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The 5-Step Blueprint To Outthink Your Competition And Dominate Your Industry

by Kaihan Krippendorff

12 minute read

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    Accelerating your company’s growth is about more than outspending or outmuscling your competition. It’s about outthinking them.

    Outmuscling the competition is great, but if you can boost your execution plan with a disruptive strategy, then you can get that much farther, that much easier — and with fewer resources.
    Consider this story far back into history that illustrates the power of outthinking your competition.


    The Strategy They Didn’t Expect

    In ancient China, a general kept losing to a prince in horse racing. Frustrated, the general sought the help of an advisor. The advisor noted that since the prince was so wealthy, he would always have the advantage at the well-known strategies for winning: better horses, better riders, and better care and feeding of the horses.

    So, next time, the advisor told the general, we’re going to change how we play the game. Next time, instead of following the usual strategy of starting the races with your fastest horses, you’ll start with your slowest.

    Sure enough, by the end of the race, the prince’s horses were tired. And that’s when the general brought out his fastest horses — and beat his competition.

    That’s what happens when you introduce what I call a Fourth Option. You use a strategy that’s not a, b, or c, which are the accepted and predictable approaches. The option you choose is one the competition doesn’t consider or expect, so they can’t anticipate or respond to the outcome.

    This concept is a source of advantage in all domains — from sports to everyday decision-making. That means you can use it to develop business growth strategies that disrupt and dominate your industry.

    But how can you become an outthinker? How can you generate that Fourth Option?.


    5 Steps To Designing Your Innovative Growth Strategy

    There’s a 5-step blueprint for finding those innovative strategies that put your company on the path to achieving long-term goals. I’ve used it to help facilitate more than 500 strategic processes, and it works to guide your thinking into new areas.

    This blueprint for finding the Fourth Option is easy to remember when you think of it as an acronym:

    Imagine.
    Envision what the future will look like, identify long-term trends, and work backward to set your goals.

    Dissect.
    Explore multiple points of differentiation.

    Expand.
    Generate innovative strategies that go beyond the obvious.

    Analyze.
    Select, categorize, and prioritize the best approaches to pinpoint Fourth Option ideas.

    Sell.
    Build support, establish alignment, and get buy-in from your team.


    Let’s examine each step in embracing a new game … and outthinking the competition.


    Step 1: Imagine the Future

    The COVID-19 pandemic accelerated many trends that already were at play, from a digital transformation to the demand for personalization. What if you thought 10 years into the future and envisioned the environment if those trends continue? What strategy will you employ that keeps you relevant in this changing game?

    Think of it like this: My daughter always beats me at chess. Why? Because I just move the pawns forward, hoping maybe I can get her into a checkmate. But she thinks ahead. Then she works backward from the end goal as she decides what moves will get that checkmate.

    Unfortunately, when we create business growth strategies, we often approach it like I play chess: We’re novice players thinking about how we did last year, instead of looking ahead.

    Here’s a better way: Follow these 4 steps to determine where you want to go and how to get there:

    1. Imagine the trends.
    2. Consider the future you want to work toward.
    3. Picture the future you want in 10 years.
    4. Set strategic goals — for 1 to 3 years — that let you work backward from that 10-year vision.


    Maybe you want to be number one, double your revenue, or be the most-loved brand. That’s your checkmate. Work backward from there, thinking about where you need to be in the near term to achieve what you want long-term.


    Step 2: Dissect Your Business Model

    Now think beyond the obvious parts of your business. Consider multiple points of differentiation as you work to establish your Fourth Option. Look beyond the obvious places to think expansively about where you could do something exciting.

    As you examine business growth strategies, consider the following 8 Ps that are potential points of differentiation:

    1. Positioning: Who will your core customer be? What should your brand mean?
    2. Product: Will your product or service attributes need to change?
    3. Pricing: Should you change your pricing model?
    4. Placement: Should you distribute your product or service differently?
    5. Promotion: How will you get customers through your funnel?
    6. Processes: What key processes must you run? How should you operate?
    7. Physical Experience and Spaces: What should your customer experience be?
    8. People: Who do you recruit? How do you organize? What should your cultural values be?


    Airbnb is a perfect example of innovation across multiple elements of a business. The company started in 2008, and 10 years later it reached $4.8 billion in revenue. One secret to its success are its multiple differentiation points across many business owners.

    Its business model focuses on a new way to travel, offering a proprietary platform that leverages networks of hosts and guests. But beyond the surface, Airbnb serves an unmet, higher-order need: connection. The company’s culture is another aspect of its differentiation, with a focus on creativity to develop what Airbnb calls “unconventional solutions.”

    It’s hard to compete with a company that’s setting itself apart in so many aspects of its business.
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    Step 3: Expand Your Strategic Options

    Now that you’ve chosen which business areas are your focus, it’s time to expand your set of strategic options.

    You do this by generating between about 40 and 200 ideas. Many strategic processes call for generating 3 to 4 ideas and analyzing from there, but there’s power in generating many more options. Let’s go back to chess to consider this expansive approach.

    Master chess player Alexandra Kosteniuk challenged entire towns of people to chess games. During those events, she traveled from one player’s board to the next, winning game after game along the way. Research tells us that master chess players recognize twice as many patterns on the board as expert players, and grandmasters see 10 times as many. She won games because she saw more patterns than her opponent.

    I’ve identified 36 fundamental strategic patterns that successful companies see as they find Fourth Options to grow and scale. In my research comparing pairs of companies to determine which is higher-performing, I’ve found that high-performing companies often follow 5 strategic patterns in particular.

