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The Hardball Strategies By George Stalk and Robert Lachenauer  There are many strategies in the hardball playbook; indeed, any strategy that provides a competitive advantage is a hardball move. There are, however, a handful of classic hardball strategies that have proved, over the decades, to be particularly effective in generating competitive advantage, and they are the ones we describe in this book:
Unleash massive and overwhelming force Although hardball players prefer the indirect attack, they sometimes surprise and overcome their competitors with a frontal assault. Massive and overwhelming force must be deployed like the blow of a hammer—accurate, direct and swift. It must not be used until the company is ready to put all its energy behind it. The company must also be certain that the competitive advantage it believes it has is actually available for action. On paper, the power of all a company's units may look greater than the competitor's, but can those units perform decisively together in battle? When a company chooses the direct attack strategy, it may be necessary to completely overhaul its business in order to unleash the force. The process can feel like the turnaround of a successful company, a paradoxical situation that is uncomfortable for entrenched leaders. Only those with vision and courage should engage in this bold, and often very public, hardball strategy. Although the force used must be massive, it is not always wise for it to be so overwhelming that you completely demolish your competitors. It may be better to keep a competitor weak and struggling than to force it into bankruptcy, from which it could emerge fit, lean and eager for revenge. Exploit anomalies Sometimes a growth opportunity lies hidden in a phenomenon that, at first glance, seems irrelevant to the business or contradictory to current practice. But anomalies–such as idiosyncratic customer preferences, unexpected employee behaviors, or odd insights from another industry–can show the way to competitive advantage, even decisive advantage. Softball players want to ignore anomalies or try to suppress them because they don't conform to standard practice. Their senior managers usually dismiss anomalies as narrowly based or random events; running a business to meet standard operating procedures is difficult enough without having to account for every deviation that comes along. Hardball executives, however, relish anomalies. They look for ways to exploit them, asking: What's really going on here? What can we learn from this? Is there an insight that can take our business to a whole new level? The key to exploiting an anomaly is to expand it from a rare and isolated instance and apply it to a large volume of customers. Business processes and systems often need to be adjusted to sustain and encourage anomalous behavior and to achieve competitive advantage in cost, quality, time and value. The reactions of competitors must be anticipated, countered or neutralized. Threaten your competitor's profit sanctuaries Profit sanctuaries are the parts of a business where a company makes the most money and steadily accumulates wealth, like a bear storing up fat for winter. In certain circumstances, the hardball player can gain competitive advantage by attacking a competitor's profit sanctuaries. This is a particularly good retaliatory strategy. If your competitor starts pushing into any of your territories, you respond by attacking his plump underbelly. He should get the message, fast. This is also a risky strategy. It can take you deep into the caution zone, so each use must be considered on its own legal merits. Your competitor is likely to retaliate by attacking your profit sanctuaries. And he may have greater financial resources than you thought, or a "sugar daddy" waiting in the wings to save his hide. You could even face allegations of anti-competitive behavior. So, when you decide to gut the bear, it's a good idea to bring legal counsel along on the hunt. Take it and make it your own Softball competitors like to think their bright ideas are sacred. Hardball players know better. They're willing to take any good idea they see (at least any one that isn't nailed down by a patent or other legal protection) and use it to create competitive advantage for themselves. But hardball borrowing is not as easy as it may seem. It involves much more than appropriating a good idea; you have to improve on it. Harry B. Cunningham, who created Kmart in the early 1960s, admitted that Sam Walton "not only copied our concepts, he strengthened them" in his Wal-Mart stores. You also need to make the idea your own, grafting it into your organization and getting your people to buy into it. Simply replicating the details isn't enough. Just ask all the airlines that have tried–and failed–to copy Southwest. You needn't restrict your borrowing to competitors. You can pick up ideas in one geographic market and transplant them in another, as Ryanair has done with Southwest's model in Europe. You can also transplant between industries, as casket maker Batesville has done. It applied the methods of the Toyota Production System to casket making and revitalized a moribund industry. Some people might recoil when they're called a copycat. Hardball players couldn't care less. If Steve Jobs had ignored the Graphical User Interface he saw at Xerox PARC, Apple Computer would never have been born. If Kiichiro Toyoda hadn't learned just-in-time techniques from Ford, Toyota wouldn't have surpassed rival Nissan in the 1950s, much less succeeded in the United States. Entice your competitor into retreat Sometimes, through a superior understanding of your business and your industry, you can take actions that confuse your competitors and entice them to behave in ways that they believe will be beneficial to them but that actually will weaken them. If you have a superb understanding of your own costs, for example, you can set prices so your competitors respond by seeking business that they think will be profitable for them, but that will, in fact, drive up their costs and depress their profits. Enticing your competitors toward business that drives up their costs is one of the most complex and devilish strategies of hardball competition. It is a risky, bet-the-company strategy. It works best in complex businesses where costs may be misallocated. There is lots of potential for error. Your analysis of the actual versus apparent costs associated with a product, service or customer—and the strategy that grows out of that analysis—had better be right. Break compromises When a hardball player wants to achieve explosive growth, he looks for a compromise to break. A compromise is a concession that an industry forces on its customers, who often accept it because they have come to believe it is endemic–"just the way things work." Circuit City's CarMax broke the compromise in used car retailing by offering a much bigger selection of cars of all brands and ages, simplifying the search with a computerized inventory system, and streamlining the sales process so that customers could drive away with their cars in 90 minutes. CarMax has eaten the lunch of many traditional dealers and has gained the strength to beat back attacks from copycats such as AutoNation. In many cases, a company that seeks to employ one of the classic hardball strategies finds that it is not properly prepared to do so, or doesn't have all the resources it needs to get started. Sometimes the best and fastest way for a company to put itself in a position to deploy its desired hardball strategy is to acquire or merge with a company that has the needed capability or resource. Merger and acquisition activity can be used, not as a strategy unto itself, but as a way to further a hardball strategy or strengthen a competitive advantage. |
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