Judo Strategy

柔道

Team J

Scope

• The term first used (in business context) by David B. Yoffie and Michael A. Cusumano• Strategy for smaller players to take-on heavyweights• Example: Netscape v/s Microsoft, Palm OS v/s Microsoft• But, those companies didn’t do well..!• So, was it just a metaphor..?• Is it a full-fledged strategy?

Background

Judo Techniques

Movement

Balance

Leverage

Why “Judo-only” may fail..!

You

Competitor

Success..!!

Judo

Judo

Weaknesses of Judo

Netscape: - (Violated Judo Rules)•Refusal to cooperate with Microsoft and AOL: Remember leveraging rival’s resources?•Refusal to offer it free-of-charge (Microsoft did it!)

Palm: - (Mastered Judo Rules)•Avoided head to head battles with Microsoft•But was there any competitive advantage?

Failures of Netscape and Palm

"an ambitious and compelling ... dream that energizes ... that provides the emotional and intellectual energy for the journey ... to the future.”

Strategic Intent

ConceptStrategic Intent Judo Strategy

Ambitions Stretch targets Stay under radar

Competitive Advantages

Build Ignore

Sustainability Stable over time Short Span

Resources Misfit High degree of fit

Analogy Video Picture

Strategic Intent = Competitive Advantage + Competitive Innovation

Strategic IntentGary Hamel; C.K. Pralahad. Harvard Business Review, 1989

Competitive Advantage Competitive Innovation

Case Study- ebay

•The business mission was to create online market place

•Earned $3.3 billion in the 10th year of operations-Microsoft, Dell and Cisco Systems could not do it! (currently, it’s $7.7 billion!)

Yahoo! Amazon.com ebay

Market Cap. $37.1 billion $30.27 billion $41.66 billion

Revenues $6.9 billion $14.8 $7.6 billon

P/E ratio 59.15 64.66 123.99

ebay: Competitor Analysis

CompanyMarket Cap.

04/16/08

Yahoo 37.67BEbay 41.94B

Amazon 30.22B

ebay: Judo Strategy

•Ebay used Judo techniques throughout the journey: - •Select Niche (online auction); don’t take bigger competitors head-on (e-mail): (Movement) •Alliance with AOL: Grip the bigger competitor (Balance)•Use opponent's strength against it: capture auction market share on AOL network! (Leverage)•Avoid tit-for-tat: No response to “free access” strategy by Yahoo!, Amazon.com

ebay: Strategic Intent

•Establish Sense of urgency: - •Leverage networks; move towards striking ambitious deals (AOL)

•Competitive Focus: •Establish SWAT teams; weekly reporting

•Launch Initiatives: -•Buy PayPal (adding to business proposition)

•Establishing clear milestones: - •Objectives in terms of users, creation of communities

Conclusion

Create Urgency

Establish Milestones

Competitor Focus

Launch Progressively

Train Employees

You

Competitor Success..!!

Competitive Imitation

Competitive Innovation

JudoStrategy

Strategic Intent