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October 21, 2004

From Chapter Four: The Stealth Play

If you can't beat 'em... Join 'em or make sure to stay out of their way.

It can get downright discouraging when you find yourself confronting a competitor company that has everything going for them. Whether it's because they're ten times your size, or better positioned, or just the default incumbent, it's still a bummer when they just seem to keep holding on to their lead.

You try so hard, you know you have something really special. Why, oh why can't you win for a change? Well, nobody said business was going to be easy or fair. Don't get too depressed. Don't throw in the towel. When you see another drag racer pass you by or find a platform landing on your head, remember the loss of a single battle-or even a number of them-doesn't determine the outcome of the campaign. If you have enough fortitude, if you're nimble, truly determined, and you don't let foolish pride get in your way, you can accept your losses, climb into your tent, and take cover.

The Stealth Play is the one for just such situations. It's a play you turn to out of need rather than strength. It doesn't offer a speedy route to victory, and it's not as dramatic or heroic as the previous plays. When you're not in a position to win one of those, it's the Stealth Play to the rescue, one the most important to have in your repertoire. You can pull out Stealth and use it as an alternative to slipping into a Drag Race you don't want, or whenever you enter a market where you face tough opponents who have more clout than you. It will help you gain or regain your foothold. Then you can survive, thrive, and even find a way to come back and fight another day.

What Does Survival Look Like?

Survival does sound better than the alternative. But what does this play actually look like?

The Stealth Play is like a quarterback sneak. Rather than running a play where you try to outrace the other team to the goal line, or launch a brutal assault against their defenses, you find a way to slip through while they aren't noticing. Once into their backfield, you find a way to keep their attention diverted.

To switch metaphors for a moment, a cavalry charge may seem heroic, the gallant thing to do. But when facing an opponent too well armed or too securely ensconced behind their walls, it's suicide. There's not a lot of profit in self-destruction. The smarter course is to find other, safer ways to undermine their advantages, ways that won't draw too much attention to you.

So when you're not yet able to win a direct confrontation, you avoid it. If your opponent controls the central position, find another place to make inroads. If they are more popular than you, hitch your wagon to them. But you will always be on the lookout for their blind spots, for opportunities to fill the gaps they leave or to address the needs and desires they overlook. And whatever you do, you won't draw attention to your actions or allow them to feel threatened until you're good and ready for them.

This is the essence of the Stealth Play.

The story of Enterprise Rent-A-Car offers a very telling example of a company that found itself confronted by massive opponents. Rather than duke it out with the heavyweights, the company removed itself to more protected terrain. There it could safely watch the top dogs beat each to a pulp while it built a stronger and stronger business-only to reemerge as a head to head competitor and arguably the biggest in its class.

Enterprise was started back in 1957 by fighter pilot Jack Taylor as a small, local car-leasing company. Early on the company did very well because of local knowledge and good service. It eventually grew to become a national car rental business, offering, among other things, daily rentals to people whose cars were being repaired. It continued to grow nicely until, in the 1970s, it found itself embroiled in the airport car rental market, where a fierce battle raged between the big players like Avis and Hertz, with millions spent on national advertising and promotion.

The company took a step back and asked itself some tough questions. Were they ready to go "head to head to head" with the two biggest players in this market? Did they even want to? Was struggling to compete for the spot of third car in a very expensive version of what we label the Drag Race worth the trouble? Was something like "We try even harder" consistent with their strengths and their modus operandi? The answer in every case was no.

Enterprise looked back to its roots in local, hometown markets and decided to remove itself from the cutthroat playing field "at the edge of America's runways." Instead, it found plenty of remaining gaps in its own backyard. It continuously expanded its footprint in hometown locations that the big airport travelers neglected to address because they were too busy slugging out rates and location fees at airports.

Enterprise decided not to bother competing for your travel-related business. It left that bloody field completely to the "big boys." It focused on being your nearby source when you needed a temporary replacement. It enhanced its offering to include a "We'll pick you up" service, making its differentiation complete.

Under the cover of highly localized small rental agencies, Enterprise was able to build a very powerful alternative business model. And because they listened and were low to the ground, they found and filled one of the most boring gaps in the business. Boring, but one of the biggest.

Other than business travel, one of the major reasons for renting a car is as a temporary replacement after an accident. And who, in the end, is paying the bill? Insurance companies-making them huge potential customers.

The other major differentiation Enterprise came up with was based on the issue of, Who wants to have to find their way to the airport to pick up their rental after their car just got totaled? Hertz and Avis would like you to. Instead, with Enterprise's multiple in-city locations and its "We'll pick you up" service, the choice for the carless car owner was obvious. On top of this natural grass roots advantage, Enterprise also made sure that it built its business to target the insurers-who rent tons of cars every year and whose checks don't bounce.

The result? Enterprise now owns the vast majority of the insurance temporary replacement market. And they captured this share right under Hertz's and Avis' noses without ever having to Drag Race either one of them directly.

Lo and behold, after biding its time and sticking to its knitting for so long, Enterprise reemerged in the mid-1990s as a huge player, with over 500,000 vehicles, and over 5,000 locations. Now they were ready to start opening rental offices at airports again. Is another Drag Race about to begin? Wonder who's in the best position this time around.

Posted by rich at October 21, 2004 12:52 AM

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