The goal of business strategy is to gain market share through thought and action. If you can outthink your competitor, it is easier to win your competitors' customers. To get started, you must understand what your competitor's CEO wants to accomplish.

You have a prime business opportunity if you see a mismatch between your competitor's strategy and what customers will need in the future. As a Lecturer of Strategy at Babson College, ranked No. 1 in entrepreneurship for the last 21 years in a row, I have been trying to find ways to illustrate this for years.

Fortunately, Feb. 14 news provided a fantastic lesson in the power of how to outthink a competitor and win its customers. That's the day Airbus announced that it would stop producing its 555-seat Superjumbo A380 in 2021 after its largest customer, Emirates, takes delivery of the final 14 planes it ordered, according to the Wall Street Journal

It's an outcome that rival Boeing predicted about 25 years ago when it outplayed Airbus with a brilliant bit of judo strategy (using Airbus's strength against itself), according to my 2008 book You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing.

As I wrote, Boeing knew two things about Airbus:

  • Airbus believed that if it could prevail in the Superjumbo market, it could cripple Boeing.
  • The leaders of Airbus's British, French, and German business units had different views of the future of the Superjumbo market.

Boeing also believed that the future was not in the Superjumbo market -- which it had long dominated with its 747 -- but in the market for mid-sized aircraft such as Boeing's 787 Dreamliner or Airbus's A350.

Boeing believed that if it could convince Airbus to focus on the Superjumbo market, Boeing could get a big lead in the mid-sized jet market. So Boeing proposed -- and Airbus accepted -- that the companies collaborate on a market research study to estimate the size of the Superjumbo market. The two competitors came to different conclusions: Airbus's estimate was that airlines would demand 1,000 aircraft, Boeing's was 250. 

The market research project had the desired outcome. Airbus invested over $10 billion in the A380 while Boeing bet at least that much on the 787. Boeings' prediction was spot on -- the Journal reported that Emirates's 123 orders accounted for about half the market.

And the 787 has been much more successful. To date, Boeing has received orders for 1,421 787s and has delivered 789, according to Boeing.

Here are four insights from this story that can help you win customers from a big incumbent.

1. Know What Your Competitor Wants.

Successful incumbents often forget how they got that way. Instead of listening to customers to understand their ambitions and concerns about the future, some incumbents focus on the quirky ambitions of their CEO. If the CEO wants something different than what customers need, there is an opportunity to win its customers.

Boeing realized that Airbus's fuselage envy was an opportunity to take market share. An industry consultant told me that Airbus -- which lacked a jumbo aircraft -- exhibited "hubris. They told themselves, 'If we have the biggest plane, we will beat Boeing.'"

2. Take a Clear-Eyed View Of The Future.

To seize such an opportunity, you must win the incumbent's customers. For that, you have to talk to customers, understand how their needs will change in the future, and build a product that will better satisfy those future needs.

By listening to the company's Strategic Analysis Department (SAD) Boeing decided to focus on the mid-range market. SAD asked its Airline Advisory Council, consisting of Boeing's best customers, what they would like in a new aircraft -- it also looked at changing route structures, new business objectives (such as an emphasis on profit versus market share). 

3. Distract Your Competitor.

By learning about disagreements in different parts of its organization you can distract your competitor.

Boeing thought that the Superjumbo research study would enable it to get ahead of Airbus and delay its response to the 787. Boeing took advantage of the conflict between Airbus's British business unit that believed Boeing's more conservative Superjumbo market forecast and its French and German units that were way more bullish.

4. Bet On Your Vision.

Once you've distracted the incumbent from your strategy, you must bet on your vision.

Boeing did this well -- remaining focused on the market for intermediate-sized jets, which proved to be the better bet. While Airbus thought it was delivering the coup de grace to Boeing; Airbus's decision to go forward with the A380 delayed its ability to respond to the market demand for the 787.

Upstarts use strategy to beat incumbents. Follow these four principles to get there.