Focusing on what the competition is doing in considering your own strategy tacitly enables your competitors to force you to compete on their terms.
For breakthrough strategy, forget about the competition.
Define the market and industry based on your strengths and compete on your own terms, especially when your business is a relatively small player competing against incumbent giants.
AIG Insurance Group Japan does just that, with what the company calls “Active Care.” Rather than competing head on with colossal incumbents like Nippon Life, AIG is redefining what insurance is in Japan. While most insurance business is based on a payout should a risk be realized, AIG goes one step beyond, defining its services not just as a post-facto financial contingency, but also as preventing a risk from being realized in the first place. Given all the massive amounts of data the company has on risk, they’re capable of proactively providing advisory to their clients on which behaviors to change and how to best keep something bad from happening. For example, AIG Japan ran an event in Osaka with fun activities for families and their children to promote bicycle safety through changed behaviors. Osaka has the highest rate of bicycle accidents in Japan with a surging rate of fatalities, which prompted a government ordinance to require bicycle accidents in insurance for all adults and even children.
And that’s not all. The company philosophy about insurance is not just giving people money when a personal debilitating accident occurs, but instead is conscious that the client’s ultimate goal is to maintain their quality of life, using Japanese technology and innovation. In 2017, AIG established a partnership with Japanese cybernetics technology leader Cyberdyne for that very purpose. AIG Insurance Group Japan’s CEO at the time, Bob Noddin, along with Cyberdyne founder and CEO Yoshiyuki Sankai established a partnership with the view of being able to provide cybernetic technology to accident victims that enables continuity of quality of life rather than just a financial payout.
In a highly regulated industry like insurance, conventional wisdom is that any business strategy is limited by law, so there is little point in dramatic innovation, just incremental changes to product formulation. For AIG though, it is not regulation-driven strategy but rather strategy-driven regulation in which the business’s leaders believe. The company has also been proactive (vis-a-vis regulators) in grabbing the attention of bureaucrats who believe a change is in the best interests of the Japanese consumers, but have been disappointed by the lethargy exhibited by large incumbent players. The regulators are listening to bold ideas.
AIG Japan is a disruptor, and setting the pace in the industry. Their incumbent competitors can’t keep up. Rather than resigning to compete in their competitors’ market the way their competitors define it, AIG Japan is forcing its competitors to compete in a market of AIG’s making – on AIG’s terms. Any business can do the same, and there is no excuse not to.
“But our industry is different. We can’t do that. Things are too (you supply the adjective) for that to work.”
I pay no heed to such claims. Fast Retailing, purveyor of the Uniqlo brand redefined the clothing industry in Japan, and now perhaps the world. When founder and CEO Tadashi Yanai started out, do you think that things were easy for him in the collusive and protected clothing industry in Japan? Do you think he got a lot of encouragement from industry peers? Do you think it was easy for Honda Motors founder and president Soichiro Honda to ignore the then Ministry of International Trade and Industry when it issued official “guidance” (read that as orders) for Honda to stick to motorcycles and drop the idea of manufacturing cars? Uber CEO Dara Khosrowshahi recently visited Japan and met with Prime Minister Shinzo Abe to push for regulatory reform in the taxi industry to accommodate Uber’s popular business model. These are business leaders who chose to make their own sandbox and play on their own terms rather than play in a sandbox on the terms of others.You can make your own sandbox, if you are proactive, audacious, and unapologetic about ruffling feathers. Click To Tweet
Are there other industries ripe for a new sandbox in Japan? Perhaps a better question is are there any industries in Japan that aren’t? One that comes to mind is advertising and PR, which is currently eighty-percent dominated by Dentsu.
What about your industry?