Digital Thoughts – Five Rules Of Hardball

    Most of the companies in our space did very well in 2004. Some of them did so well that unanticipated but certainly desired exit strategies were realized. 2005 brings more promise but most likely not the easy gold of 2004. Not that anyone in our industry has complained or sounded any reason to be alarmed, nor fortunately is any hurting, but that certainly doesn’t imply a lack of competition or any easy road ahead. In fact, I’d argue, given the increased capital investments and attention aimed at online advertising, that this year might be among the most cutthroat and challenging. As such, ask yourself, will your company thrive? The best time to plan for a difficult time is certainly not when times turn tough. In this week’s Thoughts I decided to share one of my favorite articles from the Harvard Business Review. Named Hardball, it comes from a book of the same name by George Stalk, Jr., and Rob Lachenauer.

    The first line of the article, though, tells it all, “Winners in business play rough and don’t apologize for it.” The authors then provide three great examples, one each from Toyota, Dell, and Wal-Mart. In the case of Toyota, Messrs. Stalk and Lachenauer point out how Toyota chose to begin its reign to ascendancy by attacking the Big Three where they felt the least desire to defend. In the process of doing so, Toyota also created a production system that it practically dares others to match in productivity and quality. Toyota then moved its way up the car line now taking on the profit centers of the Big Three and winning. In the Dell example, it referenced a time when after one of its competitors announced poor results due to price cuts; Dell announced an additional price cut. With Wal-Mart, one story told of how they chose to cut off Rubbermaid after Rubbermaid’s not wanting to lower prices for Wal-Mart, while another told of Wal-Mart’s decision to introduce a profit center challenging brand during a time when one of its competitors had filed for bankruptcy.

    Many times the companies that play hardball receive bad press for their moves. Often the term hardball connotes underhanded action in order to achieve business dominance, but, as the authors write, “…hardball is not about playing beyond the lines of legality.” As they say, “Hardball players don’t cheat.” Hardball players will play to win and generally will risk hurting themselves some in the process. Hardball players don’t whine or complain. Instead they focus and do so intently and intensely, driving out the softer competitors and improving the market in the end by forcing all to produce better products and services in order to stay in the game.

    The Hardball Manifesto as outlined by Stalk and Lachenauer consists of five rules or as they say five fundamental behaviors necessary for success. The first states “Focus relentlessly on competitive advantage.” The other four behaviors, like this one, read in a similarly self-explanatory manner. That is to say they do not reference behaviors that come as a surprise to any in business or are out of reach. That is why the first rule simply tells us to pay more attention to those things we do better than others. The second rule informs us to “Strive for ‘extreme’ competitive advantage.” In other words, don’t just settle for an advantage, work on putting such distance between you and your competitors that they cannot catch up. This is precisely what Toyota has done with its production system. Following the first two rules, the third says “Avoid competing directly.”

    With all this talk of competition, it almost feels as though the only way to compete is directly. Not so say the Hardball creators. The example they point to is Southwest airlines that in building up their fleet chose the unexpected route of building hubs in lower trafficked airports. The fourth rule tells us “Exploit people’s will to win.” People must be action oriented and their desire to kick butt engaged. They cannot accept the status quo. The fifth and final behavior states, “Know the caution zone.” This means to know whether your actions break any laws. Actions should do well for the customer. You can take out a competitor but be careful not to do so in a manner that would anger non-competitors. In other words, play to win but don’t win only by kicking another in the knees.

    While playing hardball can sound mean and anti-competitive, it is actually all about fair competition. It is about being prepared for the future and not letting success stand in the way of more success. Business, like life, is a sport, and even champions need to stay in shape if they are to be contenders the next year. True champions, like true hardballers, enjoy winning and will only want more success after having had a taste of it initially. Additionally as the authors state, you can win without being seen as a bully, i.e. part of being a champion is having supporters. If you don’t win right, you risk having the sport turn on you and ban you from playing. On your mark; get set; go…