Wednesday, 7 January 2015

Is there a renewed role for Maskirovka in business strategy?

Late last year I worked with a client who was trying to decide what course to take with a digital commerce business they'd acquired. Without going into too many details, the business unit was effectively competing in a two player market across three or four digital channels. One of those is direct sales through eBay, which generated considerable revenues but produced very poor  margins due to highly competitive pricing and the complexity of running a large catalogue on eBay. 

My recommendation was to cease trading this channel for two reasons:
  1. To simplify the business' operations so that the management could focus on gaining control in areas that are likely to be more critical to future success (read: direct, branded channels)
  2. If we cede control of an unprofitable, non-strategic but relatively large revenue channel to the competitor then it may well distract them from our renewed focus on the areas we think are really crucial for long-term victory
I realised later that with small tweaks we could be even more deceptive. For example, perhaps we should trade eBay a little so that it looks like we are still committed to the channel; we could do a press release or two that talk about how excited we are about it... you get the idea. 

All this got me thinking. Why does corporate no longer contain any deception? We spend so much money looking at customers and products and internal structure, but rarely about how to conceal our real intentions, beyond blunt instruments like cyber-security. 

It also reminded me of some reading I did about Soviet military tactics many years ago.

Camouflage and deception were a crucial element of the military strategy and planning of the former Soviet Union (and presumably of the organisations that followed it). The word they used to describe this kind of approach is 'maskirovka' - a very broad concept that is difficult to translate, but which encompasses ideas including: camouflage, concealment, deceptionimitationdisinformation, secrecy, security, feints, diversions, and simulation.

The sketch shows how maskirovka dovetails with other elements of strategic military planning and the specific principles for any attempted maskirovka, each of which must be considered in order to make the deception successful.

You can read more about these elements and the military approach to maskirovka in this excellent 1988 article, but in brief:
  • Activity. The maskirovka must be persistent in order to make it believable and lull the competitor to incorrectly assess the situation. Once a form or type of maskirovka has been implemented, it may become necessary to change it.
  • Plausibility. All efforts at maskirovka must be plausible. This is an especially important principle. Regardless of the type or form of maskirovka involved, the competitor must believe what he sees is real when in fact it is not
  • Variety. Repetitious patterns of maskirovka must be avoided and variety employed. This is the principle of variety
  • Continuity. Maskirovka must be part of all plans and must be continued throughout an operation, whether you are directly in competition with an organisation or not. Outward concealment and deception should be an instinctive tactic
I'm ashamed to say that our tiny eBay gambit actually fails most of these principles: it is plausible but it isn't persistent (we need the competitor to think that we're losing rather than withdrawing), it has no real variety and it is standalone (there is no follow up). 

But I wonder whether there is merit in the concept though. As organisations start to embrace digital economy thinking about their portfolio they'll start to do a greater volume and a greater variety of activities in the market. To my mind this makes the idea of executing experiments designed to test your ability to deceive or mislead a competitor far more plausible. We are already seeing the most advanced companies performing repeated, learning experiments to test product - market fit (& therefore understand demand), so why not test the responses of competitors and even of governments to see how they respond to you?

We are in an age of multi-dimensional competition in which there are far more opportunities for growth than any company can possibly follow. Choosing where to invest is a challenge for every organisation. So why make it easy for your competitor? Put them off balance; see them as an actual competitor rather than an abstract object. Absolutely don't base a strategy on damaging someone else, but definitely see that as part of the plan and use lean methods to learn how to do it best.

Or maybe my forays back into portfolio strategy are making me love retro strategy too much! Perhaps this sort of thinking belongs back with RAND and the strategic management of the 1950s. Any thoughts greatly appreciated!