IN 1932, Soviet-Russian biology professor Georgy Gause (1910-1986) did several experiments in which he combined yeast with a species of paramecium.
He discovered that not all species survive in the same environment. Some will be weak while others will be strong, even though they have the same biological makeup.
The same lesson can be understood in business: when two or more competitors offer the same product for the same market, one can prevail over the other.
In another series of experiments, Gause found that when Paramecium was paired with a different species, the result was that both could survive and even thrive in the same environment.
This is called the principle of competitive exclusion.
When applied in business, it means offering different types of products and services to customers, like what McDonald’s and Jollibee do.
Even though these two quick-service restaurants are competitors in the same market, they offer different amenities, ambiance and, of course, taste that attract customers. When you go to their restaurants, you can easily feel the big difference.
For one thing, you’ll find that McDonald’s menu offerings taste different from Jollibee’s langhap-sarap (literally, delicious aroma).
In other words, two companies (or the same species) cannot survive if they continue to copy each other.
What do Gause’s experiences have to do with business strategy?
I believe 98% of management experts will recommend having a strategy that can flow from the outcome of a visualization program to help understand one’s trading horizon and formulate solutions for it.
For a business to be successful, it must have at least a basic strategy to make things happen. This can be done using a strategic planning process that includes a review of an organization’s vision, mission, and value statements to ensure they are still in step with the times.
One of the most used tools is the SWOT analysis (strengths, weaknesses, opportunities, threats). “In the business context,” wrote academic and management theorist Richard Pascale (b. 1942), a strategy “refers to a process by which a firm researches and analyzes its environment and resources to select defined opportunities in terms of the markets to serve and the products to serve them.”
In a California Management Review article titled “Perspectives on Strategy: The Real Story Behind Honda’s Success” (1984), Pascale opined that having a strategy means making “discrete decisions to invest resources in order to achieve identified goals “.
Many goals can be achieved if we understand best practices. After all, smart people don’t rely on their “gut feeling” but on real cases that provide sensible lessons.
In the case of Honda’s spectacular success in selling its motorcycles in the United States, Canadian scholar Henry Mintzberg (b. 1939) examined two conflicting interpretations of the same success: one explained by the Boston Consulting Group ( BCG) and the other by Pascale.
Primarily, the BCG report claimed that Honda was banking on its success in Japan, which allowed it to achieve economies of scale.
Honda’s high volumes due to its strong home market customer base allowed it to enter the United States at a competitive price and allowed it to beat market leaders like Harley-Davidson, Triumph and Norton. Pascale was not convinced.
He felt that Honda’s success was due to its lightweight 50cc Super Cub model, which appealed more to the public than the heavy Harley-Davidsons designed for police and military use, but which also attracted sleazy groups. like the Hell’s Angels.
Honda capitalized on the marketing of the lightweight Super Cub model with the slogan “You meet the nicest people on a Honda” – an apparent rebuke to the Hell’s Angels.
This led Honda to discover the untapped American market.
Looking at Honda’s success story, should we compete head-on with industry leaders by offering the same product or discover a new market? The debate may go on forever, in business school and beyond, but surely the Honda effect should be revisited by those interested in creating a business strategy.
This remains an interesting case that depicts a marketing strategy of good versus evil.
Rey Elbo is a business consultant specializing in human resources and total quality management. Chat with him on Facebook, LinkedIn or Twitter or send comments to [email protected] or via https://reyelbo.consulting.