interest groups, the probability of Information Warfare increases.

First discussed as something specific to the military arena, IW is now a concern of businesses as well. What is Information Warfare as it relates to business? It's an approach to business competition focusing on the management and use of information to gain a decisive competitive advantage. This is done by leveraging and protecting ones' own information and info systems while denying your opponent information about your business. This enables your company to achieve "information superiority."

There will be several IW battlegrounds in the future. Toffler talks about the battle at the checkout counter, where retailers are using barcode information correlated with customer credit card numbers to gather buying pattern data at the individual level. By doing so they achieve information superiority over others in their supply chain, such as the manufacturers. This information provides them an advantage by strengthening their link to the customer at the expense of the manufacturer. Another IW battleground will take place on the Internet, as companies such as Amazon.com "disintermediate" local bookstores. By providing a huge "virtual inventory" of books that customers can browse through and order over the internet, Amazon is pre-empting their traditional competitors by getting to customers first.

The final, and more concerning battleground, is the NetWar battlefield. NetWar occurs when countries, companies, organizations and individuals penetrate their target's information systems to gather or destroy data. NetWar also consists of the spreading of disinformation about a company over the Net. Who might do this? A company's foreign or domestic competitors,a foreign government agency seeking to help domestic suppliers, a terrorist organization, a special interest group or a hobby hacker.

Therefore, to achieve information superiority it is mandatory that you both protect your own information and systems proactively as well as seek to gain access to as much business-critical knowledge as possible. You cannot afford to lose the Information Wars!



Mark McNeilly brings Sun Tzu's strategic principles to life as the author of  Sun Tzu and the Art of Business; with TV and radio interviews and with seminar presentations. For more information visit www.suntzu1.com

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