First, I would like to wish everyone a Happy New Year and
all the best for 2012.
The last piece in my series “Lessons I Learned from Sports
that Apply to Business” covers a game that I love and only wish my ability was
matched by my passion – Squash. I have
played the game for longer than I care to admit, but fortunately my
understanding of the game has improved with time. The key points from squash
that apply to business are, in my opinion are: (i) dominate the “T”; (ii) keep
the other person on the defensive; (iii) not every stroke is a winning one; and
(iv) when stuck in a war of attrition, change the game!
Dominating the “T”
In squash, the “T” is an intersection of lines near the
center of the court where the player is in the best position to retrieve the
opponent’s next shot. Skilled players will return a shot and then move back to
the “T” before playing their next shot. From this position the player can
quickly access any part of the court to retrieve the opponent’s next shot with
a minimum of movement.
However, in order to return to the “T” in a timely fashion, the
player needs to measure the way they approach the ball for the shot, keeping
low and flexible, and maintain their center of gravity over their legs. If they
throw themselves at the ball in order to reach it, they could end up being in a
position which my coach fondly referred to a as being in “extremiss”. Basically the player has committed so much to the shot
that they cannot easily return to the “T” as their bodies are not in a neutral
position from which they can change direction. In such a position and unable to
return to the “T”, they allow their opponent to win the point by placing the
ball where they cannot get to it.
In business, I believe the same is true. The future is
uncertain and the past is not always a guide to the future. Over the last few
years we have experienced “Black Swan” events and felt the impact of “fat
tails”. Corporate strategy is about managing the uncertainty by creating a
portfolio of the necessary strategic and growth options which allow the company
to respond to a changing environment – in effect returning to the “T”. If a
company commits to a strategy which does not allow it to deal with uncertainty,
it is effectively in “extremiss” and
is so cannot recover to the corporate “T”. However, this is not to say that the
company, it management and employees are not committed to the strategy chosen,
just that if the environment changes such that the strategy is not working, the
company can quickly adjust.
Not Every Shot is a Winning Shot
In squash, as the players get better the rallies get longer
and the game becomes a war of attrition. Thus, the aim of the game is keep the
other player on the defensive until you are in a position to hit a winning
shot. By hitting the ball deep and in
the corners it reduces the other player’s ability to hit an attacking shot. In
that regard, many of the shots that are hit, are not winning shots, but designed
to put the other player on the defensive and move them in the back of the court
and so that you can set up an attacking shot.
In business many see a winning product and think that is
what destroyed the competition and put the company on top. However, while I
think that a great product or strategy helps – and in the case of a disruptive
technology maybe essential, most of the time, the key is to be continually
pushing your competition into a defensive position from which they cannot
attack you and so when you launch the winning product, the competition are effectively
neutralized and not able to muster an adequate response. Apple is good example
as it continues to release of new products or significant updates which keeps
its competitors on the defensive and continually playing “catch up”. This
enables Apple to extend its market lead and redefine the market.
Often it is the
follow up to the Winning Shot that wins the Point
As was mentioned above, as the players ability improves the
game becomes one of attrition and there are not many opportunities for an “ace”
or a “winning shot” that your opponent cannot reach. In reaching the ball to
return the winning shot, often puts your opponent in a position where they are
no longer balanced and thus they are unable to return to the “T” prepared for
your next shot, and it is that shot that wins the point.
In business while most planning is done on a ceteris paribus basis, the launch of a
new product or strategy nearly always elicits a response for the competition –
following Newton’s third law “for every
action there is an opposite and equal reaction.” However, if in responding to your strategy or
new product, the competition has put themselves in a position where they are
unable to effectively respond to your next move, you can take a market
leadership position or redefine the market.
Many studies have been done that show that those companies
that emerge as market leaders during periods of market turbulence and recession
often hold that position for a long time. This is due to the fact that during market
recessions and turbulence, resources – both human and financial - are stretched
and the ability of companies to respond effectively is compromised. So if a company
launches a winning product or redefines the market redefined during such a
period, the competition cannot respond adequately and the company can take a
market leadership position. An example of this was the emergence of Amazon as
the market leader in online shopping following the 2000/2001 recession. As the economy returns to a period of
stability, human and financial capital is available and so the company responds
more effectively and the ability to gain that market leadership is more
limited.
When stuck in a war
of attrition, change the game
In squash, if you get into a war of attrition unless you are
far fitter than your opponent and don’t mind, it is best to change the game so
that you retake the advantage. Changing the game is done by (i) changing the
tempo of play; (ii) changing the height of the ball; or (iii) being
unpredictable. In business, it is the same, if you and your competition are
fighting but no one is winning, you have to change the game. This is either by:
·
change the tempo – speed to market
of new products, reaction to the competition or the introduction of new
products. By changing the speed of these, you can throw off the competition and
move yourself into a more competitive position. Not all of these have to be
done faster, by slowing down some of these, you can prepare yourself better so
that the launch of the product or the response is better planned and executed.
·
change the height - redefine the
market and what are the key selling points of the product. At times like this
look at the market and determine if you can redefine it such that you are
selling on a different basis. Examples are: the Apple Ipod changing the market
from a music player to a music store; and Valtra, a Finnish tractor company,
that became the Dell of the tractor industry – they would build it to the
client’s specifications, paint any name on it, and clients were invited to
watch it being assembled. This changes the base of competition.
·
be unpredictable! More risky, but
has been said in my prior blogs, strategies that can grow a company have the
same characteristics of those that cause the company to fail. You cannot
succeed by being safe.
Copyright 2011 Marc Borrelli
