The Sheep That Leads the Flock
Or: How Blindly Following Your Competitors Could be Giving Them the Edge
While discussing company matters, a colleague of mine dismissed one of the options available to us by saying: “this would have us acting like mindless sheep.” Living - and also driving - in Ireland, I have somehow become aware of sheep, and narrowly avoided a handful of them on numerous occasions when visiting the family in the neighbouring county. And while I got the point my colleague was making, I thought (to myself!) that she was perhaps being a little unfair to the animal, at least some of them.
I have indeed come to observe that there is always one sheep leading the flock. The one that is is by far the most audacious. The one that moves forward with a purpose and you want to watch out for as it gives little warning before venturing your way. The other sheep following it seem to trust their ‘leader’ with their lives. They may sometime seem like they too know where they are going but would not appear exactly sure why they do so. They should however feel much safer, as I can easily anticipate their every move...
My apologies to the zoological community for this cliché, but it actually illustrates a phenomenon I have also observed in business. It is not so rare to see supply chain design decisions – for example – being ultimately made on the basis that the market leader or a competitor is “already doing it.” The reasoning is not totally unfounded. The leader might have invested a lot of time and effort coming to the conclusion of setting up its operations one way or another. He may also have somehow paved the way for others to what may have once been a Greenfield territory (with literally no road leading to it, never mind a broadband connection!).
The issue is that the leader’s decision was made to solve for the leader’s challenges, to meet its own business objectives in consideration of its own profile. By “blindly following the leader” and trusting that its choices should also be right for them, some companies may not fully realize that they might be ignoring all of the above. The competitor may have chosen - for example - the right solution for a high volume/low variability product portfolio well suited for automation, a low inventory model enabled by a stable demand, a distribution location at the centre of gravity of its market base to supply a particular channel, a centralized solution that may correspond to a lead-time acceptable to its customers and made affordable by its global freight agreement, or perhaps even just suited to its own financial/legal structure.
All these criteria are probably some of the factors influencing the leader’s decision. Some of these may be totally irrelevant or worse, contrary to your “challenger position” in the market. Following the leader may in some cases be damaging to your business and end up serving the competition more than yourself, where you may benefit from a differentiated strategy.
Often perceived less risky, easier to justify and sometimes even a cheaper option than status-quo (but not necessarily the cheapest option), the decision to ‘jump on the bandwagon’ is very tempting at first glance but may not be the best suited decision for your success. My personal advice: Follow the facts (your facts) rather than the competition and be the sheep that leads the flock!