Thursday, December 3, 2009

Some guidelines from the world of marketing

Jack Trout, in his new book Repositioning: Marketing in an Era of Competition, Change, and Crisis (McGraw-Hill, 2010), maintains that the concept of long-term planning “has finally been put to rest.” (p. 113) Its fatal flaw is the simple fact that we can’t predict the future. Taking its place are two short-term directives—“stay flexible and seize the opportunity.” (p. 115) And, Trout adds, start every campaign with your competition in mind. “It’s not what you want to do; it’s what your competition will let you do.” (p. 121)

Since we don’t know who is on the other side of our trades we can’t identify the competition. But we know that in the markets everybody is after everybody else’s money. Moreover, the world of trading and investing is even more cutthroat than the world of business. Businesses can expand not just their market share but the very size of the overall market. PCs and Macs are not locked in a zero-sum game.

Even though we don’t know exactly who’s on the other side of our trades, we can invent a persona for our competition. The competition has to be worthy; it’s foolhardy to assume that our competitor is a rank novice who probably won’t be around for long. We can then give this worthy opponent some salient characteristics, including trading strengths and weaknesses, and (depending on what motivates us) perhaps a thoroughly unlikable personality. Does our opponent trade the same time frame as we do? Does he fold at the slightest wobble in his position? Does he hang on too long? Is he brilliant at trade execution? We don’t want to compete directly against the opponent’s strengths. “When a competitor is known for one thing, you have to be known for something else.” (p. 121)

The good thing about inventing our adversary is that we can change him at will. If either we or the markets change and we need an adversary with a different set of qualities, our imagination can produce him in a jiffy. Just remember: stay flexible, seize the opportunity, and you may just trounce your imaginary opponent.

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