The five keys to understanding the use of opportunities to advance a position.
Art of War Quote:
"You can recognize the opportunity for victory; you don't create it."
Sun Tzu's The Art of War 4:1:1
Perspective:
"The reason so many people never get anywhere in life is because when opportunity knocks, they are out in the backyard looking for four-leaf clovers." Walter Percy Chrysler
General Principle:
Positions are advanced only by finding openings.
Situation:
This problem is identifying opportunities. One of the most common strategic mistakes is thinking that we have to duplicate the strengths of others in order to be competitive. The race goes to the swiftest. To win, we must be the fastest. However, strategic contests are more complicated than contests of skill. In competitive positioning, we seldom find opportunities duplicating the success of others. The opposite, finding success by focusing on the weaknesses of others, is the general rule.
Opportunity:
In normal usage, we use the word "opportunity" to describe any situation that offers an advantage or a combination of favorable circumstances. In Sun Tzu's strategy, we use the term "opportunity" to specifically to describe an opening in the direction of our goal. If we think in terms of advancing our position, openings allow us to move forward easily. Like all of strategy, an opening arises from a simple comparison (1.3.1 Competitive Comparison). An opening represents a vacant position that is relatively better than our current one. That position must be "open" because we don't want to get into contests to take positions away from those who already control them. These conflicts of strength against strength are just too expensive (3.1.3 Conflict Cost).
Key Methods:
To find opportunities, we must understand what they are and how they are created. The most basic rules are:
- Strategic economics dictates pursuing openings in our environment. No position is perfect. Relatively better positions offer a better balance of costs and rewards. Openings reflect unfulfilled needs in the environment. There are many specific types of costs and rewards, but, by pursuing openings, we avoid the most predictable cost, that of conflict and pursue the most predictable source of reward, the needs of others (3.1.0 Strategic Economics).
- Opportunities are constantly created and destroyed by the natural shifts in needs. Once an opening is filled, a need satisfied, the opportunity is no longer there but moves somewhere else. Phases such as a "window of opportunity" express our common sense appreciation for this. Opportunities are generated by the natural dynamics of the competitive environment. No one creates their own opportunities. All we can do is position ourselves correctly to be in the right place at the right time when openings occur. Opportunity creation follows a pattern. We learn to recognize where opportunities are being created (3.2 Opportunity Creation).
- An opportunity is only an opportunity if we have the resources to pursue it. Pursuing opportunities without understanding the constraints of our limited can be extremely dangerous. All openings are opportunities for someone, but we are interesting only in openings that represent our opportunities (3.3 Opportunity Resources).
- Large competitors create lots of opportunities smaller organizations. One of the most common reasons that we fail to recognize opportunities is that we tend to think of size as an advantage. Large organizations reshape the environment in ways that create openings and opportunities for smaller competitors. In competitive arenas, size advantages turn into weaknesses that we can exploit (3.4 Dis-Economies of Scale).
- A strength or fullness in one area points to the opportunity in a corresponding weakness or emptiness in another. Nature abhors a vacuum. We think of this emptiness as an unfulfilled need. Needs are vacuums that want to be filled. The ideal battleground is one that is empty but needs to be filled because of the nature of the opening. The most non-intuitive rules in strategy relate to how this emptiness creates wealth and power (3.5 Strength and Weakness).
- Opportunities are hard to see because they sit in gaps in our perception. We cannot see openings because there is nothing to see. We see success, but success is what happens when someone fills an opening. We develop mental models that allow us to see the gap between objective reality and our subjective impressions of it to find opportunities (3.6 Leveraging Subjectivity).
- We can discover opportunities by redefining the nature of the ground. Competition is based on making comparisons. The problem is that there are just some types of comparisons in which we are never going to look as good as we can. How comparisons are made is based upon a subjective decision. This choice either divides one set of contestants or one set of judges from another. This choice defines the advantageous "battle ground" (3.7 Defining the Ground).
- We can see opportunities by mapping the five key elements. There are many types of openings, but we miss many of our potential opportunities because we cannot "see" the concepts involved. Given the right techniques, we can map the five dimensions used in Sun Tzu's strategic analysis into a two-dimensional picture (3.8 Strategic Matrix Analysis).
Illustration:
Let us use some business examples from the Internet to illustrate what opportunities are.
- Strategic economics dictates pursuing openings in our environment. Yahoo, Google, PayPal, YouTube, Twitter, and all the other Internet companies found needs that no one else had satisfied on the newly created ground of the web.
- Opportunities are constantly created and destroyed by the natural shifts in needs. The advantage that newspapers held since the invention of the printing press faded as electronic media rose. It simply uses less resources to deliver news and information via the Internet. Google saw that the business advantage of the Internet was in advertising. As buyer's eyes moved from papers to the Internet, sellers needed advertising to reach them. Old media dies. New media is born.
- An opportunity is only an opportunity if we have the resources to pursue it. The old media didn't have the intellectual resources to provide their customers with an entry into the new media. Time/Warner saw the opportunity. Time/Warner tried to get into the Internet by purchasing AOL, but they lack the intellectual resources do master the new area. Google had the intellectual resources of a new search algorithm and was the first to connect advertising with searching.
- Large competitors create lots of opportunities smaller organizations. The culture of a large media organizations didn't allow it to adapt to the rapidly changing environment of the internet. Time/Warner/AOL at legitimized the new media and created opportunities for much smaller competitors. Those competitors rose up to eventually swamp the much larger company.
- A strength or fullness in one area points to the opportunity in a corresponding weakness or emptiness in another. The vast number of places offering text information on the Internet created an opening for the video information provided by YouTube. The detailed information on the internet created a need for brief information more suitable to phones offered by Twitter.
- Opportunities are hard to see because they sit in gaps in our perception. In a retail environment, we see shopping and buying as the same general process. The difference between the two processes becomes clearer on the Internet. We shop to learn what we want. We buy to get the best price and service.
- We can discover opportunities by redefining the nature of the ground. The division between shopping and buying has created a host of new opportunities for both shopping services where we learn, such as C/Net for information on electronics, and buying services where we save such as Amazon.
- We can see opportunities by mapping the five key elements. Using the matrix analysis, we can see both where the various competitors on the Internet sit and where potential openings are.