July 19, 2022

I recently had the great fortune to attend a presentation by Dr. Kaihan Krippendorff, founder of Outthinker (www. Outthinker.com). This presentation was hosted by Chase Bank for it’s small to middle market clients, and I want to acknowledge my colleague at Chase Bank, Austin McMackin, for the invite.

“Outthinker” refers to outthinking your competition and how doing that can generate huge growth in customers, sales, profits and value. The key to his talk was about finding “The Fourth Option” which he describes as changing how you play the game. His first example, which happened to come from outside of the business world, was how, at the 1968 Olympics in Mexico City, Dick Fosbury blew away the competition in the high jump. Before he invented his technique for the high jump, which got the name the Fosbury Flop, competitors in this sport either kept doing the event and their training the same way, did the event the same but focused on their physical strength or did the event the same but ran faster towards the bar. Gains from competition to competition were incremental.   Fosbury came up with a whole new way to jump over the bar, a Fourth Option, and blew away the competition.  When competitors and TV analysts heard that he was going to go over the bar with his back facing the bar rather than his stomach they though it was impossible. It couldn’t work. Yet is did and he blew away the competition. Today, and for many decades it’s been the standard way to do the high jump. See this YouTube video for more:  https://www.youtube.com/watch?v=CZsH46Ek2ao

Moving on to the world of business, he talked about Urban outfitters.  From 1970 to 2002, they had steady but slow growth, but starting around 2002, they far exceeded the growth of their competitors The GAP and American Eagle, among others. They also grew their profit margins.  What changed? According to the speaker, they asked themselves and then found a Fourth Option. More specifically, they did these 3 things.

 

  1. They said that they would cater only to college students. If GAP wanted to copy, they couldn’t because they’d after to turn away most of their existing customers. They asked themselves: “Who do we serve?” and “Who do we not serve?”.
  2. They offered used clothing. Would the GAP adopt this strategy? No, because it’s very inefficient. While their competitors were trying to be efficient, they decided not to be which made them different which I in turn allowed them to charge more.
  3. They decided to stop recruiting store managers from business schools and instead they hired artists. This gave them more freedom on displays. Would GAP do that? No. Every Urban Outfitters store looks a little different.

Their strategy was and is not a secret. Anybody can copy it. GAP could do it if they abandon 80% of market, disrupt supply chain, fire all their managers and hire all new managers. The cost of doing this is more than the cost of not doing it; so, they don’t do it.   You can see and hear Kaihan talk about this here: https://outthinker.com/keynote-speaking/?wchannelid=08quda24vg&wmediaid=vakarj7tr7

More generally, Kaihan says:

  • Don’t set goals based on past performance. That restricts higher goals and new ideas.
  • Skate to where the hockey puck will be not where it is
  • There is power in coordination. Think Uber, AirBNB, flocks of birds. >>>Bundle to get out of commodity pricing issues.
  • Put your competitors on two-front battle. For example, Starbucks focused on people (its workers and its customers); that’s when it took off.
  • Ask yourself: “what business are you really in?” Starbucks said “people” not “coffee”.
  • Benefit others. Benefit the world
  • Don’t play by the rules.
  • Think about where is their non-consumption? Due to price? Due to access? Due to lack of know how? Due to lack of time?   Where is there a new product that doesn’t exist?  Think Gatorade. Think Redbull.  

He talked about how thinking out of the box and creatively is actually natural to human beings—just look at what kids do. Adults need to re-find those skills.

Ask yourself and your team, what’s the 4th option. Here’s another story he told: 2.

It was 240 BC in China. One general with an army of 50,000 men was on one side of river with the enemy army of 100,000 on the other side. 1. If he crossed, the enemy would kill them. 2. He could go back to his emperor and tell him they didn’t cross because the enemy would kill them, and he’d be killed. 3. He could wait till the enemy army left, but they would never leave.

Before proceeding across, he asked himself what other options do I have? He came up with one. He had some of his men dam the river with sandbags, crossed and fought. They then crossed back to the original side of the river with the enemy army following them. At that point, he had his men release the water from the dam killing and/or trapping the enemy army which allowed him to defeat those that crossed. See more in this TedX talk:  https://outthinker.com/keynote-speaking/?wchannelid=08quda24vg&wmediaid=9vp2kdcxsk

He talked about how big winners in business play differently:

  • Fight for tomorrow not today. They ask themselves: where is the next battle ground.
  • Coordinate the uncoordinated turning a threat into an advantage.
  • Do good. Don’t just serve shareholders. Help all stakeholders because everyone wants you to win. The bigger and more they grow, the more good they can do.

See and hear him talk about this in the 2nd half of the same link:  https://outthinker.com/keynote-speaking/?wchannelid=08quda24vg&wmediaid=9vp2kdcxsk

These three strategies can help reveal a 4th option. Stop before you jump in the river and ask yourself what’s the 4th option. Where is the next battle ground? What is uncoordinated that can be coordinated? What good can we do?