Thinking Like a Contrarian With Counter-Positioning
Amazon or Borders, In-N-Out or McDonalds, Netflix or Blockbuster. In each of these scenarios, the incumbent surely saw the startup coming and had the resources to offer a superior offering but didn't do it. Why? Counter-Positioning is one reason.
Counter-Positioning is defined (by Hamilton Helmer) as
A newcomer adopts a new, superior business model which the incumbent does not mimic due to anticipated damage to their existing business.
To qualify this, a business that isn't large enough for the incumbent isn't an example of counter-positioning – there must exist pain.
In purely economic terms, you can think of counter-positioning as offering a negative net present value (NPV) decision for the incumbent. Entering or switching business models to the newcomer's model would cannibalize enough business to dramatically reduce revenue in the short term. It's hard for business leaders to believe (cognitive biases) that switching to the new strategy would work. Agency issues (am I willing to bet my career on this?) also come into play.
Helmer disambiguates his idea of Counter-Positioning from Clayton Christensen's model of Disruptive Innovation in a few ways. Take In-N-Out vs. McDonald's. In-N-Out is still fast food, but it stands for everything that McDonald's doesn't. Freshness over speed. Ingredients over scale. Secret menu options over openness. It's important to note that Counter-Positioning can't be implicit: it has to reference a competitor, e.g., In-N-Out isn't counter-positioned against Five Guys, which also only serves fresh ingredients.
If you're interested in learning more about Counter Positioning, it's described in Hamilton Helmer's book, 7 Powers. But, unlike most business books, this one isn't just fluff. It has a foreword by Netflix Co-Founder and CEO Reed Hastings and an endorsement from Stanford's Graduate School of Business Dean, Jon Levin.