This captures 20 proven techniques to change the competitive equation, and some ways to think about how to apply that to your business situation. It's real-world examples provides a 1-stop shop for ways to think about your competitive play.

1. Turning Tables
Twenty proven techniques to change
the competitive equation

2. About Rubicon
• Help high tech organizations create market-
winning strategies
– Since 1999
– Practices: define, deliver, defend, optimize
©2010 Rubicon Consulting, Inc.
Page 2

3. Summary
• There’s infinite variety in competitive strategies, but
they almost all have one thing in common: They change
the rules
– Attack from an unexpected direction
– Turn an asset into a liability
• Almost all are business strategies, not just marketing or
engineering strategies
– You have to adjust everything you do to align with the strategies
• Sometimes the hardest step is coming up with new ways
to look at your business
– Thus this presentation…
©2010 Rubicon Consulting, Inc.
Page 3

4. 1. The Innovator’s Advantage
• Use your critical mass to add features faster than others can
copy
– Spreadsheets: Lotus vs. Visicalc
– Word processing: Text wrap around irregular graphics
• Why it works
– Leader has more money available for
R&D, and can use PR to set the agenda
for everyone else
– Leader picks the battlefronts, doesn’t
announce them until shipment
– Requires secrecy, heavy marketing of
new features each year
©2010 Rubicon Consulting, Inc.
Page 4

5. 2. Bundling and tying as a weapon
• Tying purchase of one product to purchase of another
– …to commoditize a competitor’s cash cow
– …to create barriers to defection
– …to shift pricing to something people don’t watch
• Examples
– Most famous in Gillette razors
– Cell phone purchase tied to service plan
• Forces competitors to also offer subsidized phones
• Enables exclusive bundling deals (AT&T iPhone)
– Netscape: Give browser away as a carrier for a
software platform (HTML)
• Make money from services, etc.
– Microsoft: Bundle browser into the OS
• Won the battle but lost the war
• HTML was still established as a platform – led to Google
©2010 Rubicon Consulting, Inc.
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6. 3. Get help from partners
• MySpace was the dominant social network
• Facebook made
two critical
changes
– Opened up
membership:
September, 2006
– Facebook
platform:
May 2007
©2010 Rubicon Consulting, Inc. Page 6

7. More on partners…
• …as an extension of your
core
– Intuit Marketplace
– Third party extensions/
applications for vertical
market accounting and
general business
management
• …as an integral part of
your core
– Salesforce.com App
Exchange
– “The premier hub for
enterprise cloud apps”
©2010 Rubicon Consulting, Inc.
Page 7

8. 4. Redefine the product
• Yahoo search: Gateway to content
– Use the search page to attract readers
• You actually want to distract them from
searching
– Works best with display advertising (brands
building image)
– Like a free soup kitchen run by a church
• Google search: Performance advertising
– The search is the content
– After they engage, get people to click on paid
links relevant to the search results
– Driven by performance advertising (pay per
click)
• The same function (search) transformed
by a completely different context and
monetization model
©2010 Rubicon Consulting, Inc.
Page 8

9. 5. Redefine the business you’re in
3,000
• Cable TV news 2,672
• CNN: We’re in the news 2,500
business 2,000
– Respected, dignified: The TV 1,500
news network of record
– Shining moment: Collapse of 1,000 728 694 694
the Soviet empire 500
177
• Fox: We’re in the 0
entertainment business
– Shining moment: Geraldo
Rivera with the Marines in Iraq
Cable news viewers, December 2009
©2010 Rubicon Consulting, Inc.
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10. 6. Commoditize a luxury
• Southwest versus the airline industry
• “The Romance of Flying” vs. “Greyhound of the
Skies”
• Works best when people
are being charged for
things they don’t value
– The question is not
whether they like premium
services; it’s do they like
them better than money
©2010 Rubicon Consulting, Inc.
Page 10

11. 7. Luxury-ize a commodity
• Change the context of the product
– Change the standard of what’s “good”
– Apply a national brand to a formerly local product
• Starbucks: Not selling coffee,
selling an experience
– An affordable indulgence
– Personal image (I am tasteful)
– Meeting with others
©2010 Rubicon Consulting, Inc.
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12. 8. Innovation in completely
commoditized markets
• The more commoditized the market, the more
impact a small difference can make
– Make it easy to understand and advertise
“A cup that doesn’t buckle” “No more twist ties”
©2010 Rubicon Consulting, Inc.
Page 12

13. 9. Segmentation as a
weapon (part 1)
• GM versus Ford 90 years ago 1918 Cadillac
• GM: Different BUs focused on
different segments of the market
– Plus central corporate infrastructure
for efficiency and accountability 1918 Chevrolet
• Devastating success against
Ford’s one size fits all
1918 Ford Model T
©2010 Rubicon Consulting, Inc.
Page 13

14. 10. Segmentation as a weapon (part 2)
• Nintendo vs. Microsoft
and Sony
• You don’t have the
money to compete
head-on, so carve off a
segment
• Family gaming
– Unique controller that
makes games accessible
to children and parents
– Created a new segment of
the console industry
©2010 Rubicon Consulting, Inc.
Page 14

