Lanchester Strategy

What Is the Lanchester Strategy?

The Lanchester Strategy is a battle plan adopted from a military strategy that can be applied in the business context, particularly for businesses that are entering new markets. In warfare, the strategy is based on quantifying the relative strength of armies in order to predict winners and losers. In business, the strategy directs entrepreneurs to choose market types for new and existing businesses–based on a similar relative strength analysis–in an attempt to find the easiest markets to penetrate.

Understanding the Lanchester Strategy

The Lanchester strategy is a variation of the divide-and-conquer tactic, which allows seemingly insurmountable tactical challenges to be overcome. If a startup or other small business wants to enter a market where an incumbent company maintains a monopoly, launching a head-on rival campaign will likely fail. Under the Lanchester Strategy, the more effective approach would be for a company to target one aspect or location of its rival to destabilize a potential monopoly.

This strategy is named after British army engineer Frederick W. Lanchester, who published the laws governing the war strategy in a landmark publication titled Aviation in Warfare: The Dawn of the Fourth Arm in 1916_._ Lanchester's laws were later implemented successfully by the Allied Forces in World War II. After World War II, renowned quality expert Edward Deming applied the same laws to operations research.

The Lanchester Strategy was introduced in Japan in the 1950s and popularized by Japanese consultant Nobuo Taoka in the 1960s. The Lanchester Strategy increasingly became used to capture market share. Canon Inc. was one of the first companies to utilize the strategy for its fierce battle with Xerox in the global photocopier market of the 1970s and 1980s.

Principles of the Lanchester Strategy

Lanchester’s experiences and observations of aircraft usage in combat during World War I helped him establish his strategy. As an engineer, Lanchester applied mathematical analysis to casualties across all of the forces present in battle. This included ground forces–infantry and naval forces–and the aircraft he helped build. This methodology helped him assess the effectiveness of the aircraft he had worked on.

One of Lanchester’s observations was that if a military force outnumbers its opposition, its effective firepower was equivalent to the square of the total number of units in the larger force. In other words, the combined arms of an army with a three-to-one number advantage would effectively have nine times the relative firepower of the smaller enemy. Given that assessment, Lanchester postulated that the smaller force should focus its attack on only one part of the larger enemy force at a time. Since then, this strategy has been implemented in military action and in business tactics.