Competing with the HerdBy Robert W. Bradford
In teaching about strategic competency, I've often said that being different is far more valuable than most people realize. One only has to look at some of today's most spectacular business failures to see examples of this -- and yet, otherwise intelligent, highly-paid executives have a strong tendency to pursue strategies that are so similar to their competitors as to be indistinguishable. Why is this?One of the primary culprits of this phenomenon is the "industry expert". This is a person who makes his living telling people in a given industry "how things are done". Inevitably, if most of the key players in an industry listen to such an expert, his or her reputation is raised to a level that virtually prevents challenge from rational outside observers. Industry experts abound in some of the most troubled industries -- financial services, airlines and automotive manufacturing, just to name a few.
There is another, more irrational reason why herd mentality takes over the strategic planning of entire industries. Behavioral researchers have long noted that seeing people similar to ourselves doing something creates a strong impulse to imitate. This is a clearly irrational behavior, as it has been noted to affect, for example, suicide rates when there is a highly-publicized suicide. So, when executives at competing companies begin behaving in a way that is strategically irrational, we all have a propensity to copy their behavior and rationalize it as "the way you do things in this industry".
This goes a long way to explaining the baffling strategies of the dot-com boom and bust ("We don't need customers, we just need more investors") and the more recent and troubling crisis in the financial-services sector. While an objective outside observer could easily point out the inherent irrationality of the behavior in question, humans can become resistant to logic when they feel that "everyone is doing it". And yet -- here is one of the keys to great strategy -- the fact that "everyone is doing it" is a GREAT reason to do exactly the opposite.
How can we avoid this powerful impulse? What steps can be taken to avoid being one of the victims taken in by herd mentality?
- Understand that your company, and its situation, is completely different from competitors.
- Listen closely to outsiders who challenge industry norms.
- No matter how uncomfortable it makes you, strive for clear, perceivable differences between your strategy and the strategies prevalent in the rest of your industry.
Robert W. Bradford is President of Center for Simplified Strategic Planning, Inc. He can be reached by email at
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© Copyright 2009 by Center for Simplified Strategic Planning, Inc. Ann Arbor, MI -- Reprint permission granted with full attribution.