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Strategic Ways to Use Your Competitors’ (Internal + External) Flaws

As you have elected to be a part of the FIRMSconsulting community, today I am going to share with you another piece from a new book/program we are working on. It is focused on how to achieve a sustainable competitive advantage by uncovering flaws in your thinking and thinking of your competitors. This is from writing that I have done this afternoon. I hope you enjoy it.

Thinking distorts and alters reality 

One of the ways to achieve a sustainable competitive advantage is by identifying flaws in thinking of your competitors, and in your thinking. Identifying flaws in thinking of competitors should always be an element of competitor analysis.

It is not possible to see the world in which we live without distortion. First of all, the reality is richer than our ability to comprehend it. Second of all, our limiting elements, such as biases and blind spots, do not allow us to see reality as it is. We always see it as distorted. In addition, thinking about reality further alters reality.

This lack of correspondence between our thinking and reality sounds demotivating and frustrating. But there is no reason for despair. In many ways, it is good news. It is good news because our inherently imperfect understanding of reality opens unlimited opportunities for improving our understanding, and our reality. And what is further exciting is that improvement is infinite because perfection can’t be attained.

Humans need progress. Without progress, we perish. If we lived in a perfect world, with a perfect understanding of that world, with a perfect career, personal life, and guaranteed achievement of all our goals, there would be nothing left to strive for. And as the bible says (Proverbs 29), although it is often attributed to JFK, “Where there is no vision, the people perish.

This openness to improvement is a quality I observed in our most successful clients and business partners. And being close-minded to seeking improvement is a quality I observed in very successful strategists, people who used to “rule the world,” but since that time fell into mediocrity, not just mediocrity of performance but also significant deterioration of thinking abilities compared to abilities they had earlier in their career.

The most common characteristic I see in people who “should have been a president by now”—a president of a large organization, a president of a country, a president of their own meaningful business—but are not is this “I am the smartest person in the room” attitude. Given their upbringing, their education, their earlier career, their talents, or all of the above combined, they should have been doing something meaningful with their lives by now, but they are not. Instead, they usually failed in multiple businesses and went into forced retirement.

When you are with a person like that, they barely let you say anything unless they want some specific information from you at that time. They have an aura of “I am the only smart person here, you should catch my every word and kiss the ground I walk on.” It is quite funny and sad to see once you notice the pattern. Those are very gifted people who either didn’t have a good mentor to yank them out of their hubris or who refused to get help when it was offered and by now are too far gone. I met multiple people like this. They always have this one characteristic, which I believe is the number one reason for their failures later in their careers and lives. They are usually bitter, angry, and at times abusive people. Although they know how to put on a charm for a short while. And they could have contributed much more to the world than they did if it wasn’t for this one quality they allowed to expand and overtake them. This openness to improvement is fundamental to being an effective strategist and problem solver.

Moreover, this is good news because it means your competitors view reality in a distorted ways. And they may not be paying as much attention to it as you are. So you are in a position to uncover where the thinking of your competitors is flawed.

Taking advantage of flaws in your competitors’ thinking (and your thinking)

In more practical terms, this lack of correspondence between our understanding of reality and actual reality means there are infinite opportunities to uncover the flaws in your competitors’ thinking and take advantage of them. Identifying flaws in your competitors thinking should be part of competitor analyses. Let’s say you are a senior manager at a large organization, and you want to get to the executive level. There are significant flaws in “how things are done now” because of this lack of correspondence between understanding reality and actual reality. Not just your lack of understanding, but a lack of understanding by each participant within the organization. By uncovering these flaws and leveraging them, you can make it a “no-brainer” for you to be promoted to the executive level. We have done it many times with our clients and documented the entire process in minute detail on StrategyTraining.com for some of those cases.

An example of taking advantage of flaws in competitor’s thinking

As an example, take a look at the “How to Sell $10 Million Consulting Studies” program. We took a client, Andrew, whose career had stalled at the senior manager level, uncovered flaws in “how things are done now” within his organization and helped this client use the insights from the uncovered flaws to get promoted to partner within 3 years. We helped Andrew accomplish 2 major goals within 3 years. One, implementing the plan to build a new innovation business division/practice when he had no employees, no revenue, and no strategy, which eventually led to a $30MM revenue/annum business within 3 years. Two, as a result of the above, Andrew was appointed an equity partner within the 3 years by following a highly unconventional path: by re-building the firm’s failed innovation practice.

