DEFINITION of 'Lanchester Strategy'

Lanchester Strategy is a plan of attack that has been successfully applied in the business context, particularly for entering new markets. The strategy is named after British engineer Frederick W. Lanchester, who published in 1916 the laws governing the war strategy in a landmark publication titled "Aviation in Warfare: The Dawn of the Fourth Arm." In business, the strategy is typically used to choose market types for new and existing businesses, in an attempt to find the easiest markets to penetrate.

BREAKING DOWN 'Lanchester Strategy'

Lanchester's laws were later implemented in successful war strategies by the Allies in World War II. After World War II, renowned quality expert Edward Deming applied the laws into 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 was increasingly used to capture market share, with Canon being one of the first companies to utilize the strategy globally during its fierce battle with Xerox in the photocopier market in 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 such as infantry, naval forces, and even 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 outnumber their opposition, their 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 numbers advantage would effectively have nine times the relative firepower than the smaller enemy. Given that assessment, Lanchester postulated that the smaller force should focus its attack on one part of the larger enemy force at a time.

Such a strategy has been implemented in a variety of ways in battle and in business. At its core, the strategy is a spin on divide and conquer tactics, which allow seemingly insurmountable 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 to target one aspect or location of the rival to destabilize their monopoly.

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