Dec 132006

"Business is not a sporting event"

Great New Yorker article by James Surowiecki titled "In Praise of Third Place." He's analyzing the current video game console wars, but his points are wise and generally applicable:

A recent survey of the evidence on market share by J. Scott Armstrong and Kesten C. Green found that companies that adopt what they call "competitor-oriented objectives" actually end up hurting their own profitability. In other words, the more a company focusses on beating its competitors, rather than on the bottom line, the worse it is likely to do.

The point is that business is not a sporting event. Victory for one company doesn't mean defeat for everyone else. Markets today are so big ... that companies can profit even when they're not on top, as long as they aren't desperately trying to get there. The key is to play to your strengths while recognizing your limitations.

At the macro level, this is relevant to business strategy.

At the micro level, this is relevant to positional bidding wars in paid search.

Smart article.


2 Responses to ""Business is not a sporting event""
Nigel Varcoe says:
Nice message Alan. The original article is a powerful one - I agree entirely with its sentiment. As a CEO charged with building a great company, for me there is no question that we build a stronger and more sustainable company when we have strong values at our core. And values of team and community, maximizing opportunity and of fulfilling potential, are much more powerful than "winners and losers". Thanks for the heads up! Merry Christmas. Nigel.
Mattg says:
We should rather be concerned with our strength and customer satisfaction.

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