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Bismarck, Pirates and Labour: What politics can teach us about market positioning

by | Apr 10, 2021

Business and Politics have a lot in common. Sure, there are some core differences. Businesses exist primarily to make money, governments are there to spend it. Governments have armies, the police and the law to enforce their decisions on their constituents. Not many businesses have those resources nor should they.

But if you gloss over those aspects, similarities between voters and customers appear. The voter lends their support by voting for a candidate, the customer uses money to support a business.

Going another level deeper, the longevity of government is directly tied to what their electorate want them to do. No democratic government survives by alienating its voters. The same thing happens in business. Companies have a set of core customers and need to react when their customers no longer buy from them.

Politicians are required to keep an eye on things to make sure they are keeping with times and securing the support of a number of different voting groups that will deliver them a majority at the next election. Modern political parties survey their voters and spot gaps in the political landscape that they can exploit. Sometimes they blatantly steal policies from other parties to snatch away their voters. This is exactly what happens in business as well. Here is an example of Amazon stealing Fab.com’s business by onboarding the latter’s suppliers and nullifying Fab’s competitive advantage.

In this article, I want to explore three cases of how politicians recognised, lost and struggled to create opportunities. We’ll explore the 19th century Otto von Bismarck, the rise of the Pirate Party in the 21st century and the woes of the British Labour Party in this past decade.

In each case, I’ll link it all back to how the lesson is relevant for business. We’ve discussed positioning before in the positioning context of Mashroom, but I hope this gives us another perspective to market positioning in a different context.

The Iron Chancellor. More flexible than brittle

Bismarck sporting the moustache in the 80s. No, the 1880s.

 

Otto von Bismarck, a.k.a. the Iron Chancellor, is famous for being the key architect behind uniting Germany into a unified state. But we’re not going to focus on that achievement. Instead, we’ll look at some of his political and policy manoeuvres in office. What is less well known is that his government was the first to introduce the modern welfare state. State health insurance and state pensions for the average worker were enshrined into law in several acts over the course of a decade.

This may not seem a big deal. Health and accident insurance as well as pensions were key socialist policies endorsed by the left political spectrum at the time. But Bismarck, though politically independent, headed a right-wing government that was ostensibly on the side of rich landowners. And it was not in the interest of the rich landowner to pay extra taxes to finance these state benefits for workers.

During the 1870s and 1880s, however, leftist ideas were gaining momentum among common workers. In 1867 Karl Marx published volume 1 of Das Kapital. 1873 also saw a worldwide economic depression occur which led to 20% of corporations to go bankrupt and many agricultural workers heading to cities in search for work. The lack of available work led to the unemployed flocking to the radical left and social democratic parties. This led to gains in the polls for the left. Bismarck had to do something about it.

Within a decade he had enacted legislation that was probably the most radical since the French Revolution a century earlier:

Health Insurance Bill of 1883

Accident Insurance Bill of 1884

Old Age and Disability Insurance Bill of 1889

Although he didn’t stop the rise of the left, he did ensure the most radical elements did not come to the fore.

Bismarck spotted a growing trend (socialism), positioned himself and his government so they could profit from the trend (or at least not be left flatfooted) and possibly avoided what could have otherwise been a revolution. He pacified factory and agricultural workers with state insurance and a pension.

Although there wasn’t a ‘gap in the market’, Bismarck’s appropriation of key socialist policy and repositioning meant that the radical left did not get more than 20% of the vote in his years in government or thereafter. Although the more moderate social democrats became the most voted for party in the decades after Bismarck left government. But Bismarck’s policies probably staved them off for a good two decades.

Bismarck repositioned his government to be more worker friendly and as a result stole votes from the left political spectrum. Businesses can also tap into different verticals where competitors are more dominant. But they’ll have to provide a better proposition than the incumbents. Bismarck, for examples, was actually in power and could enact those policies where the left parties were in the opposition.

When new unclaimed opportunities emerge: The German and Czech Pirate Parties

Pirate parties are a movement of political parties that sprung up 10-15 years ago across northern and central Europe as The Pirate Bay, a file sharing website, was closed down.

These parties were aligned along the freedoms that were important among the younger generations. They were used to downloading content, fed up with hierarchy and generally not represented by any of the existing political parties. Some of the policies they pushed were fairly straight forward (e.g. make government more digital) but there were also some controversial ones (e.g. abolishing copyrights thereby allowing free distribution of books, music and films without paying the rights holders).

What’s remarkable about these parties is that they arose fairly organically from a gap in the political landscape. In Germany, for example, the two main parties battled over Gen X, Baby Boomers and the Silent Generation whereas Millennials were largely ignored. Many Millenials found a home in the ideas of the Pirate Party, which brought a fresh take on politics although also some chaos.

