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A new book argues that to survive and win in today's environment of corporate scrutiny, short-term expectations and political uncertainty, business leaders must not succumb to caution and “managerial correctness.” Rather than correctness, they need to focus on competitiveness by keeping a sharp eye on cost, value and assets, and avoiding weak “softball” tactics.
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Hardball: Are You Playing to Play or Playing to Win? (Harvard Business School Press, 2004), was written by George Stalk, a Boston Consulting Group partner, and his BCG colleague, Rob Lachenauer, now CEO of GEO2.
In addition to extensive on-the-ground experience in North America helping numerous corporations set, remake and refine strategy, Mr. Stalk spent years in Japan learning why and how companies there were beating their American competitors. He later ran a factory to prove his theories and methodologies. His best-selling book Competing Against Time (Free Press, 1990) defined the importance of time-based competition. He has been with BCG since 1978.
“In Hardball, we advocate a return to a singular focus on pure, unadulterated competitive strategy – strategy that's smart and fierce and that can be rough and brutal to competitors, but never mean or outside the law,” said Mr. Stalk. “It's important to embrace hardball principles now. With globalization, the most sophisticated consumer economy ever, new technologies and the emergence of India and China, competition in the coming decade will be as fierce as we've ever seen it. There will be the leading players and lots of niche players, but very few, if any, players in between.
The authors suggest that when a company is really competing ferociously to win, variables like business citizenship, quality, model employment practices and customer focus fall into line, almost naturally. Says Mr. Stalk, “Winners contribute more to society, customers and employees than also-rans.”
Hardball uses the actual experiences and stories of more than 20 companies to demonstrate and characterize hardball moves that have brought companies decisive wins, created losers out of once-formidable competitors, resulted in breakthroughs for customers and ended illogical and outdated regulatory and legal strictures on businesses.
Creating Losers: Launching Direct and Indirect Attacks at Competitors
According to Hardball, winning companies do more than just pay attention to their customers and the overall marketplace. They also know their competitors – their cost structures, profit sanctuaries, weaknesses, how they make decisions and strategies – almost as well as they know themselves and are bold enough to actively use that information against competitors.
Said Mr. Stalk, “Hardball companies entice competitors into businesses that actually make them weaker; use indirect means to erode competitors' most profitable businesses and take their most successful strategies, improve them — and then use them to beat competitors.”
The book shows how one consumer vacuum-cleaner manufacturer was able to protect its own “profit sanctuary” by using its knowledge of a competitor's source of profitability to focus its new products and force a retreat. It details how Federal-Mogul, an automotive parts manufacturer, was able to put its deep knowledge of its industry to work to entice a competitor, JPI, into a business that seemed worthwhile but actually raised JPI's costs.
Unleashing Massive Force — Carefully
In addition to outsmarting competitors, hardball players overpower them. Hardball players have generally amassed substantial resources, and they're not afraid to “write the check” and take the risk when it comes to protecting or maintaining competitive advantage, according to the book. And yet they demonstrate restraint. Winning hardball companies, for instance, are often careful not to drive a competitor into bankruptcy, a place from which it could emerge stronger than before.
The book describes how Frito-Lay and its CEO deployed the force of the company's formidable distribution capability to force another hardball competitor, Anheuser-Bush and its Eagle Snacks division, into a full retreat and eventually a withdrawal from the business. The book also shows how GM has pushed its rivals, Ford and DaimlerChrysler, onto the “ropes” with 0% financing and a barrage of new products.
The Hardball Mindset
In the book, Mr. Stalk describes attributes of the hardball mindset. “Hardball executives 'live at the rock face' of their businesses, so they deeply understand their products and services and how customers actually use them. In addition, they believe in the fundamental importance of head-to-head business competition. They make no apologies for attacking competitors and have no qualms about confusing them or faking them out in order to drive them off their turf,” he said.
Further, the hardball mindset involves:
Keeping the organization focused on the issues at the 'heart-of-the-matter' of the future of their company.
Developing truth-telling networks so one isn't sheltered from the realities of the organization and the competitive situation.
Demanding that employees try to have the best possible information about their competitors and a sharper understanding of their competitors than the competitors have about themselves.
Never being satisfied with just being in the lead and always staying focused on taking the leadership position to the next level.
Being strong and smart enough to enter the “caution zone” of business – but also being prepared and disciplined enough not to bend laws or compromise obligations.
Hardball Ideas Provoke Strong Responses – Favorable and Unfavorable
“Articulating the hardball mindset provokes strong responses; some people are offended, while others are excited and immediately embrace and relate to the ideas. But the reality is that playing hardball and maintaining a hardball mindset mean nothing more – or less — than setting and executing on superb strategy. Business is tough; it's about winning and losing, not just winning. A good strategy, by necessity, needs to delight customers and eliminate competitors,” said Mr. Lachenauer, Mr. Stalk's co-author.
Hardball Players are Better for Business and the World than “Softball” Players
“While hardball players challenge strictures and boundaries that may be outdated or no longer necessary, it's the softball players that are more likely to flout or attempt to 're-rig' laws and the rules of business and society. Softball players look for the quick win and the appearance of competitive advantage in order to meet short-term goals, like raising the stock price or getting funding. Hardball players go for real profits, not 'accounting' profits, and stay focused on decisive, long-term advantage,” said Mr. Stalk.
He added, “Hardball companies are great for business. They 'cleanse markets.' They motivate their people to do their best and make them excited about what they do. They set customers' expectations high and meet them. And hardball executives set good examples for other leaders, executives and managers.”
Low-cost consumer commodities; bundled financial services; low-cost, no-frills airfares, and simplified auto maintenance programs are some of the byproducts of companies' successful hardball strategies, according to Mr. Lachenauer.
“Hardball executives like to win – and win big. But they're not 'loud-mouths' full of bluster. Most of the ones I know are secure, confident and quiet,” said Mr. Stalk. “And hardball corporate boards focus equally on good governance and ensuring that management is committed to seeking unassailable competitive advantage.”
It's not enough for a board to have a good audit committee,” says Mr. Stalk. “It ought to have a good hardball committee.”
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