Underdog

“The strong do what they can while the weak must suffer what they must”  - Thucydides, History of the Peloponnesian War

The 2nd Peloponnesian War pitted against each other the two superpowers of the Hellenic world - Athens and Sparta. Ultimately Sparta was the winner, and Athens would never recover its former glory. As the exiled Athenian strategos Thucydides put it, “What made the war inevitable was the growth of Athenian power and the fear which this caused in Sparta.”

In a way though this grand perspective represents a kind of ‘salience bias’ - in this case identifying the causes of historic outcomes with the actions of the big players. It’s interesting, I think, to consider some other perspectives: in particular, those of a town between Athens and Corinth, called Megara, and a city on the Island of Corfu, called Korkyra. 

Megara and Korkyra were adversaries, with the former in particular feeling that the latter was thwarting its ambitions. By way of insurance, Korkyra negotiated defensive support from Athens, on the basis that their combined navies would be needed to see off the Spartans if war came. In turn, Megara persuaded its larger ally, Corinth, to up its game on the basis of the punitive sanctions Athens had imposed on Megara for an earlier provocation. Corinth was itself a major ally of Sparta, and pressed them for action. Sparta thus began to worry about the potential defection of its ally. Reluctantly, they edged towards war on the weak pretext of the ‘Megarian Decree’...

From this perspective at least, the two giants were almost the helpless pawns of two minnows.

Our recently published position paper, ‘Principles of Strategy for Owner Managed Enterprises’, although mainly concerned with the ways in which strategic planning needs to be modified to reflect the unique position of the owners, also looks briefly at the challenges and opportunities inherent in competing as ‘underdog’. The discipline of strategy as applied to business has its roots in the giant US corporations of the mid-twentieth century, and there is an oddly persistent view that this is where it should stay, but a good deal of progress has been made since then in developing and applying strategic principles for small and mid-market enterprises.

Strategy isn't the same as planning, it is the actual or envisaged competitive stance of the business. As a consideration, it is as relevant for an SME as for a multinational. Peter Drucker defined the purpose of a business as being “to create a customer” (see The Practice of Management, Butterworth-Heinemann (1955)). Business strategy is about doing this systematically, in an environment where there is competition for the customer’s attention.

We see the reluctance of many smaller enterprises to engage with real strategy (as opposed to the displacement activity of playing with spreadsheets) as being a kind of learned helplessness. It’s seen as being impossible to construct a credible narrative about competing with the corporate giants of the industry, for example, so we prefer not to think about it too much. We know that competitors are out there, but they rarely feature explicitly, let alone systematically, in our thinking.

This is potentially a missed opportunity. A small enterprise may be able to demonstrate an agility or bespoke capability which would break the systems of a larger monolith, or to dominate some domain - a locality, product niche or obscure channel, for example. A corner shop may think of itself as being unable to compete with Tesco, but its unique location and service mix may well be completely inaccessible to the giant. As long as those factors are valued by a customer segment, it has the basis of a winning strategy.

In particular, as with Megara and Korkyra, an ‘underdog’ may be able to improve its positioning by forming key alliances. Increasingly, corporate giants are seeking to partner with smaller, more dynamic and innovative enterprises, in order to counter their relative torpor. It’s perfectly valid to view such a relationship as being driven by the ambitions and perspectives of the smaller partner, rather than as an act of subjection to a behemoth. 

An enterprise with an effective strategy, of any size, is clear about the basis on which it competes. It is equally clear about what activities it will not engage in, and what customer segments are not its market. It will make sure that all aspects of the business are in alignment with, and drivers of, this direction of travel. An enterprise untethered from strategy will typically chase business indiscriminately, will engage in too broad a range of activities irrespective of where (if anywhere) it has real advantage, and will have people, activities and goals which are very often at odds with each other. 

And this is as true for a Megara as it is for a Sparta.

The Strategy Exchange position papers ‘Principles of Strategy for Owner Managed Enterprises’ and ‘How to Think About Technology’ can be downloaded free of charge at  https://www.theStrategyExchange.co.uk/articles/

For more on the ‘underdog’ perspective in the Peloponnesian War, see Freeman, L. ‘Strategy: a History’, OUP (2013) and Lebow, R. N. ‘Play It Again Pericles: Agents, Structures and the Peloponnesian War’, European Journal of International Relations (1996).