Curveball Strategy: Fooling the Competition

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Curveball Strategy: Fooling the Competition

🔥 In baseball, a "Curveball" is a breaking pitch, i.e. a certain way of pitching (throwing) the ball such that it doesn't approach the batter in a straight line. When thrown correctly, the ball seems to slow down and suddenly drops down while approaching the batter, who tends to swing too early, and above the ball's trajectory. This has led to the phrase 'to throw a curve' which means to trick someone with something that wasn't expected or is not true.

WHAT IS A CURVEBALL STRATEGY? INTRODUCTION
In business, several types of cunning Curveball Strategies are used to fool the competition – making them do something foolish which they wouldn't have done, or prevent them from doing something wise which they would have done. Often the competitors aren't aware that a strategic curveball is being used against them; it's often too late before the competitor realizes the true intention of the firm deploying the strategy. The distraction created by the curveball makes the competitor look in a different direction. And even if they discover it and recover quickly that can still be enough for the firm using these tactics to get a lead in capturing more market share and increasing their revenue.

DIFFERENT TYPES OF CURVEBALL STRATEGIES

1. DRAWING THE COMPETITOR OUT OF THE PROFIT ZONE: According to the Customer Classification Matrix by Shapiro et al. (1987), customer segments yielding higher revenue don't always yield higher profits – sometimes the cost to serve a particular segment could be higher, resulting in lesser profits or even losses. Firms may leave out (or intentionally fail in attracting) such less profitable customer segments, and focus on other segments that are profitable in the longer run. Competitors who fall for this strategic curveball, end up chasing the customer segments which are loss-making in the long run. This strategy can be used in industries with relatively unsophisticated pricing policies, such as office supplies and equipment, consumer financial services, and medical supplies and equipment.
   For example, a US chemical firm Ecolab focused on big chain accounts like hospitals, and tactfully bid to lose out on small individual accounts (which could be charged higher, but had high costs-to-serve). The competitor Diversey, who didn't take these costs into account, went after these customers and ended up making losses in the long run.
2. EMPLOYING UNFAMILIAR TECHNIQUES: This involves implementing successful techniques belonging to other industries. This strategy is preferable for industries with slow-growing businesses with long-established traditions, stable market shares, established seller-buyer relationships, and predictable cash flows. Such industry players are often comfortable with their business models which are perfected over time; the use of another industry practice by a clever competitor will throw them off-balance.
   For example, the CEO of Halifax Bank of Scotland (HBOS) brought in marketing and merchandising techniques of a retailer to the banking industry. With the goal of providing the best deal, HBOS managed to gain the attention of customers via attractive deals. The UK banks which were known to upsell to their existing customers in order to squeeze out the last profits were unable to stand up to HBOS's competitive deals. HBOS also provided the staff with incentive compensation to boost sales; this technique unknown to UK banks was widely used in the retail sector. HBOS ended up capturing a huge chunk of the market share via its retail financial services.
3. DISGUISING ONE'S SUCCESS: Firms can misguide competitors by achieving competitive advantage through unlikely means, such as "stealth sales" (e.g. driving sales through service technicians, along with usual salesforce). Maintaining good customer relationships and providing customer satisfaction via quick responses and efficient service, helps the customer service in getting renewals of existing service-contract and also follow-on sales. Thus, the firm can increase the number of "salespersons" without actually increasing the salesforce. Stealth sales can be used successfully in industries where field service is important for customer satisfaction.
   For example, manufacturers of mass storage devices, aircraft engines and components, factory equipment, and process automation systems can successfully resort to stealth sales.
4. GETTING THE COMPETITORS TO MISINTERPRET ONE'S SUCCESS: Any successful, innovative strategy of a firm is prone to be copied by the competitors. They might conduct an incomplete assessment of the firm's winning strategy, emulating only a few activities or components (often overlooking the key component to success). However, this competitive advantage is the result of a 'fit' among the different activities of the entire firm, which reinforce each other. Failing to recreate this complete fit, will not yield the same success.
   For example, many US airlines tried to emulate the low-cost operations of Southwest Airlines but failed. They copied the frugal customer service and reduced labour costs but failed to notice the most important factor - extreme asset utilization. Southwest, via a production-oriented approach vis-à-vis the traditional customer-oriented approach for scheduling flights, aimed at keeping the planes in the air as much as possible (with quick turnarounds). Southwest managed a point-to-point route network vis-à-vis traditional hub-and-spoke network, so it was less affected by delayed flights. Faster turnaround time, led to higher asset utilization, which helped in maintaining the low costs (running on lower profit margins).

Similar to a batter facing a curveball, if competing firms stick to focusing on the averages or "the norm" (the straight ball), they might miss the strategic curveball in the form of new strategies and operational techniques employed by clever competitors.

⇒ Can you think of other types or examples of curveball strategies? Please help developing this topic further.

Sources:
Stalk Jr., George (2006) "Curveball: Strategies to Fool the Competition", 2006, Harvard Business Review
Shapiro, B. P., Rangan, V. K., Moriarty, R. T. & Ross, E. B. (1987) "Manage Customers for Profits (Not Just Sales)", 1987, Harvard Business Review
Porter, Michael E. (1996) "What is Strategy?", 1996, Harvard Business Review
Major League Baseball (n.d.) "Curveball (CU)", n.d., mlb.com

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		1 Mervin Seeduwa Coach
	Curveball Strategies versus Disruption This is a very good piece of knowledge sharing. Thank you. I was wondering how this differs from the current buzzword of 'disruption'. Perhaps disruption refers to a new agile player coming with compl...

		1 Jaap de Jonge Editor, Netherlands
	Curveball Tactics in Disruptive Strategies @Mervin Seeduwa: And yours is a very good question, thanks for asking. I think curveball strategies could be very useful in Disruptive innovation for hiding your actual strategic plan, tactics or situ...