Andrew was never tasked with building a new division. No one saw him as a leader in the firm. The leaders of the firm did not even know his name. We had to work with Andrew to create the opportunity and lead the implementation. This made his journey that much tougher. Initially, starting with no support, no plan, and no team, we began uncovering flaws, leveraging them, and designing and implementing his plan. After some small successes of acquiring a total budget of just $150K, and signing authority of $5,000, we were able to leverage that initial success and build upon it to achieve total revenue of >$30MM within 3 years. And in that program, we documented every meeting, dinner, coffee chat, obstacle, plan, tactic, pilot, proposal, marital problem, client pushback, strategy, success, failure, etc.

Before Andrew, no equity partner had ever been elected from an internal role in this firm. In any corporation in the world, you are promoted by getting things done that generate profits. Fancy reports, slides, insights, etc., are important in consulting but less so in industry. In industry, those who make things happen are rewarded. Conversely, a leader with great insights who cannot implement and build a business will not last long. In the case of Andrew we were able to uncover flaws that became a foundation of the idea, and with no support, figure out the implementation steps to convert the idea into a stable, sustainable, and significantly profitable business within a major organization.

This particular program is very focused on the implementation of ideas, versus strategy development only. Understanding implementation is important. Strategy and operations studies are different, though both use the same core problem-solving tools: objective functions, decision trees, hypotheses, etc. Both strategy and operations studies generate a report at their conclusion. This report will list several benefits expected to result from pursuing the recommendation. Implementation is about ensuring the benefits from the report are achieved. In other words, if the report indicated $200M additional cash at the end of fiscal year 1, we should have $200M additional cash in the bank account by the end of fiscal year 1. An implementation may or may not require a large transfer of skills to the client. Once-off benefits can be achieved by consultants, but ensuring ongoing benefits, or benefits with a long payback period, need client employees trained to constantly achieve the benefits. Implementation is built on numerous change management techniques. Implementation is 70% change management and 30% analysis. The analyses are rarely fancy in implementation since delivering the promise made in the strategy/operations study, e.g. money in the bank is the true measure of success.

As we discussed in the chapter on the generation of insights, seeing other people’s career strategies and specifically what they did to accelerate their rise is an effective way to increase your chances of uncovering flaws in your thinking, in group thinking within your organization, and coming up with insight for an effective strategy for your career.

So how do you uncover flaws?  

So how do you uncover flaws in your thinking and your competitors’ thinking? First of all, when you look at the situation, you need to internalize that your understanding of reality is bound to be distorted. A recent example from my life where I failed to assume my view was distorted is that last year I acquired another business that has a very large email list and serves a completely different audience. It has nothing to do with business, strategy, problem-solving, or executive presence. It is a completely different audience, and my assumption was that in addition to serving this new different audience, I could also cross-promote my other companies’ products and services to this new audience.

My view of reality was proven distorted because when I started testing cross-promoting to this new large audience, it became clear that this completely different audience has no interest in business strategy, problem-solving, leadership, or executive presence skills. I do not regret acquiring this business. It is profitable and meaningful on its own. But this distorted view of reality is a great example of how important it is to remain acutely aware, at all times, that our view of reality is distorted. At the time of acquiring this business, I was convinced that my assumption would be right, even though my business partner, Michael, the genius that he is, pointed out that a completely different audience will not be interested, even to a small degree, to resources outside of their stated interests.

To find flaws, you can use a decision tree combined with hypotheses process we cover in The Consulting Offer. When forming a hypothesis it needs to be different from the accepted wisdom. In becoming skilled at identifying flaws, you will also come across flaws that are not yet generally accepted but currently have the momentum to become generally accepted, for a period of time. This becomes particularly helpful in investing. It allows you to take advantage of not only uncovering flaws but also of uncovering flawed hypotheses while understanding the weaknesses involved so, in case of investing, you can sell in time.

Related articles: 

19 Ways for Developing Strategy Insights

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