Know your enemy (and theirs)

I’ve just watched the season finale of Game of Thrones; winter is coming, and enemies have partnered to confront a common foe. It got me thinking that sometimes you don’t know who your enemies are until they’re at your door. At that point, it’s good to have allies.
Know your enemy (and theirs) Know your enemy (and theirs) Know your enemy (and theirs) Know your enemy (and theirs) Know your enemy (and theirs)

For companies to survive and profit from change, they must take a fresh look at what they could be and find new allies

I recently discussed how competitors of the future might come from unusual places and play by unexpected of rules. In a world where Apple recycles metal rather than purchasing new, the definition of a ‘miner' changes, and with it the definition of a competitor.

It is tough to wrap our heads around this change. We live in a mental model that says: "we are a mining company and we compete with other mining companies." Organisations that think this way don't consider competing with their customers, or the customer of their customers, or with fantastical industries that don't yet exist (i.e. deep-sea or asteroid miners).

But what if you desired to see the industry in a new light? You might start with a simple question: "What is a mining company?"

Two basic perspectives offer a way to help answer this question:

  1. We are what we do: we find, mine and process ‘stuff' to extract a material; or
  2. We are who we serve: we fill a need, supplying metals and materials.

Both offers us the potential to disrupt and be disrupted.

Looking at a mining company through the first perspective results in a traditional scope; to discover, extract and process natural resources. Here, the miner competes with other miners, but the players are broader than that. New threats can emerge from non-traditional miners, such as those in space, or from biological or chemical solutions able to ‘manufacture' what was previously mined. Any company that could do this differently or more efficiently is a threat.

There is opportunity here as well, in the human, technical and operational capabilities that miners possess; these could be used elsewhere. Could the ability to explore for orebodies or manage large capital-intensive projects in complex societies suggest new business opportunities, markets or industries? Possibly.

The second lens broadens the scope, but also the threat and opportunity. Mining companies fill a need for metals and materials. This has worked for the last century, but things are changing. Chemical companies are designing alternatives to metals for industries like automotive and aerospace. Technology companies are considering acquiring metals from recycling (or perhaps becoming miners themselves). New manufacturing technologies, like 3-D printing, are demanding advanced metallic composites that could shift value generation from the raw material provider to the processor.

When looked at this way, the scope changes and the competitive set broadens significantly. Chemical and technology companies, advanced composite manufacturers and other miners, all make an appearance. The opportunity is to shift to the customer focus and invest in these new markets, but this requires a pivot that few executives or companies can make alone.

Friends might be able to help. And this begs the question: "who is the enemy of my enemy?"

Consider this: does Google compete with Whole Foods? The answer is yes.

This month, Google teamed up with Wal-Mart, which competes with Whole Foods, in a response to Amazon's acquisition of that company. This now puts Google in the grocery business and Wal-Mart in the technology industry.

Now let's look at a potential mining scenario, where Apple begins recycling and finds a way to compete for metal production. One approach is to ignore this, another is to enter the recycling market early on and shift the landscape. A third option would be to consider that Apple might also enter the automotive industry and develop an autonomous car, which would directly compete with Tesla. Might it make sense for a miner like BHP to enter the automotive market and ally itself with (or buy?) Tesla to provide itself with an advantage against Apple? It might.

This move impacts a potential competitor, provides BHP with locked-in metals customers and diversifies the company's portfolio into energy/automotive/technology.

However, there is the risk of going too far and losing sight of reality. After all, companies must deliver shareholder value in the present. One thing is clear though, sitting back and doing nothing won't help growth. For companies to survive and profit from change, they must take a fresh look at what they could be and find new allies to match new enemies.

After all, Winter is coming...

George Hemingway is a partner and head of the innovation practice for Stratalis, a growth strategy and innovation consultancy focused on helping leading organisations to think through the future and outperform in uncertain markets. Contact him at George.hemingway@stratalisgroup.com or on Twitter: @GeorgeStratalis