About the author  ⁄ Ben Gilad

BENJAMIN GILAD, PhD, is founder and president of the Academy of Com­petitive Intelligence, Inc., and with Mark Chussil, a cofounder and partner of Sync Strategy. He is a former associate professor of strategy at Rutgers University’s School of Management, and a pioneer in the field of competi­tive intelligence and war gaming. He has published seven books and more than 90 articles in academic and practitioners’ publications on the topics of behavioral economics, competitive intelligence, and business war gaming.

He has been running war games for Fortune 500 companies since the 1980s and teaching a course on war gaming as part of Fuld-Gilad-Herring Acad­emy of CI which grants CIP certification in the field of CI. The Strategic and Competitive Intelligence Professionals society awarded him its highest Meritorious Award in 1996.

He earned his PhD in economics at New York University, MBA at the University of Central Mis­souri, and BA at Tel Aviv University.

In my previous post, “Competing in the Age of Bill Ackerman,” I held that many executives insulate themselves from a diversity of views. This problem doesn’t plague executives alone. Managers, unaware of the biased source of their external perspectives, seem to follow some bad habits as well.

For one, an important way managers develop external perspective is by attending conferences where they can meet people with different perspectives, and hear a variety of views, some controversial, some less.

Alas, as a recent article in USA Today claims, the conference business has gone to the dogs. Worse, dogs without perspective.

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In one of the most intriguing articles I’ve read in a long time, The Economist’s Capitalism’s unlikely heroes suggests a different perspective on the rise of activist hedge-fund investors. These brash and vocal billionaires take small positions in public companies and act to fix mismanagement by trying to convince other shareholders to support cost-cutting, spin-offs, and returning cash to shareholders.

Unlike buy-out private equity, the activist hedge funds buy only a small amount of shares, and so they neither burden the target with loads of debt nor strip companies of their assets (that’s so 1980s). Unlike Wall Street investors, activists get actively involved in management decisions. Naturally, companies’ chiefs abhor them. Critics call them vultures. Boards try to poison-pill them.

More interesting than the acrimony between companies’ top executives and tormentors like Bill Ackerman and Dan Loeb is the phenomenal rise in the level of activity of these activists’ funds. According to The Economist, they’ve got $100 billion in their war chests (about 20% of all hedge-fund capital inflows in 2014). Last year they launched 344 campaigns against public companies including P&G, Apple, Microsoft, Pepsi, and even Netflix. As shocking as it may sound, one out of two companies on the S&P 500 index has shown an activist shareholder on its stock registry in the past five years.

Why is there such an increase in activists’ funds? Have companies gotten worse and caused an immune response?

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Have you seen the recent commercial by Weight Watchers, dubbed My Butt? It’s a beauty. I admit, when I read about it in the USA Today article “Weight Watchers: Butts are in for 2015”, I was male-curious. Sorry, evolution gave my brain an instinctive admiration for the female derriere. But when you watch the ad and read about the strategy behind it, you realize there is much more than meets the eye behind the behinds.

The story of how Weight Watchers came about to run the ad featuring female butts through a woman’s life is instructive of how strategy changes take effect in real life. Weight Watchers was founded on the premise that people who want to diet will find a structured program both convenient and supportive and will therefore be less price-sensitive. That has been true for many years as WW became a successful giant. On the way it used celebrities as the face of diet. That marketing mindset comes naturally to consumer-oriented companies in this field. Nutrisystem did the same with Marie Osmond, and who among baby boomers doesn’t remember Jenny Craig’s Valerie Bertinelli with great fondness?

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USA Today, MotorWeek, Cars.com, and an actual family tested and ranked family-sized, moderately priced sedans. The resulting article, originally published with the suspense-ruining headline “Winner is Hyundai Sonata Sport,” compared the Hyundai Sonata (who knew?), Chevrolet Malibu, Chrysler 200, Ford Fusion, Honda Accord, Mazda 6, Nissan Altima, Toyota Camry, and Volkswagen Passat.

I rate the results merely semi-interesting. The real story, though, is not about the cars. The real story is about the manufacturers and consumers. So here is what I learned from that riveting story investigating back-seat space and “giant grilles,” among other things of cosmic significance.

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You might think I’m announcing that today there is strategy in the United States. Such a discovery would indeed be welcome but it’s not what I mean. I mean that you can see strategy in almost every newspaper article. All you need is to want to see it!
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We tend to think strategy, in the sense of unique positioning, is for large companies with large strategic-planning staffs and large strategy-consulting firms presenting large bills. It might be that the opposite is true.

In large companies strategy is mostly tactical tweaks to the master plan that made them big to begin with. That strategy was the founder’s dream. It succeeded, and made the company large. The rest, as they say, is history, with a bit of tinkering at the margins.

The number of large firms that changed strategy or created strategy once they were big can be counted on one hand with perhaps four fingers left over. IBM (under Gerstner). (Apropos IBM, see also my co-editor Mark Chussil’s “The Holy Grail of Competing.”)

Did I say IBM?

Since small businesses are typically run by their founders, and since they haven’t yet accumulated the fat to sustain them for decades like large firms, if they are to survive they must have some unique positioning. If the business is local, we often don’t see “strategy,” but even a slight difference in activities can make, well, a big difference.

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You might think I’m announcing that today there is strategy in the United States. Such a discovery would indeed be welcome but it’s not what I mean. I mean that you can see strategy in almost every newspaper article. All you need is to want to see it!
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In Disruptive Innovation versus Old-Fashioned Strategy I admired the smart strategy of Elio Motors in bypassing some regulatory costs. It seems that type of entrepreneurial thinking is becoming a major theme of entrepreneurial strategies.

USA Today reported on the success of Uber and Lyft, startups that use smartphone apps to connect passengers with private drivers. In just four years Uber expanded to serve 128 cities in 37 countries; Lyft serves 67 cities. The companies’ strategies depend directly on skirting government regulations: they claim not to be taxis and therefore not subject to taxi regulations.

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Competition among writers has been reviewed on this site in a wonderful piece by Daniel Quinn. This piece looks at the other side – how literary agents compete and how market forces created an extraordinary market with headquarters in…Brooklyn.
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Beware, males! Let my personal experience serve as a warning for you who aspire to see your names on a best-selling novel.

Barriers to entry into a market can be obvious: a dominant incumbent, the need for economies of scale, etc. Sometimes they’re less obvious, such as political connections with government officials (e.g., see my article on Elon Musk’s Telsa).

But what do you do, and how do you compete, when the barrier is… sex?

No, not that. Gender.

We all know Silicon Valley is friendliest to males, especially white or Asian, especially young. But sometimes the sex barrier sneaks up on you, or at least on me, when least expected. Specifically, in writing and publishing.

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