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Senior Correspondent

Is Business a Combination of Sport and War?

In the CEO Afterlife

Is Business a Combination of Sport and War?

The notion of business as a combination of sport and war was attributed to Emile Herzog (1885-1967), a French author who used the pen name, Andre Maurois. I’m going to admit at the outset that I was a strong proponent of Herzog’s concept for most of my career. However, now that I look back from the CEO afterlife, I realize that this view need not be pervasive.

The man who preceded me in the corner office lived by the credo that a company’s success wasn’t enough; the other guy had to fail. That may sound extreme. The truth of the matter was this: he was recruited to turn around a failing business on the verge of bankruptcy. When a business is in the red because of smart competitive maneuvers or its own strategic ineptitude, intense disdain for the competition emerges. It is the mindset of a company in a “turnaround.” Desperate times require desperate measures. As in war, a common enemy is a great place to unify and motivate a team behind a worthy cause. At the time, our cause was survival.

As for sport, the game of market share was an easy way to track success. We put our best efforts into creative and strategic maneuvers to tip the scales in our favor. With only 100 percent available to the players of the market share game, you knew whether your play(s) made you a winner or a loser. But hold on for a moment. The delusion is that market share is the “be-all and end-all” of business success. Proponents believe that dominant market share creates competitive advantage because of marketplace leverage and economies of scale. This is the mentality of the old economy.

Old economy thinking works within known market space defined by industry boundaries and competitive rules. The 100 percent boundary can get crowded and those obsessed with winning or defending their territory often resort to non-strategic tactics. The tactic that works best to defend or build share in the short term is price cuts or special discounts. Be forewarned, this tactic destroys profits.

The new economy doesn’t operate that way. Sure, they work hard at improving their competitive positions within existing markets. But their leaders are farsighted. Their horizon is markets that do not exist. The key is to get to that future first. No one has done this better than Apple. They think big and they think bold. At the other end of the spectrum is Research in Motion. Thinking bold, and using bold as nomenclature (Blackberry Bold), are not the same.

Success in business does not have to hinge on the sport and war analogy. Yes, that mindset worked for me when the hungry wolf was at our door. But in my final years as CEO of a growing, profitable consumer packaged goods enterprise, it was senseless to engage in bitter wars that challenged margins. A competitor doesn’t have to fail; they too, can make a profit. But they cannot be permitted to lead; make them play catch-up by continuing to strategically innovate. That’s how I played the game. I suggest you do the same.

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