the new lanchester strategy
TRANSCRIPT
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The New Lanchester Strategy
Building a successful start up and fighting military battles have many of the same qualities
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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
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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’
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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
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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
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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
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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.
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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
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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
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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)
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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
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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.
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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
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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
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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
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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
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Any Questions?
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