Mastering Strategic Movement at Palm

Why do some companies succeed in defeating stronger rivals while others fail? All ambitious businesses must face that question sooner or later. Whether you’re a startup taking on industry giants or a giant moving into markets dominated by powerful incumbents, the basic problem remains the same: How do you compete with opponents who have size, strength and history on their side?

The answer lies in a simple but powerful precept: Successful challengers use what we call judo strategy to prevent opponents from bringing their full strength into play.1 Judo strategists avoid head-to-head struggles and other trials of strength that they are likely to lose. Instead, by relying on speed, agility and creative thinking, they develop strategies that make it difficult for stronger rivals to compete.

Palm Computing (now Palm Inc.) provides a powerful illustration of judo strategy at work. Founded in 1992 by Jeff Hawkins, Palm dominated the hand-held computing market less than a year after shipping its first electronic organizer in early 1996. Even more remarkably, despite competition from the most powerful software company in the world, Palm went from strength to strength. Microsoft Corp. marshaled masses of money, manpower and marketing muscle behind its own hand-held operating system. But year after year, Palm remained far ahead. And when it went public in March 2000, first-day trading valued the company at $53 billion.

More recently, Palm has shown signs of weakness. Nonetheless, it bested Microsoft for five years. Why did it succeed where so many others had failed? In large part, because of management’s intuitive use of judo-strategy principles and techniques.

What Is Judo Strategy?

Judo strategy is an approach to competition that emphasizes skill rather than size or strength. It has two sources: the Japanese martial art of judo, which teaches a competitor to use opponents’ own strength against them, and judo economics, an early effort to show how a small company can use a similar strategy to gain a foothold in a market dominated by a large incumbent.2

Building on those foundations, we argue that companies can win against larger or stronger competitors by mastering three core principles: movement, balance and leverage. In judo, those principles work closely together. As one expert wrote, “Through movement the opponent is led into an unbalanced position. Then he is thrown either by some form of leverage or by stopping or sweeping away some part of his body or limbs.&

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References

1. The article is adapted from the authors’ book, “Judo Strategy: Turning Your Competitors’ Strength to Your Advantage” (Boston: Harvard Business School Press, 2001).

2. Judith R. Gelman and Steven C. Salop, “Judo Economics: Capacity Limitations and Coupon Competition,” Rand Journal of Economics 14 (fall 1983): 315–325.

3. Charles Yerkow, “Modern Judo: The Complete Ju-Jutsu Library” (Harrisburg, Pennsylvania: The Military Service Publishing Co., 1942), 44.

4.Jimmy Pedro, telephone interview, June 28, 1999.

5. We have borrowed this term from Drew Fudenberg and Jean Tirole, “The Fat-Cat Effect, the Puppy-Dog Ploy and the Lean and Hungry Look,” American Economic Review 74 (May 1984): 361–366.

6. All quotations from Palm and Microsoft executives are taken from interviews the authors conducted in July 1999, January 2000, July 2000 and August 2000.

7. Bob Metcalfe, “Without Case of Vapors, Netscape’s Tools Will Give Blackbird Reason To Squawk,” InfoWorld, Sept. 18, 1995, 111.

8. Ian Fried, “Palm, Handspring Lose Ground to Microsoft,” CNET News.com, Feb. 20, 2001, http://news.cnet.com/news/0-1006-200-4880476.html.

9. 3Com later reversed that decision, spinning Palm off in March 2000; three months later Handspring went public.

10. Handspring’s product strategy was based on a technique we term “push when pulled.” See Yoffie, “Judo Strategy,” 59–64, 115–116.