Balancing Strategy to win is a very successful method to apply when one is not the strongest.
Working with allies is often a requirement in modern business.
Allies are not permanent, however, confluence of interests and avoidance of unnecessary confrontations and friction is a smarter way to do business.
Company survival makes it often necessary to form alliances, even if those alliances are hybrid.
An agile Company knows when there is a business necessity to form an alliance, who to form it with and when to let it go. In this context, the Balancing Strategy is an 
alternative technique to that of siding with the biggest and/or strongest. In particular, siding with the biggest is not cost free. It means following, accepting, compromising and naturally receiving the lesser part of the spoils if the alliance is successful and the bigger part of pain if the alliance is unsuccessful.
To apply the Balancing Strategy, the foremost requirement is to measure accurately its own vs the other forces strength and direction, in the field.
The Balancing Strategy is interesting for the smaller player. It can only be applied, if the sum of the smaller player combined with the weaker of the two bigger players, can result in a major competitive advantage.
An example can demonstrate the concept:
Assume that there are two hardware producers producing similar product, a major (A) and a minor (B) one.
Assume that there is a software producer, the product of whom, will make either of the two hardware producers superior to the other.
The knee jerk decision of the software producer is to associate with A, hardware producer vs B.
This is not necessarily correct.
The final aim of the software producer is to maximize its income and hence profit, from the sales of its software.
If the difference in strength between A and B hardware producers is small, then B hardware producer will be inclined to pay more, for the software product, which will undeniably give him competitive advantage over A.
This, combined with the superiority of the final product, will result in a greater income for the software producer than the opposite choice. In addition, allying with B, will give the software producer more leverage in the alliance vs associating with A. Hence, judiciously choosing its partner, the software producer can efficiently leverage itself and be a significant player in the relationship & in B’s portfolio versus being a secondary player in A’s one.
The Balancing Strategy is as successful as the accurate knowledge of the relative strengths of all the players involved. It must also be understood that normally there are more than two significant players in a business field.
The Strategic Aim is not to dominate but rather to maximize benefit.
To this end, all principal parameters must be taken into account in choosing the ally.
Dominant to all other parameters, the first requirement is a thorough understanding of the Structure and Players in the relevant Market.
Once this is fully ascertained, three are the issues to be strategically examined:
- The first, is complementarity and common interest.
- The second, is the temporariness of the relationship, in the sense of the expected longevity of the association.
- The third is the certainty of the outcome. A Balancing Strategy is not a zero-sum game. No outcome is fully certain or constant, however, the closer to certainty the assessment, the more successful the outcome.
Any Company attempting to play a Balancing game must be agile. That means that the Company is able to follow its Leadership in this involved Strategy.
The task for its Leadership is twofold:
- First, to carve a good niche position for the Company.
- Second, to be even handed in its choice and duration of partnerships, acting with the optimum possible, data based, decision making and devoid of bias.
The Balancing Strategy approach must be soft and to the extent possible, discreet. The credibility of the Company is at stake.
The modern digital environment is supportive of the decision-making process but there is no yet digital system devised, which can replace the fine judgment required, for this difficult, albeit rewarding, Strategy.
The Balancing Strategy, in today’s complex and continuously disrupted Business environment, is one of the superior forms of Leadership.
