THE JOURNAL OF LEADERSHIP APPLICATIONS
Vol. 10, No. 9
(626) 350-1500 Ext 102
© 2013 William A. Cohen, PhD
Chris Zane is the founder of Zane’s Cycles, a bicycle store in the New Haven, Connecticut area. As he was trying to get established, the competition was tough and he had to fight hard for every customer. How to compete against the Wal-Mart and K-Mart’s and other giants, much less the established independent dealers, was a major challenge for this small retailer.
Zane soon decided that he couldn’t compete directly. For example, he couldn’t offer a substantially lower price, a more extensive cycling inventory, better products, or a phalanx of products that had nothing to do with bicycles.
Because direct competition having to do with the product, price, and distribution were standard, he decided he’d have to differentiate in another way by taking an indirect approach. Zane decided to emphasize customer service, specifically the length of time that the service was to be provided.
Of course, everyone says they offer superior customer service, including extended guarantees of one time period or another. In his business the norm among all his competitors was to offer a 30-day guarantee on routine parts and service. Zane decided to jump up his guarantee to one year. It took his competitors two years to realize they were losing market share to Zane’s Cycles due to this indirect approach on “the flank” of the mainstream way of competing.
Competitors finally caught on and eventually matched Zane’s one-year guarantee. Unfortunately for them, Zane immediately doubled his guarantee to two years. When competitors tried to play catch up and followed him again, he went to a five-year guarantee. In the end, Zane offered a lifetime guarantee. Competitors thought that finally this was as far as he could go, but it wasn’t. Those competitors that were able, reluctantly extended to a lifetime guarantee. However, even that wasn’t the ultimate. Zane followed by extending his lifetime guarantee to everything in his store! And by then, he had plenty of additional cycling products to offer.
By taking an indirect approach, Zane had found a way to compete at which his competitors were always behind, and at which he had the advantage even though his competition in some areas were far wealthier and more powerful. As a result of his indirect strategy, Zane grew pretty powerful himself and soon was the number one bicycle retailer in size for his geographic area.
Zane’s Indirect Approach: How He Came to Risk with his Guarantees
If you think that Zane’s approach was sheer bravado and terribly risky, think again. This strategy may have involved some risk, but it was perfectly calculated. Early on, Zane noticed that few buyers brought their bicycles or accessories in for repair after the second year of purchase. An analysis of sales data showed that for those that did come in for repairs after two years, Zane made money since he did the repairs.
In addition, Zane calculated what any customer was worth to him over a buying lifetime. That’s why when a customer came into Zane’s store with a 6-year old pump that was completely worn out from use, Zane happily gave him a brand new pump. Let’s look at his economic analysis for this pump. This 6-year old worn-out pump was a top-of-the-line item originally costing $60. So you might jump to the conclusion that Zane was out $60. However, its cost to Zane was only about $30. Moreover, in this case, because of his relationship with the manufacturer, he was credited with the $30, so giving the customer a new pump actually cost Zane nothing.
Even if the pump had cost Zane $30, replacing it for free still made economic sense. The next two times this customer came in to Zane’s store, he bought $200 in accessories. Zane netted about $100. Moreover, when the customer decides to buy his next bicycle, where is he likely to go? So, Zane will make even more. And what about word-of-mouth advertising to other prospects? That’s probably worth even more.
Zane’s Cycles did not mean the competition head-on, but maneuvered around the competition’s flank to strike in an area of Zane strength against competition weakness.
Zane’s Cycles grew to become one of the top five bicycle retailers in the nation at thattime. No wonder that Texas A & M invited this Connecticut Yankee to come out to Texas to teach as part of the college’s executive-in-residence program!
The shortest distance between two points may be a straight line, but that is in geometry, not strategy. It isn’t necessarily the best direction to take to reach your goal when facing competition. Any football, basketball, hockey, or soccer player or coach can tell you that. Feinting in one direct and going toward another, drawing off the competition in one direction and then passing to someone not expected to score the goal is standard fare in team sports. It would be utterly foolish and predictable to simply head directly toward a goal, especially if this is where the competition is concentrated, simply because this involved a shorter measurable distance.
The Indirect Approach Mystifies Until It Is Too Late
If you have ever seen at a magician’s performance, you may have wondered at his ability to perform what appear to be impossible feats. In fact, his ability to “do magic” is based on an application of the indirect approach. While you are being misdirected by him to focus on something unimportant, he accomplishes something that you may well have noticed if you had not been distracted.
