A Fund Manager's analysis of Narendra Modi's strategy

There is a not well understood competitive dynamic called ‘counter-positioning’, primarily because it is so contrarian that most people do not think of it as a natural course. It involves doing something that is very far away/ and often opposite of the strategies that have delivered incredible success to the incumbents. As such, this strategy is seen in action most often when the incumbents appear invincible by conventional metrics. How many of us remember someone or the other saying “BJP will never, ever win a majority!”.

To create something new is beset with several challenges, and often happens when circumstances are in a flux, technological change, changing demographics, changing aspirations, changing geopolitics etc. To leverage this and successfully counter-position, requires three characteristics:

1) An upstart (Modi), who develops a superior, heterodox model (development + Hindutva) 

2) The model has the ability to challenge entrenched players (Congress+, i.e., appeasement, a warped idea of secularism, caste based, family based, language based, parochial parties)

3) A steady accumulation of a voting base while the entrenched interests seem paralyzed, and unable to respond

The brilliance of counter positioning lies in the incumbent’s active decision to NOT copy the upstart’s new model, because they feel they are better off doing what they have done for generations. In military terms, an army general leaves a front entirely unmanned, and when he sees the adversary enter his land from it, decides to do nothing.

The reason why an incumbent would eschew a superior business approach could be:

1. They believe that going the new route hurts their interests in their original business, because both are diametrically opposite. In our case, the ecosystem taking the Hindutva + development route would hurt their carefully cultivated ‘secular’ image where a language/a caste/ a region + minority vote = electoral victory. Not to mention a network of rent seeking and palm greasing machines that served the incumbents across the political, bureaucratic, and business spectrum. Or so it is alleged.

2. Another reason could be, the incumbent sees the upstart’s model as a new experiment. One whose success is unproven, vs. an existing model that has worked for generations to put a certain type of person in the PMO. The risk is simply too high.

3. And finally, the third reason could be an “agency problem”. See, a political party is supposed to reflect the wishes of the common people of the nation. But more often than not it is held hostage to the whim of the matriarch/ patriarch that runs it, the CEO so to speak. If diverting the party towards Development + Hindutva hurts the interests of the ‘CEO’, then the ‘CEO’ will not do it. Which CEO will jeopardize her/his own job just because its in the interest of the shareholders (people, in this case)? Might as well stick to the old road, and milk it for what it’s worth, isn’t it?

Loosely, one can compare counter-positioning as type of a disruptive technology. Like what the invention of automobiles, might have done to bullock carts. Or what OTT has done to theatres/ cable TV etc.

Once the losses become overwhelming for the incumbent, they exhibit the “deer in headlights” syndrome. They flip-flop between trying the upstart’s strategy, to going back to their own when they see that slipping away. Porter describes this as the “middle of the road” approach, and it often doesn’t end well for the incumbent. An incumbent’s reaction to a counter positioning challenge usually goes through the following phases:

1) Denial (There is no Modi wave!)

2) Ridicule (Where is the Modi wave?)

3) Fear (Modi will disenfranchise X religion, Brahmanical patriarchy, blah)

4) Anger (Modi wears billion-dollar kurtas, drives a Maybach, 2002 Godhra, the fisticuffs at Madison square gardens by ecosystem journalists, etc)

5) Capitulation (often too late, “Ye hindu hain, wo Hindu hain, Main Hindu hoon”, the temple runs, “I am a brahmin”, etc)

The most amazing thing about the counter positioning strategy is simply this: Modi doesn’t need the ecosystem to fail or falter in executing their existing strategy. In fact, he is hoping the they play it even better. The harder they stress on false secularism, or cry hoarse about Brahminical patriarchy, or dismiss Hindu temples and sentiments, the better it is for him. This is the brilliance of counter positioning, that the opponent playing her/his best game, will still be taken “off the board”.

The only chink in this strategy is that it is not an exclusive one. That is, multiple players can follow it. It is often said that there is more space to the BJP’s Right, than there is to the Congress led ecosystem’s Left. In face in an earlier blog post, I had pointed out that it would be more electorally rewarding for regional parties that have had a saffron tilt to swerve far right, than go left. But only the opposite has happened so far, and the results are for all to see.