Strategy and Innovation

What Happens When the Sumo Master Learns Judo?

Summing Up

Respondents to the latest "What Do You Think?" column expressed a general lack of concern about adverse effects from Microsoft's settlement with the Federal Government for a variety of reasons.

Charley Cullinane reminds us that "There is a portion of the population that does not trust Microsoft and its use of 'customer' information to market to customers and hold them digitally captive. This demographic will continue to provide sales to (a judo master competitor)."

These comments reflect general beliefs that the larger and more successful a competitor becomes, the greater the likelihood that it will not be a major player in future competitions in rapidly changing environments.
—Professor James Heskett

Both Dennis Crane and Richard Eckel suggested that a broader view of the competitive spectrum for information technology might lead one to conclude that what is happening is business as usual. Microsoft is facing a race with time and the markets to re-deploy monopoly profits from a waning desktop opportunity in order to become more competitive with sumos in other parts of the information technology spectrum. Crane concludes "history argues against Microsoft, as the leader in one generation of technology, becoming the dominant player in the next generation. As long as Microsoft continues to re-deploy the margins in its core business to explore new ones, chances are the market and customers will benefit relative to what would happen in a fragmented market ..." Citing the popularity of Linux at the server level, Eckel points out that "what that 800 lb. Gorilla (MS) is fighting against is a guerrilla army that is free."

These comments reflect general beliefs that the larger and more successful a competitor becomes, the greater the likelihood that it will not be a major player in future competitions in rapidly changing environments. But they reflect something more: a belief that competition in information technology at this stage of the game requires non-traditional regulatory responses in a competition in which combatants have unusual means at their disposal, regardless of size.

The comments raise several questions: What are the chances that Microsoft can defy traditional market dynamics? What kinds of strategic and organizational decisions would it take? If it were to successfully learn judo, would we (or should the Government) really care whether it could enhance its chances in the post desktop world? Do today's information technology industries really require a different approach to government regulation? What do you think?

Original Article

It's probably a good idea to be suspicious of the application of non-business analogies to business. But one recent book, Judo Strategy, (HBSP,2001), by David Yoffie and Mary Kwak, provides interesting advice on how underpowered upstarts can compete against the sumo giants of their industries by practicing the business equivalent of judo. The authors provide examples of how, by practicing judo principles of movement (not inviting attack, defining the competitive space, and following through fast); balance (gripping your opponent, avoiding tit-for-tat, and pushing when pulled); and leverage (leveraging your opponent's assets, partners, and competitors), the small can outsmart the large.

Exhibit A is the story of Intuit, the financial software provider. Intuit has continued to dominate Microsoft in its niche through intensifying focus, defining the competitive space, listening to customers through creating marketing research and customer service, and developing products created by hard-to-find customer-centered software engineers.

But now Microsoft's proposed settlement of its dispute with an even bigger sumo—government—would involve giving computers equipped with its operating system to thousands of inner-city schools. Is this an example of the sumo learning judo—following through fast, pushing when pulled, and leveraging Apple Computer's (educational) partners to Microsoft's long-term competitive advantage?

In the wake of the Microsoft settlement, what does the future hold for competition in such areas as operating systems, Web services platforms, Web services, and enterprise applications? Will the Intuits of the world be able to carve out and hold onto market niches, offering hope for other judo competitors? Will other sumos, such as Sun Microsystems, "bulk up" to compete? Will Microsoft follow through with its promise of a kinder, gentler application of sumo? Or will we find ourselves in the middle of another contest between Microsoft and the biggest sumo of them all? What do you think?

Latest from HBS faculty experts

Expertly curated insights, precisely tailored to address the challenges you are tackling today.

Strategy and Innovation

Social Responsibility

Data and Technology