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Competitive Strategy: Not to Fight Wars of Attrition

An abundance of resources often incentivises businesses to engage in wars of attrition. Wars of attrition are simply based on the concept of ‘outlasting your enemy by losing less over a long period of time.’ You see wars of attrition in businesses under-pricing competitors out of the market. Wars of attrition always speak to a laziness or a lack of proper strategy on how to create value and be unique.

Yet businesses can’t be blamed. The creativity and efficiencies that often belong to businesses during their growth stages tend to be lost when they reach maturity. Thus, a dominant market player will always react to a new player through a war of attrition strategy. If a new player introduces an innovative product in the market, the existing player replicates the same product and offer it at a cheaper price. The dominant player is less interested in a profitable product, but simply to shove the new player out of the market.

The problem with wars of attrition is that they assume the other player is not playing by the same strategy. Secondly, wars of attrition tend to under-estimate the ability of the competitor to scale up, to gain resources or to be boldened by the battle. Wars of attrition exhaust both sides and tend to leave the market open to those that are not playing by the same strategy.

The space will always be open for differentiators. If Coca Cola and Pepsi played wars of attrition, it would probably create space for Riham Cola to move in and consolidate in the soft drinks market. The other problem with wars of attrition is that it bleeds both companies. The effects of bleeding will always be felt long after the war has ended.

There’s usually no clear winner in a war of attrition. We could talk of a pyrrhic victory. Wars of attrition are costly victories. Let’s assume Coca Cola won a war of attrition against Pepsi. That war of attrition will have left Coca Cola completely disoriented and distracted from its core strategy. Wars of attrition also take away focus from the critical questions:

  1. Where should the business play?
  2. How should the business win?

For those are the two questions every business should be asking. Wars of strategy are a result of not answering those two questions. An underdog could also lead a major player into a war of attrition to slow them down. This could mean one player taking on another not via price but via a data privacy and espionage accusation. This is meant to draw the major player’s hand into a direct confrontation.

But the rule stands; ‘only those deficient in strategy fight wars of attrition.’ Wars of attrition are not strategy. The best war is one you don’t have to fight. And fighting a war of strategy is an admission of failure of strategy. It’s a slippery slope into an abyss of business failure. You may win the war of attrition, but the victory will always come at such a cost that underscores all the benefits accrued.

Thus, business should always remember that when they are lost, they should ask the question: ‘How do we create value in a unique way, while making the most of our resources?’ And that value is shared value for their customers, their owners, their employees, their communities and even their suppliers. Those that figure out how to constantly create and capture value will find no need for playing wars of attrition. Wars of attrition are played by empires in decline, or those that already have nothing to lose (already underdogs) and thus benefit from making the big bleed.