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Imitating competitors can stifle growth

By pursuing an ultimate strategy as opposed to copying and pasting competitor strategies, Southwest Airlines has become one of the greatest entrepreneurial and leadership stories ever written. 

By DR. FRANCIS FONDO

Quite often, we witness instances where a corporate body takes a strategic action that had earlier been taken by another one. We read daily of companies shedding off staff as a reaction to similar moves taken by their competitors.  Mostly, this is done when new industry regulations or laws are passed by a state’s parliament or ministries. We also come across such actions when the economy is perceived to be in a downturn or some international events such as BREXIT or the return of Mercantilism takes place.

Occasionally, we also witness a corporate body appointing a global consultancy firm to study its operations and recommend a business roadmap for the future.  Soon afterwards, a company in the same industry does a similar appointment of the same Consultancy. The Consultancy body appointed by both Corporates administers the same prescription even though what ails one corporate may be completely different from the other.

What we see happening within the business environment is corporate imitation or what Michael Robert, author of the Power of Strategic Thinking calls a Me-too Strategy. The question that business leaders need to address themselves to is “Can a me-too Strategy put your company business in a position of market leadership?” What happens when every morning when you wake up, the first thing that goes through your mind is what your competitors are up to or what you will do in order to react to a strategic action taken by your competitors. Such a scenario can lead to many strategic mistakes.

Corporate shortsightedness

No company is the same as another in every respect. Companies differ in shareholder profiles and preferences.  The business philosophies and values should therefore be the main reference points for guiding strategic actions over the short term and the long term.

The story is told of a UK Company called International Computers Limited (ICL) which used to offer computers that were IBM Copycats.  That strategy worked only in protected territories favored by compatriot British Companies.  When these markets were deregulated, customers started to look for the real IBM machines.  ICL started receiving less and less orders and after many years of struggles and retrenchments, the company closed down many of its operations and only a fraction of its former size is currently in existence.

Chrysler, a US automobile manufacturer decided in the 1970 and early 1980s to position itself as the ‘American Mercedes”. Its cars were modeled along the technical specifications of the Mercedes Cars, going even to the extent of comparing its logo with Mercedes and pointing out the similarity. That strategy led to bankruptcy or what is known within the legal fraternity as Chapter 11 as car buyers started to go for the real Mercedes even though Chrysler’s Cars were going for half the price!

Clearly, imitation breeds disaster. There are companies that are not bothered by the actions of their competitors at all.  Wal-Mart, the global leader of retail Supermarkets does not spend any time worrying about JCPenny, K-Mart and Sears Roebuck in the USA or anywhere in the World.  Wal-Mart has a proactive offensive strategy that keeps surprising competitors and makes them irrelevant everywhere in the world.  In fact, it has already left several competitors in the Intensive Care Unit and it is doubtful if they will ever return to the turnaround medical wards and resume business.  Wal-Mart’s strategy is known as the Ultimate Strategy.

Surrender your personality

The most appealing Ultimate Business Strategy is that applied by Herb Kelleher of South West Airlines. His strategy is centered around people.  He emphasises this in the following words “in a lot of companies you have to surrender your personality when you show up for work.  We never felt that way, we always felt that if you allow people to be themselves at work, they will enjoy what they are doing.  We take a great interest in their personal lives as well.  There is no one at Southwest Airlines who has any significant event in his/her life, be it good or bad, a birth or a death, who doesn’t hear from us.”

To herb Kelleher, happy fun-loving employees is the route to happy customers. His function for managing employees is not called Human Resources Department.  Instead it is known as Peoples Department.  People are recruited for attitude not MBAs, degrees, and experience. Herb believes that it is possible to teach people how to provide customer service but changing their DNA is impossible.

Southwest Airlines’ Competitive Strategy is grounded on low cost, fun and intimate relationships between its employees and its customers.  One customer who had a heart attack at the airport was taken to hospital by the Airline’s Ticket Agent.  The agent remained at the hospital all night with the patient, calling his wife at regular intervals to let her know how the treatment was progressing!  The customer could not believe this brand of customer care!

By pursuing an ultimate strategy as opposed to copying and pasting competitor strategies, Southwest Airlines has become one of the greatest entrepreneurial and leadership stories ever written. In an industry plagued by fare wars, recessions and skyrocketing fuel costs that have resulted in other Airlines going bust, Southwest Airlines is the largest domestic Airline in the Unites States of America, with annual revenues of more than USD 12 billion, boasting 35,000 employees. All this has been made possible by using an ultimate strategy instead of a me-too strategy.

Dr. Francis Fondo is a member of Intergovernmental Relations Technical Committee. He is also a member of The Kenya Institute of Management. Email: francisfondo@gmail.com

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