The New Lanchester Strategy

Building a successful start up and fighting military battles have many of the same qualities

What does it imply?

• Founding a start up is not for the feint of heart, much like leading an army

• Takes vision, determination and a confidence to continue with your instinct in the face of adversity

The New Lanchester Strategy

• Takes it’s name from the English engineer, Fred W Lanchester

• He observed that size advantage on one side is the square of the number of units in in the force

• Therefore, two opposing armies go to battle, one with a 2-to-1 advantage, the firepower of the bigger army is quadrupled thus inflicting four times the punishment

• So, concentrate your smaller force to attach to a single point of an enemy

• Once that battle is won, move onto the next small chunk with your concentrated force and resources can overcome

• Theory based on the really old battle strategy of ‘Divide and Conquer’

The theory behind the New Lanchester Strategy• How much “fire power” will it take to beat an enemy?• How can concentrating forces into a smaller portion of an enemy

be a better strategy for victory

Small Army

Small Firepower

Small Force

Case studies

• Many prominent cases in history where a smaller force in sheer numbers has defeated a much larger army

• Two such examples are the Battle of Thermopylae and the Battle of Trafalgar

Battle of Thermopylae• Fought by the allied Greek states in 480 BC lead by King Leonidas of Sparta (The 300) against Persian

Empire of Xerxes.

• King Leonidas’ strategy was to defend the only passage way in

• Concentrated the battle at a single point

• Not have his inferior army flanked by the Persians

Battle of Trafalgar• Lord Nelson fought the Battle of Trafalgar in 1805, facing the combined fleets of France and Spain with

his numerically inferior force

• Split the superior enemy fleet into two

• Decisive concentration of force to the rear of the Franco-Spanish fleet

• Franco-Spanish fleet lost twenty-two ships, without a single British vessel being lost.

Canon and Xerox

• Utilized a similar "battle" strategy in their conquest of Xerox

• Overwhelming rival in Rank Xerox

• Took a foothold in the market by first concentrating its resources in Scotland

• Achieved a 40% market share

• Attacked selected and tightly defined regions in England

• Invested more and more in product development and sales resource

• Final push into the lucrative London market

• Superior product and a numerically superior sales force. Rank Xerox didn’t stand a chance

Check

Locate

Conquer

Expand

The New Lanchester Strategy in Business

• Transitioned into the corporate world for companies that are looking to enter existing markets

• For a small company looking to take on the incumbents

• For a new start up looking to formulate a battle plan

Market Analysis

If a single company has 74% of the market, the market has become an effective monopoly. For a start up, that’s an unassailable position for a head-on assault. (think Microsoft)

Market AnalysisIf the biggest player in a market has at least a 26% market share, the market is unstable, with a strong possibility of abrupt shifts in the company rankings. Here there may be some entry opportunities

Market AnalysisIf the biggest player has less than 26% market share, it has no real impact in influencing the market. Start ups who want to enter an existing market find these the easiest to penetrate.

Rules Deducted

attacking a company that holds a monopoly head-on is suicide.

no start up has enough cash to out spend an industry leader in marketing resources

you target a smaller aspect of that industry leader’s business

establish a foothold

greater chance of success

Example• Start up creates a portable music

player to rival the iPod

• Attacking Apple head on is impossible

• So plan an attack on a particular aspect

of the business

• Target an unloved demographic that is

being ignored by Apple’s marketing

department

• Establish yourself as the key leader of

portable music devices for that

unloved demographic

How to Battle

• Define the battle

• Can win with concentrated resources

• Very likely to win a small battle

• Could lead to eventual market dominance

• The most important aspect of the Lanchester Strategy is the need for concentration

• Split your much larger opponent’s force into pieces

• Take on each piece separately

The Take Away

1. The essence of New Lanchester Strategy is “Divide and Conquer”

2. Split the enemy force into multiple elements

3. Attack one part at a time

4. Its all about committing the maximum amount of your resources against the minimum amount of your enemy

Any Questions?

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