W H I T E P A P E R

Competitor Crazy Ivans

Anticipating Radical Changes in Direction

By: Kenneth Sawka

 INTRODUCTION

In the classic spy novel and movie The Hunt for Red
October, a “Crazy Ivan” is described as a sharp turn
made by a Russian submarine to see if a vessel is behind
it when it suspects it is being followed by an American
sub. Today, the term has come to describe any quick,
unexpected, and radical change in direction, literally or
metaphorically.

“Russian captains sometime turn suddenly to see if

anyone’s behind them. We call it ‘Crazy Ivan.’ The only
thing you can do is go dead. Shut everything down and
make like a hole in the water.”
One persistent challenge of developing and executing
a robust competitive strategy is the often unpredictable
nature of competitors, especially when they believe
they are under competitive pressure — in essence,
being “followed” by an adversary. I call these moves
competitor Crazy Ivans.

One would assume that competitor Crazy Ivans

are unpredictable, always unwelcome, and usually
irrational moves by a competitor that complicate the
affected company’s ability to form and implement a
response, or to prevent competitors from pulling them
in the first place. But, in examining several competitive
strategy projects and speaking with clients about their
companies’ own competitor Crazy Ivan experiences,
many of these assumptions do not stand up to reality.

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 ORGANIZATIONS
CAN OFTEN SEE
CRAZY IVANS
In The Hunt For Red October, intrepid CIA analyst Jack COMING
Ryan knew when Soviet submarine Captain Ramius
would pull a Crazy Ivan if he feared he was being
followed by an American sub – at the top and bottom
of the hour.

Jack Ryan: Has he made any Crazy Ivans?

Capt. Bart Mancuso: What difference does that make?
Jack Ryan: Because his next one is going to be to
starboard.
Capt. Bart Mancuso: Why? Because his last was to port?
Jack Ryan: No. Because he always goes to starboard in
the bottom half of the hour.
In a similar way, there is some predictability to competitor
Crazy Ivans. While any specific competitor move or
industry event is impossible to predict accurately, often
firms can analyze intelligence indicators and anticipate
roughly what a competitor might do and how it might
act.

I recently ran a war-game for a US manufacturing company,

examining likely competitive response to a new product
launch under a well-known and widely respected brand.
The war-game suggested that a likely, and possibly
effective, competitor response to the product launch,
was to take a price discount on the competitor’s legacy
product, take attention away from the product launch
and compel customers not to switch to the new product.
Through the analysis conducted in the war-game, this
company was able to not only envision the likelihood

z y
of a price drop, but could specify in rough terms the

a
CrIvan
amount of the price move, on which products, and for
which market segments. Is this analysis perfect in terms
of describing a future competitor event? No. But, it gives
management enough credible warning that it can begin
to develop contingency plans now in advance of the
expected price drop. Should the competitor pull a Crazy
Ivan by dropping price, my client is ready.

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 EMBRACE
COMPETITOR
CRAZY IVANS

Indeed, though seemingly unwelcome, competitor

Crazy Ivans can pay strategic dividends to your
organization. In the movie, even though Ryan knew that
Ramius would pull a Crazy Ivan at the top and bottom of
the hour, he had to guess which direction the sub would
turn. Ultimately, Ramius validated Ryan’s guess when he
turned to starboard.

Capt. Bart Mancuso: How did you know that his next turn
would be to starboard?
Jack Ryan: I didn’t. I had a 50/50 chance. I needed a
break. Sorry.
In competitive strategy, the parallel is clear: competitor
Crazy Ivans can reveal deficiencies in your company’s
offering or value proposition based on guesses about the
market and competition, and prompt a re-examination
of your strategy with an eye toward improving your
competitive posturing in your targeted markets or
customer segments.

