ASYMMETRIC COMPETITION: OR, WHY SPOTIFY IS BEATING SONY (AND NOW THEY’RE JOINING THEM!)

The corporation is dying…in some respects it’s already dead!

Well, maybe we’re over-stating things a bit. It’s not so much that the corporation is dead — what has changed is how they are organized and how they operate.

Senior executives sitting in corporate headquarters dictating to workers from down on high about what the strategy of the firm is, and how they will work, just doesn’t work anymore. Well, not if a firm wants to be successful that is. Traditional forms of hierarchical ‘command and control’ organizational structures and related ways of working and thinking just don’t fit the modern commercial environment. Not only are traditional powerhouses losing market share because of ‘upstarts’ in their industry — but competition is coming from firms in previously unrelated sectors. This is why companies like Sony are losing market share to Spotify and companies like Canon have lost market share to Apple.

An increasingly turbulent environment means that how organizations compete, where they compete, and what they’re competing over has changed dramatically, and continues to change at an ever-increasing rate.

These broader environmental shifts are not just impacting the business community.

Militaries around the world — some of the most hierarchical of all organizations — are modifying their traditional ‘command and control’ techniques. Drawing on analyses of guerilla warfare, the USA’s troubled time in Vietnam and problems with the recent and ongoing conflicts in Afghanistan, Iraq, and Syria — militaries around the world, including the US military — are focusing much of their organizational efforts and energy on preparing themselves for engaging in asymmetric conflicts.

Popular for a number of years in military planning circles the term ‘asymmetric conflict’ was first used in a 1975 article by Andrew Mack entitled Why Big Nations Lose Small Wars. For Mack, asymmetry meant a significant disparity in power between opposing actors in a conflict. This realization has been so powerful that it is one of the key factors underlying the continued evolution of the ‘Revolution in Military Affairs’ (RMA). The greatest practical shift in military planning and operations as a result of this change has been the growth of ‘special forces’ groups within militaries. Small, highly trained groups of operatives — these groups operate in a targeted and disruptive way in a conflict environment.

A similar shift has been underway in the broader business environment for decades as well. It’s almost twenty years now since Clayton Christensen published his book The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Demonstrating how successful companies can do everything ‘right’ and still lose their market position to new competitors Christensen’s work did much to attract leaders to the concept of disruptive innovation as a way to help ensure that their companies stayed ‘on top of their game’.

As a result of these shifts, and the work of people like Christensen, companies began to establish ‘skunk works’ operations or innovation centers within the broader organizational structures. However, while shifts like these have occurred, their impact is still generally relatively limited. This is because senior managers tend to think of these new structures and processes of working as ‘bolt on’ apparatuses that augment traditional capabilities rather than mechanisms to entirely restructure a way a firm might work.

In this respect many companies still subscribe to the corporate version of the military doctrine of overwhelming force — where the larger or better-trained military force will win the conflict. But given that since 1950 weaker actors have won the majority of all asymmetric military conflicts this does not bode well for established corporate actors.

As militaries around the world have re-configured themselves to deal more effectively with asymmetric conflicts since the early 2000s these changes have been accompanied by a range of other shifts including an increased focus on inter-operability within and between militaries. Almost twenty years later we are seeing similar shifts in the corporate world.

In early 2015 Sony shut down their ‘Music Unlimited’ service — originally set up in 2010 to combat moves by groups such as Spotify — and announced their new partnership with Spotify who would now power their new music service ‘Playstation Music’. Like global military powers — networks of organizations working together provides a way for all involved to create more value than operating individually might otherwise allow.

The key to success in this changing environment is the reconfiguration of structures to deal with the realities of increasingly asymmetric competition. Learning from the experiences of the military means that part of this reconfiguration is not only a focus on the creation and deployability of agile elements within an organization (like special forces elements within militaries) but also a focus on interoperability within and across organizational boundaries. While this will not guarantee organizational success it will at least allow larger organizational structures to begin to compete more effectively in the new market environment. Cross-organizational networks are an important tool to be used in the adaptation of organizations to these new spaces of asymmetric competition.

We’re in the midst of a Revolution in Corporate Affairs (RCA). Asymmetric competition is the new norm. Incumbent corporate leaders would do well to take a leaf from the page of the world’s militaries and understand how these competition asymmetries require that their organizations increase both the agility of their structures and processes while also looking to increase their inter-operability and engagement not only within their organization but with external partners too.

Images courtesy of: Pixabay

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