    Here are those 5 strategic patterns you’ll want to spend time with as you consider innovative strategies:

    1. Move early to the next battleground

    This pattern follows the notion that you should skate to where the puck is going, rather than where the puck is. It’s the most important strategic pattern to follow because cycle times are decreasing.

    Gone are the days of introducing a strategy and waiting 5 or 10 years for it to take hold. Today’s rapidly changing technology means we’re competing in an exponential environment, so you need to plan for today and tomorrow.

    Where is the next battleground?

    2. Coordinate the uncoordinated

    This pattern reflects a paradigm shift in today’s business environment. Where once power came from control, now it comes from coordination.

    You see this in nature, where birds fly in flocks, fish swim in schools, and animals travel in herds. It’s the coordination, not control, that creates the power. Uber doesn’t own the cars; it coordinates them. Wyzant doesn’t control the tutors; it coordinates them.

    What or who would you like to coordinate?

    3. Force a 2-front battle

    This pattern shows that today’s successful companies often don’t define themselves by their industries. They define themselves by something that might seem counterintuitive to their competitors.

    Ask yourself: What business are we in? You are a “something” company that happens to be in your industry. Flatiron Health, for example, seems like a medical practice management company, but it leverages data insight to help improve oncology care — an approach that garnered $2.1 billion when Roche purchased the company after 6 years.

    4. Be good

    This pattern embraces the idea that a company’s purpose goes beyond maximizing shareholder or owner value. A smarter strategy is one that benefits multiple stakeholders — because when your growth is good for the community, everyone wants you to win.

    How can you create a strategic power by doing good? Stockpile sells stock, for example, but it sells stock to children and first-time investors. My own son and daughter can attest to the fact that the company is doing good by encouraging strong financial literacy.

    5. Create something out of nothing

    This pattern focuses on the question: What would it look like to add something to the game?

    Gatorade was selling salty water on football fields for years, and they were growing. Pepsi and Coke didn’t notice this growth until Gatorade already was the Number One brand in the category — because it was adding something that wasn’t a line item on market share reports: sports drinks.

    Think about new stakeholders, occasions, categories, and needs.


    Step 4: Analyze and Choose Options

    After you spend 7 to 10 minutes on each of the patterns with your team, analyze the ideas you generate.

    You’ll have dozens or even hundreds of options to consider, so you’ll need to think strategically as you select your Fourth Option. Three steps can help you get there:

    1. Sort your strategic options
    2. Work on your “crazy” ideas
    3. Choose your Fourth Option


    Here’s matrix that helps you plot each idea you’ve generated:

    Using this matrix, ask yourself about each idea: Is it easy or difficult? And, if we did it, would it be high-impact or low-impact? As you sort this list, I encourage you to include strategies you’re already following because you’ll likely find other options are a better use of resources.

    What I’ve learned is that the Fourth Option — that innovative strategy that no one expects — is likely to be in that high-difficulty, high-impact square of the grid. The crazy ideas. But don’t be afraid to focus on that idea that seems impossible. It’s the idea you initially might want to laugh at, just as your competitors will.

    Sit with that crazy idea. Overcome objections to it. Then as you meet daily, weekly, or monthly, execute your selected tactics. You’re going to find some winning moves.


    Step 5: Sell Your Strategy

    Now that you’ve selected your strategy for how to grow your business, it’s time to sell it to employees and investors. There are 2 ways to execute this step:

    1. Build your communications strategy.
    2. Update your execution plan.


    You can build your communications strategy, so everyone understands your Fourth Option. If you’re using an execution methodology like Scaling Up, you can simply update your execution plan - the One Page Strategic Plan.

    In the Purpose, Targets, and Goals sections of your OPSP, insert the ideas you generated as you considered trends and near-term and long-term goals in the “Imagine” step from our blueprint.

    Under the 3-5 Year Priorities and Annual Priorities sections of the execution plan, list the Fourth Options you selected.


    Now You’re Outthinking the Competition

    So, you’ve generated those innovative strategies that are your Fourth Option. Here's all it took to get here:

    1. You looked ahead to Imagine the future.
    2. You looked beyond the obvious to Dissect your business model.
    3. You generated ideas to Expand your strategic options.
    4. You spent time with you ideas to Analyze and Choose your options.
    5. Finally, you built a plan to Sell your strategy.


    And now your execution plan is in place — and you start running in the right direction. With your slowest horses first, of course.

    And for the first time ever, the general wins.


    Dig Deeper to Find Innovative Strategies for Your Business

    Are you ready to dig deeper into this 5-step blueprint to find your Fourth Option?

    You can take action now. Discover how you too can design the innovative strategy that will propel your company in your market.

    It's all in my Outthink the Competition Master Business Course.
     

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    Kaihan Krippendorff

    Kaihan Krippendorff

    Kaihan Krippendorff is the creator of The Fourth Option™ approach, a strategic methodology that teaches executives and businesses how to seize opportunities others ignore, unlock innovation, and build strategic thinking skills. A former consultant with McKinsey Co., Kaihan has spent over a decade studying corporate conflict. He is the author of three business strategy books “The Way of Innovation,” “The Art of the Advantage,” and “Hide a Dagger Behind a Smile.” Each text delves into the keys to true competitiveness and innovation.Kaihan identifies mental patterns applied by great military strategists – from Sun Tzu to John Boyd – and applies those strategies to modern breakthrough companies, such as Apple, Whole Foods, and Rosetta Stone.