Asymmetric strategy: Archimedes’ unfair advantage

People, money, media and code

Leverage is that mathematically defined quality, applying the limited resources, to have a maximum impact. But how do you get leverage in business? People, capital and ‘products with no marginal cost of replication’ are the three broad classes of leverage in the distracting age of AI. People and money have been there almost since the Garden of Eden.

Code and media are the newest form of leverage, with media dating back to Johannes Gutenberg, with his invention of the printing press roughly 600 years ago. A risk taker, Gutenburg was often in debt, had a dodgy credit rating, with constant cash flow problems so his invention came just at the right time.

Read: Competition: What tiny market are your dominating

In 1455, Gutenberg printed his first Bible, costing about 100 days’ wages, but by 1600 a book cost roughly one day’s wage. Printing, like other forms of leverage, changed the way we think and how we work.

Target asymmetric opportunities

Like David’s defeat of Goliath, invention of the printing press, the creation of code and now the algorithms of artificial intelligence -- with intelligence flowing like water from a tap -- are these all examples of asymmetric upsets? A tiny event with an astounding impact.

In business strategy, an asymmetric approach involves achieving significant impact by competing differently rather than better, by noticing and taking advantage of gaps in the market that chubby overweight incumbents ignore.

Key tactics include using unique information, leveraging technology to turn users into assets, or focusing resources on niche segments, where the giants cannot easily compete.

Today big tech platforms dominate the corporate landscape. Platform asymmetry happens when, for instance, Google, Meta, Amazon offer free or low-cost tools to users, collecting data to refine their platform and monetizing through a separate, paying customer base.

Thankfully, targeting blind spots is open to everyone. Instead of directly competing with industry leaders, smaller players focus on underserved, fragmented or emerging niches.

With a dose of imagination, it is often possible to deliver 10 times better value, and even redefining value in specific, critical areas, and apply a ‘domino principle’ chain linking together advantages.

Read: Blue ocean strategy: Four value innovation steps to creating your own market

How business was done in 2021 may not work today. Creating customer tangible value – in a product or service - and giving it away for free, then using that to start a conversation, is how emerging market leaders behave, focusing on vitality.

Vital more valuable than functional

Leverage in people revolves around creating the distinction ‘vitality’. Investing in having energetic, imaginative, self-propelled ‘fire in the belly’ vital staff is a form of leverage. It’s not uncommon to find vital staff that can do more in two hours, than the ‘functional’ others can do in a week.

“Functional people might be great at what they do, they might talk the talk and walk the walk, but the harsh reality is they are performing a role that is replaceable. If someone can find a cheaper option they will take it, because a functional person is just one possible solution to a problem. A company can downsize functional people. A client can replace a functional supplier. An investor can put their money into something else that’s just as functional. Functional does the job, but functional is still interchangeable” writes Daniel Priestly.

“People who are in functional jobs see themselves as competent when executing a set of processes. They try to get better at those processes and they make marginal improvements. Functional people try to stay up to date with the standards and make sure they are able to perform as directed, but they secretly resist change and don’t like new disruptive ideas.

Functional people often worry about being downsized or overlooked for promotions. They are fearful that someone might come along who can do things better than they can. They are concerned about technology and new systems that could replace the tasks that they know how to complete” says Priestly.

In practice, reality may be more nuanced. We all have functional tasks required, but there is need to focus on a vital role, linked to the result, and not just the functional process.

Vital staff, providing leverage ask ‘why not’ not settling for the status quo – always thinking about how they can create more value. Always learning vital staff create leverage by stimulating debate. They just don’t want to be shown the path, they want to create one.

Anyone who ignores history is doomed to repeat it

In 1697, Peter the Great, the Tsar of Russia arrived in Amsterdam, then the richest city in the world. Peter arrived incognito, undercover, disguised as a ship’s mate, he lived in a tiny artisans house with the grab of a Dutch carpenter where he served a four-month internship, Peter, the autocratic overlord of the world’s largest land empire was seeking a form of economic leverage. Thankfully, he was vital, rather than just functional, not hemmed in by convention.

“Although Peter wanted the fruits of Dutch money – the innovation, the wealth, the naval power – he wasn’t too keen on the democratic and institutional compromises the Dutch establishment made to achieve them. Encouraging debate and accepting people who might not agree with you on everything wasn’t for him, but sometimes you can’t have one without the other. Dissent and creativity often contribute to the great adventure of commercial enterprise. Dutch tolerance, Dutch wealth and Dutch financial genius appeared to go together,” writes David McWilliams in his fascinating 2024 book: Money – A Story of Humanity.

“Peter the Great failed to grasp this essential link between personal liberty, the dignity of commerce and a buzzing, innovative, networked economy. The Dutch had no raw material except the most potent of all, the one between our ears: a free and enquiring mind. Without this human energy, there could be no sustainable economic growth because there would be no consistent innovation” writes McWilliam.

Nothing new under the sun. What we think of modern financial instruments, the creative Dutch were using 400 years ago.

“The Dutch nudged the possibilities of money forward, founding their stock market, the New Exchange, in 1602. By the 1620s, many modern financial instruments were being used daily by the Dutch, including futures markets to bet on possible outcomes years away, margin financing to leverage a hunch, and the buying and selling of options to allow gambling on a bonanza or a catastrophe. Almost every possible combination of future events could be priced in money in the Amsterdam of the early 1600s.” observes McWilliam.

Leveraging limited resources in an innovative asymmetric way - is the game plan for vital emerging business leaders.

David J. Abbott is a director at aCatalyst Consulting. [email protected]

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