For example, consider the simple trick of rubbing a coin into one’s elbow until it disappears. One easy was of doing this is to announce what you are going to do. You then begin to rub. You “unintentionally” let the coin slide off your elbow and fall to the floor. You pick the coin up and begin to rub again. You again “unintentionally” drop the coin. You can repeat this clumsiness a third time. However, this time as you pick up the coin, you look directly at your audience and comment that this is a slippery coin. You begin to rub again. Suddenly, the coin is gone. What happened? While you looked at your audience and distracted them with your comment, no one noticed that you picked up the coin with your other hand!
Liddell Hart’s Analysis of Successful Strategy
Basil H. Liddell Hart was one of the leading military strategists of the 20th century. Some would go further and say that he was one of the greatest strategists of all time. Liddell Hart spent a lifetime studying the strategy of war and wrote numerous books on his analysis of the subject. Leading practitioners on both sides of many conflicts acknowledged his contribution to their successes and his fellow theorists from many countries recognized and acclaimed his brilliance.
The central theme of all of Liddell Hart’s work was that of the primacy of the indirect approach to achieving any goal. Liddell Hart concluded that the indirect approach was a law of life in all spheres and a truth of philosophy. He went on to show that in all areas of life related to the influence of mind on mind, direct confrontation only encountered, and in some cases actually provoked, a stronger and more stubborn resistance. However, resistance could be diminished, and thus success was far more likely, if an approach were taken which avoided the areas of strongest resistance. In most cases, what this means is sidestepping the position where the competition is the strongest and making your approach where he is weaker. Although, as we’ll see shortly, there is more to it than simply going where your competition is not, that indeed is one consideration.
The Indirect Approach Applied to a Strategy for Romance
Some years ago while conducting research into strategy; I heard a story during an interview that tended to confirm Liddell Hart’s contention that the indirect approach was the basis of successful strategy in all human endeavors involving mind-to-mind confrontation.
One executive told me that he had competed for his wife with another suitor. Alas, the other suitor was wealthier and was able to take this young woman on more dates and to better places than this man could afford.
Rather than go head-on in a competition he knew he could not win, this man took the indirect approach by signing up for a community college real estate course that he knew the woman he was interested in was also taking. His competitor could not take the same course, because of his business schedule. Sitting next to this woman in class, and taking her home after class enabled the man to spend a lot more time with her at no additional cost. “It only took one semester,” he said, “and we were engaged.” Thus the power of the indirect approach is confirmed for romance as well as in warfare and business.
How You Can Apply the Indirect Approach in Your Strategy
The indirect approach requires more than merely avoiding a competitor’s strength to approach a goal in an indirect manner. If this alone were all that were required, applying this concept to strategy would be routine and simple. But it is not.
If all you do is avoid a competitor’s strength and avoid approaching a goal directly, an adversary may spot your intentions and will take steps to redeploy his resources to counter your strategy if he can. You will gain nothing. Taking advantage of this principle means that your indirection must have some finesse. You must distract your competitor and get him to focus on something else of lesser or no importance – just as the magician does with his audience.
THIS MONTH’S THOUGHT FOR LEADERS
““Avoid a frontal attack on a long established position; instead seek to turn it by a flank movement . . .”
– B.H. Liddell Hart, Strategist & Developer of the Indirect Approach
Recent Linked Articles by Dr. Cohen not Published in the Journal of Leadership Applications:
5 Important Facts about Leadership from Human Resources IQ, Customer Management IQ, and Six Sigma Management IQ
Why Obeying the “Rules” of Job Search May Work Against You from Human Resources IQ, Customer Management IQ, and Six Sigma Management IQ
The Ultimate Means of Running an Organization Well from Human Resources IQ, Customer Management IQ, and Six Sigma Management IQ
The Most Peculiar Leadership Model from Human Resources IQ, Customer Management IQ, and Six Sigma Management IQ
You Must Know Your Strengths from Human Resources IQ, Customer Management IQ, and Six Sigma Management IQ
Peter Drucker and the Accomplishing of More with Less from Human Resources IQ, Customer Management IQ, and Six Sigma Management IQ
The Richest Source of Innovation from Human Resources IQ, Customer Management IQ, and Six Sigma Management IQ
Ignorance is Good from Human Resources IQ, Customer Management IQ, and Six Sigma Management IQ
Drucker, Executive Education, and the MBA from Human Resources IQ, Customer Management IQ, and Six Sigma Management IQ
Guess Who is Accountable? from Human Resources IQ, Customer Management IQ, and Six Sigma Management IQ
Yes, we do give international seminars — The U.S. country code is 01.
IF YOU LIVE IN THE LOS ANGELES AREA AND WANT TO FIND OUT MORE ABOUT A HIGH QUALITY, AFFORDABLE, MBA FOR EXECUTIVES AND ENTREPRENEURS IN OUR CLASSROOM WITH COMPLETION IN 11 MONTHS? GO TO www.gociam.org