A financial services firm benefited from a recent

Competitor Crazy Ivan in just this manner. When the
firm learned that a key competitor was introducing
a commission-free version of a popular investment
product, the financial services company’s initial reaction
was one of disbelief and shock. Why in the world would
a competitor forego revenue on a popular product?
Further analysis showed that the competitor’s move was
an effort to bring more customers into this product set
by offering, in essence, a free trial as a gateway to higher
value products for which the competitor could charge.
This analysis uncovered a major gap in the financial
services company’s product offering, and prompted it
to strike a partnership with another player to match the
competitor’s move. Doing so promoted the firm to enter
a market from which it was previously absent, and since
then it has strengthened its partnership and taken share
in this market from its competitor.

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 CRAZY IVANS
Jack Ryan knew his end-game: to let Ramius know
that Ryan knew about his plans to defect, and to aid
AREN’T SO CRAZY
his efforts to do so amid Navy commanders and other
senior officers that preferred to blast him and his
AFTER ALL
submarine out of the ocean.

Jack Ryan: Well, Sir, I was just thinking that perhaps

there’s another possibility we might consider. Ramius
might be trying to defect.
In other words, Ramius had a plan, a strategy, and
Jack Ryan figured it out. His assessment, though risky,
proved true and resulted in a counter-response that
achieved a desired outcome – winning the defection of
a respected Soviet sub commander and taking position
of a sophisticated piece of naval hardware – the Red
October.

Organizations that immediately label Competitor Crazy

Ivans as the irrational moves of a desperate competitor
are at best missing an opportunity to reconsider the
robustness of their own competitive strategy and at worst
in denial that competitors are executing a well thought
out strategy at their expense. Firms that avoid knee-jerk
reactions to Competitor Crazy Ivans and use them to
re-evaluate their competitors’ and their own strategies
accrue benefits.

A client in the high-tech industry diligently and

systematically assessed what appeared to be
Competitor Crazy Ivans launched by two competitors.
The competitors within months of each other entered a
consumer category that our client felt was a departure
from the competitors’ core competencies, and that the
market was not in a position to embrace. Working with
Fuld + Company, intelligence gathering and analysis
provided context for the competitor actions, illustrated
that the moves were in fact consistent with business
strategies that both companies had been pursuing for
years, and allowed our client to formulate and execute
a measured response within its own strategic plan. The
analysis set aside concerns within our client that its core
business would be threatened, reaffirmed the viability of
its own strategy, and allowed the company to focus on
more significant market and competitive challenges.

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 In sum, three ways to look at Competitor Crazy Ivans:
Denial Irrational Strategic
Reaction to See Competitor Assume the worst Anticipate
Competitor Crazy Ivans as the and launch ill con- Competitor Crazy
Crazy Ivans act of a desperate ceived, expensive, Ivans, assess them
and undisciplined and ineffective within a broader
competitor; these responses strategic context,
companies tend to and reinforce the
ignore them effectiveness of
their own strategy
State of market Maintain little to no Operate in a Incorporate
awareness and outward-looking state of constant competitive
preparedness competitive or paranoia and treat and market
market intelligence every market event intelligence as part
capabilities; dismiss as a life-threatening of a disciplined
competition occurrence strategic planning
because of feeling and strategic
of invincibility monitoring
capability to
inform effective
and thoughtful
responses
Information Not interested Can never Systematically
mindset in hearing about have too much gather and analyze
competitor activity information, highly competitive and
and punish those reactive to even market intelligence
that try to bring inconsequential to advance
news of Competitor events, and display business strategy
Crazy Ivans to poorly developed and improve
management’s capability to decision quality
attention critically examine and strategic
Competitor Crazy flexibility
Ivans

Operating in a state of denial, or worse, in a state

of constant fear, can only contribute to ineffective
strategies, unmeasured responses to competitive
forces, and deviation from established strategic goals or
objectives. However, by preparing for Competitor Crazy
Ivans and analyzing them when they occur, companies
can test the validity of their own strategy, make necessary
adjustments, and reinforce the validity of their plans.

Capt. Ramius: “...and the sea will grant each man new
hope, as sleep brings dreams of home.” Christopher
Columbus.
Jack Ryan: Welcome to the New World, Captain.

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