CDU and SPD, the two parties that vied for dominance at the time, missed a trick in targeting this group of voters. The German Pirate Party peaked at between 7-9% of votes in various state elections in 2011 and 2012.

But over the next couple of years it fell apart because of a lack of follow-through. The loose ideals that made it successful did not translate to lasting enthusiasm as voters struggled to decipher what the party stood for outside of the “freedom” initiatives.

In company terms, the Pirate Party was a startup that saw a gap and used it. And as it grew it should have become more professional, developing policy views for other topics that its customers (voters) care about and continuing its growth spurt. This is where the German Pirate Party failed but the Czech one succeeded.

The history of the Czech Pirate party is similar to that of the German one but for one key difference. It developed a professional set of policies and managed to differentiate itself from the incumbent political parties by being the only one that was not affected by the series of corruption scandals that rocked the country. As a result, it is now set to secure close to 30% of votes and has already secured the Prague mayorship.

Like the Germany Pirate Party, I can think of many company examples that rose on a growing new trend, but failed to capitalise on it: Myspace, Yahoo, Blackberry.

Likewise, there are also companies that have successfully repositioned themselves through a changing environment and differentiated themselves from their competition as the Czech Pirate Party has done: Apple (iTunes, iPod, iPhone etc), Microsoft, Samsung (from food to electronics producer).

UK Labour Party: The trouble with staying on the sidelines

The UK Labour party has struggled to differentiate itself meaningfully in the last decade whilst the Conservative party has been in power since 2010 under various leaders. Many people will argue about the causes of Labour’s attempts, but it all boils down to the party’s ideas not appealing to the majority of the population.

Trying to find the right set of policy suggestions to appease the electorate is like trying to navigate the below Venn Diagram.

A complicated Venn Diagram. This is still probably too simple to represent the average voter’s overlapping interests

 

Voting populations care about a myriad of different issues. Clever political strategists and their parties crystalise the issues they can differentiate themselves on and attempt to pick the combination that is likely to win a majority. Throw in likeable candidates that can communicate these issues effectively and you’re probably halfway to winning an election. But just because the solution is relatively simple doesn’t mean it’s easy to achieve. There are many moving parts in the political machinery and news cycle that can disrupt carefully laid plans.

The current Labour leader, Keir Starmer, has been careful not to tread on anyone’s toes. But this strategy may be hurting him as a recent leaked internal strategy doc revealed that voters do not know what the current Labour party stands for.

I don’t envy his position. He was elected leader when the only defining issue of the political news cycle was Covid-19. This is not too dissimilar to his predecessor whose time as Leader of the Opposition was mostly defined by Brexit. The whole point about differentiating oneself or your organisation is to find a way to stand out from your competitors but also to control or at least have influence over the subject matter.

With Brexit, there was another mighty political player (the EU) involved who dictated terms. And political parties had to react to these terms. With Covid, that player is the virus and its transmission rates.

The new Labour strategy: Show some flag

 

But the strategy document is said to reveal that the party is looking to position itself as a party that prioritises the Union Jack, prioritising military veterans and dressing smartly. Whilst I understand the need to align with voters’ patriotism, I don’t see any of these issues as addressing voters’ core issues.

The report highlighted voters caring about the economy, healthcare and Brexit (in that order). It also said that voters see Labour as only being strong on healthcare. I’m far from being a political strategist, but bringing up a strong credible plan to help kickstart the economy seems to me to be a better bet to help differentiate the party from the Conservatives. However, more than two months from this report, little else other than flag-waving has been presented.

Labour has survived because there is no other party that can compete with the two big ones. The Liberal Democrats and Greens win votes but not enough seats to endanger the Conservatives or Labour party in any meaningful way. It remains to be seen how Labour will pull itself out of this rut.

Although positioning and differentiation in business is about finding that angle that your competitors are missing, sometimes that angle is just not there. Or competitors have cornered the market and have an offering that satisfies customers’ needs. Alternatively, a change in customers’ expectations for whatever reason may also destroy your positioning (as Covid and Brexit did to the Labour party).

To continue on the flag theme, I don’t have a solution other than to throw up the white flag (sorry!). It’s not possible for Labour, but it certainly is for business. Sometimes it’s just good business sense to recognise a losing proposition and to focus energies elsewhere.

Something a bit different

I hope this exploration of the similarities between business and politicians has been interesting. Far-sighted and strategic politicians often use the same or similar mechanics as business executives or startup founders to capitalise on open gaps in their respective fields. Spotting them and capitalising on those opportunities is crucial to stay ahead of your competition. It’s a process that needs continuous attention, whether you’re in business or politics.