Creating Constraints
Purposefully introduce new bottlenecks to constrain competitors by shaping market, legal, or technical environments.
"Supply chain manipulation with a view of creating a new constraint where none existed."
- Simon Wardley
π€ Explanationβ
What is Creating Constraints?β
Creating Constraints is a strategy where an organization intentionally manufactures a new bottleneck. This can be in supply, regulation, or market standards, to restrict competitors' freedom of action. By controlling or limiting critical resources, the organization shapes the competitive landscape in its favor.
Why use Creating Constraints?β
Applying Creating Constraints can:
- Establish a sustainable competitive advantage by raising the cost and complexity for rivals.
- Secure access to key resources or channels before they become universally scarce.
- Shape market or regulatory conditions to align with your strategic goals.
How to use Creating Constraints?β
- Map your value chain and identify components with high future importance.
- Assess which components you can control or influence (suppliers, standards, legal avenues).
- Develop mechanisms for creating scarcity (exclusive contracts, patent filings, regulatory lobbying).
- Secure commitments (e.g., supplier agreements, regulatory endorsements).
- Monitor the market, enforce constraints, and adapt to competitive responses.
Core Principlesβ
- Proactive control: Act before competitors recognize the emerging bottleneck.
- Sustainable enforcement: Ensure you can maintain the constraint over time.
- Legal and ethical compliance: Balance aggressive tactics with regulatory and reputational risks.
πΊοΈ Real-World Examplesβ
Historical Example: De Beers and the Diamond Supplyβ
De Beers dominated the diamond market for decades by stockpiling gems and controlling mine output. This artificial scarcity forced competitors and consumers to operate within De Beers' controlled supply environment, maintaining high prices and market power.
Tech Example: Exclusive Carrier Deals for the iPhoneβ
When Apple launched the iPhone, it secured exclusive partnerships with carriers (e.g., AT&T in the U.S.), creating an access constraint for competitors who lacked comparable distribution, thereby shaping early market adoption.
Hypothetical Example: Lithium Supply for EV Batteriesβ
A battery manufacturer signs long-term exclusive contracts with major lithium suppliers, creating a resource bottleneck that delays new electric-vehicle entrants lacking pre-negotiated supply, raising their costs and slowing their market entry.
π¦ When to Use / When to Avoidβ
π¦ Creating Constraints Strategy Self-Assessment Tool
Find out the strategic fit and organisational readiness by marking each statement as Yes/Maybe/No based on your context. Strategy Assessment Guide.
Landscape and Climate
How well does the strategy fit your context?
- Our map shows a critical component at an early stage of evolution that will become a bottleneck.
- We have identified a future resource that competitors currently take for granted.
Organisational Readiness (Doctrine)
How capable is your organisation to execute the strategy?
- We have strong negotiation and legal capabilities.
- We can commit the necessary resources to enforce exclusivity or regulation.
Assessment and Recommendation
Strategic Fit: Weak. Ability to Execute: Weak.
RECOMMENDATION
Consider alternative strategies or address significant gaps before proceeding.
Use when: You have foresight and leverage to lock in a key resource or standard before others adapt.
Avoid when: Legal, regulatory, or reputational risks outweigh potential benefits, or if competitors can easily innovate around the constraint.
π― Leadershipβ
Core challengeβ
Balancing the strategic advantage of creating constraints against legal, ethical, and ecosystem impacts while securing stakeholder alignment.
Key leadership skills requiredβ
- Strategic foresight
- Negotiation and influence
- Legal and regulatory expertise
- Risk management and ethical judgment
- Cross-functional stakeholder alignment
Ethical considerationsβ
Consider the broader market and societal impact: overly restrictive constraints may harm innovation, provoke antitrust action, or damage relationships with partners and customers.
π How to Executeβ
- Conduct a landscape analysis and map component evolution.
- Identify control points where scarcity can be introduced.
- Build legal, regulatory, or contractual mechanisms for exclusivity.
- Coordinate with suppliers, regulators, and partners.
- Communicate strategy internally and externally to enforce the constraint.
- Monitor competitor responses and iterate your approach.
π Measuring Successβ
- Reduction in competitor access to the constrained component.
- Increased time-to-market advantage or margin improvements.
- Successful enforcement actions or regulatory approvals.
- Growth in market share relative to constrained rivals.
- Stability of the created constraint over time.
β οΈ Common Pitfalls and Warning Signsβ
Overinvestmentβ
Investing heavily before the market materializes can lead to wasted expenditure if the constraint loses relevance.
Regulatory Pushbackβ
Aggressive constraints may invite antitrust scrutiny or legal challenges that can nullify their value.
Partner Resistanceβ
Suppliers or standards bodies may resist exclusivity if they perceive unfair coercion.
Competitor Innovationβ
Rivals may develop alternative solutions that circumvent the constraint, undermining its effectiveness.
π§ Strategic Insightsβ
Timing is Criticalβ
Deploy constraints at a moment when they deliver maximal strategic leverage without premature resource waste.
Balance Ecosystem Healthβ
Maintain a healthy ecosystem to avoid long-term stagnation or backlash from partners and customers.
Prepare Counterplayβ
Anticipate potential defenses and have responses ready to uphold your newly created constraints.
β Key Questions to Askβ
- Resource: Is the targeted component critical enough to justify creating a constraint?
- Leverage: Do we have sufficient influence (legal, economic, or technical) to enforce it?
- Cost vs. Benefit: Will the strategic gains outweigh the costs and risks?
- Timing: Are we acting early enough to shape the market, but not so early that the constraint is ignored?
- Workarounds: Could competitors innovate around this constraint?
π Related Strategiesβ
- Exploiting Existing Constraint - Amplify a pre-existing bottleneck rather than creating a new one.
- Patents & Intellectual Property Rights - Leverage legal rights to block competitors from evolving key technologies.
- Raising Barriers to Entry - Broader tactics to limit competitor market entry.
β Relevant Climatic Patternsβ
- Characteristics change β trigger: imposing constraints alters how components evolve.
- Inertia can kill an organisation β influence: self-imposed limits may hinder adaptation.
π Further Reading & Referencesβ
- Exclusive Dealing - Overview of how exclusive contracts can shape market access.
- De Beers - Case study on artificially restricting diamond supply to maintain market control.
- Antitrust and Exclusive Agreements - Overview of legal considerations around exclusive arrangements.