I've Googled this for about 6 hours total, but nothing clicks. I don't have enough information to know what I'm searching for exactly...
I read a while back that the British had complete naval dominance at some point in history (colonial era I guess), and that most other countries didn't bother building up their navies because the British would just crush them in any fight.
Except that one country figured out that they didn't need to win in a fight, they just had to be able to cause enough damage where the British wouldn't mess with them. This was called the "harm principle" or "harm strategy" or something like that?
Not sure if this was the British or Spanish, but you get the general idea.
You are thinking of the 'Risk Theory', proposed by the German Admiral Tirpitz. Tirpitz developed 'Risk Theory' to justify his build-up of the German Navy in the late 1800s and early 1900s. It was first spelled out in full in the preamble to the second Navy Law in 1900. Authored by Tirpitz, the bill called for a rough doubling of the fleet laid out by the first Navy Law, of 1897 (going from two battle squadrons to four). The preamble stated that "To protect Germany's sea trade and colonies in the existing circumstances, there is only one means: Germany must have a battlefleet so strong that even for the adversary with the greatest seapower a war against it would involve such dangers as to imperil his own position in the world'. This was a clear statement of the concept; that the German navy must be large enough to be able to break British naval supremacy, even if Germany would not directly benefit from that breakage. By doing so, it would deter Britain from any action against Germany, its trade, or its colonies.
It's hard to tell how much this was a serious concept. It was widely accepted amongst the German Navy, to the point where many seamen accepted their likely deaths in action as the price of defeating the Royal Navy. However, Tirpitz was largely concerned with building up the German Navy to its own end, not with defeating the Royal Navy. The German parliament, the Reichstag, would need significant convincing to pass the bills necessary to fund the vast naval construction Tirpitz wanted. Risk theory served as a means of defence against two counterarguments; firstly, the argument that a naval buildup would increase tensions with Britain, possibly to the point of war, and secondly that Germany could not afford to build a fleet that could dethrone the Royal Navy's primacy. Tirpitz would advance other arguments in favour of a naval buildup, largely concerned with the industrial effects of building a large fleet. There was also little need to prevent Britain from involvement in a European war; Britain's army was too small to be an effectve threat to Germany.