15. 11. Attack a bystander
• Early 1980s credit cards
– Visa and MasterCard: the middle class cards
• MasterCard taking share from Visa; cards are
frequently confused
– American Express: the elite travel and luxury card
• Visa attacks American Express
– “It’s everywhere you want to be”
• Results
– American Express shoots back, increasing Visa’s
visibility
– Visa share increases from 44% to 51%
– MasterCard is the third wheel
©2010 Rubicon Consulting, Inc.
Page 15

16. 12. Matching product to
market
• Amazon vs. eBay
• eBay: an online flea market
– Caters to deal-seekers and adrenaline
junkies
• Amazon: an online department
store
– More comfortable buying process, but
more expensive
• Neither one kills the other, but one
is a much larger market
– Think about the future when you plan
your product
©2010 Rubicon Consulting, Inc.
Page 16

17. 13. Differentiating at
the bottom
• Target vs. Wal-Mart
• Target started by Dayton department stores
in the 1960s
– Discount department store
• Target logo to make it look very different from parent
– Parent company renamed Target in 2000
– Upscale, trend-forward goods at discount prices
• No PA promotions, no music, drop ceilings, wider
aisles
• Target profitable but only 1/10 the size of
Wal-Mart
– Gets much more attention that you’d expect given
its size
• Wal-Mart doing better in the recession
– Target goods are more discretionary
©2010 Rubicon Consulting, Inc.
Page 17

18. 14. Who’s your top priority?
“It's almost like
Lowes and Home
• Lowes vs. Home Depot Depot have switch
• Home Depot is newer and bigger (1978, places... Lowes used
2,193 stores) to be an almost
– Lowe’s is number two (1946, 1,616 stores) contractor-centric
• Lowe’s is more focused toward hardware store, and
homeowners rather than contractors Home Depot was for
– More emphasis on customer service (oriented nice, single-moms,
toward women, commission vs. flat salary) yuppie condo
• Home Depot failed to go upscale with owners, and people
Expo of age who might
– Higher prices need assistance, now,
the opposite is true.”
©2010 Rubicon Consulting, Inc.
Page 18

19. 15. The Japanese model
• Work up from the bottom
– Cheap products sold on price;
gradually climb up the quality
and price curve
• Usually viewed as a death
sentence
– Innovator’s Dilemma
©2010 Rubicon Consulting, Inc.
Page 19

20. 16. Who needs quality and innovation?
• Harley-Davidson vs. Honda
– Japanese motorcycles were
superior in features, quality,
pricing
• Harley realized: Sell a
lifestyle, not a product
– You don’t look like a tough
rebel when riding a refined
Japanese motorcycle
– Turned all the advantages of
Japan, Inc. against it
• The perfection of the product
devalues it
©2010 Rubicon Consulting, Inc.
Page 20

21. 17. Out-commoditize the
commoditizers
• Optimize your business to
produce high volumes
• Tie up critical components
• Put your manufacturing in low-
cost regions
• Create a strong global brand
• Nokia vs. the phone industry
– Beat Motorola, the Koreans, and
China Inc.
©2010 Rubicon Consulting, Inc.
Page 21

22. 18. Force the competition onto your turf
• Challenge competitors to compete in ways
that are difficult for them (and easy for
you)
• Apple vs. phone industry
– Phone industry advantages: Scale, distribution,
parts suppliers
– Had killed dozens of new entrants; Apple was
broadly expected to be roadkill as well
• Apple redefined the product
– Different form factor, with touchscreen
hardware the others didn’t dominate
– Heavily integrated software, leveraging MacOS
– Integration with iTunes music economy
– A single model where others produced dozens
(offset some of their volume advantage)
©2010 Rubicon Consulting, Inc.
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23. 19. Transform distribution
• Don’t change the product, change
the way people obtain it
– Cut out middlemen
– Increase availability
– Reduce prices
– iTunes is the current favorite example
• Amazon Kindle
– Publishers take 85% of book revenue;
e-books could return 80% of it to
authors
– At what point is it more profitable for
an author to publish exclusively
through e-books?
©2010 Rubicon Consulting, Inc.
Page 23

24. 20. (Your idea goes here)
• Put yourself in the shoes of your biggest competitor
– What assumptions have they built into their strategy?
• Can you invalidate them?
– Are they taking any customers or partners for granted?
• How can you appeal to them?
– What do they fear the most?
• Can you make it happen?
– What changes in the market would destroy their business?
• Can you make those changes happen?
©2010 Rubicon Consulting, Inc.

25. Questions to ask
• Which of these strategies could help us the most?
• What are the barriers to us adopting it?
– “We wouldn’t do that.”
– “We can’t coordinate our work that way.”
– “It’s too big of a change.”
– Talk to us; we’ll help you manage change. Because if you
don’t…
• What if someone used it against us?
©2010 Rubicon Consulting, Inc. Page 25

26. Win Markets
Helping high-tech firms transform their
visions into strategies, strategies into plans,
and plans into results.
www.rubiconconsulting.com
Define / Deliver / Defend / Optimize
©2010 Rubicon Consulting, Inc.