Defining an organization’s culture as a “Family” culture reflects tolerance to subpar performance. Rather focus on those characteristics of a “family” culture that you want.
The last piece in my series “Lessons I Learned from Sports that Apply to Business,” covers a game that I love, Squash, and only wish my passion matched my ability. 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 the ball 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 ball with a minimum of movement.
However, 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 to reach it, they could end up being in a position which my coach fondly referred to as being in “extremiss.” The player has committed so much to the shot that they cannot quickly return to the “T” as their bodies are not in a neutral position from which they can change direction. In such a situation 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 that 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, its management, and employees are not committed to the strategy chosen, just that if the environment changes such that the plan 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 is to keep your opponent on the defensive until you can hit a winning shot. By hitting the ball deep and in the corners, it reduces the other player’s ability to play an attacking shot. So many rallies comprised shots 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 made the company successful. However, while a great product or strategy helps, and in the case of disruptive technology, essential, in most cases, the key is continually keeping your competition on the defensive so they cannot attack. When you launch the winning product, your competitors are effectively neutralized and not able to muster an adequate response. Apple is an excellent example as it continues to release new products or significant updates that keep its competitors on the defensive and continually playing “catch up.” Thus Apple extends its market lead and redefines 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 a winning shot, it 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 assumes 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 itself in a position where they are unable to respond to your next move effectively, you can take a market leadership position or redefine the market.
Many studies show that those companies that emerge as market leaders during periods of market turbulence and recession retain that position for a long time. During market recessions and turbulence, resources – both human and financial – are stretched, and the ability of companies to respond effectively is compromised, so the leadership gained is unchallenged for a long time. 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. 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, 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 your competitors and move into a more competitive position. Not all require increased speed. By slowing down, you can better prepare the launch of the next product, or your 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. Clients were invited to watch the assembly of their tractor. Valtra changed the base of competition.
Be unpredictable! Riskier, but has been said in my prior blogs, strategies that can grow a company have the same characteristi
cs of those that cause the company to fail. You cannot succeed by being safe.
Keep playing and remember to keep your competitors playing defense as much as possible so you can take advantage when needed.
© 2012 Marc Borrelli All Rights Reserved
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As we emerge from COVID, the current employment environment makes me think of a surfing concept: “Being Caught Inside When a Big Set Comes Through.” Basically, the phrase refers to when you paddle like crazy to escape the crash of one wave, only to find that the next wave in the set is even bigger—and you’re exhausted. 2020 was the first wave, leaving us tired and low. But looking forward, there are major challenges looming on the horizon as business picks up in 2021. You are already asking a lot of your employees, who are working flat out and dealing with stress until you are able to hire more. But everyone is looking for employees right now, and hiring and retention for your organization is growing more difficult.
“Why don’t they use common sense?!” You may have said this phrase yourself, or heard it with your managers, when discussing an employee’s actions. However, the frustrated appeal to “common sense” doesn’t actually make any meaningful change in your organization. We all make decisions based on the information we have and the guides we have to use. So if the wrong decisions are being made in your organization, it’s time to examine the tools you give decision-makers.
You can only determine profitability when you know your costs. I’ve discussed before that you should price according to value, not hours. However, you still need to know your costs to understand the minimum pricing and how it is performing. Do you consider each jobs’ profitability when you price new jobs? Do you know what you should be charging to ensure you hit your profit targets? These discussions about a company’s profitability, and what measure drives profit, are critical for your organization.
If you were starting your business today, what would you do differently? This thought-provoking question is a valuable exercise, especially when it brings up the idea of “sunk costs” and how they limit us. A sunk cost is a payment or investment that has already been made. Since it is unrecoverable no matter what, a sunk cost shouldn’t be factored into any future decisions. However, we’re all familiar with the sunk cost fallacy: behavior driven by a past expenditure that isn’t recoupable, regardless of future actions.
Bringing clarity to your organization is a common theme on The Disruption! blog. Defining your business model is a worthwhile exercise for any leadership team. But how do you even begin to bring clarity into your operations? If you’re looking for a place to start, Josh Kaufman’s “Five Parts of Every Business” offers an excellent framework. Kaufman defines five parts of every business model that all flow into the next, breaking it down into Value Creation, Marketing, Sales, Value Delivery, and Finance.