Welcome to Competing.com

Our Typical Reader

Our Typical Reader

This is a site about competing better. You could have guessed by the URL. The contributors will focus on examples of successful competing and unsuccessful competing.

Underlying competing is strategy. No one can compete better without strategy because strategy is what enables anyone to win. And luck. But the site about luck is www.lasvegas.com. We have little to say about that.

The brave reader who reached this page is inundated with data and news everywhere else. What we think we can do is give insight. Insight is a funny concept since everyone uses this word to mean “what I say is important and what others say is less so.” Indeed, we believe that too but we won’t say it like that.

Instead, here is our insight on insight: it is about perspective. It is based on the “facts,” but facts alone are never insight because data have no perspective. Only the interpreter can have a perspective.

We do not filter by whether the perspective is right or wrong (how would we judge anyway?). We only care that it is a perspective, and it is thoughtful, interesting, and doesn’t contradict itself. The reader can then do with it whatever the reader wants to do with it. Once in a blue moon we may be able to make a reader in Duluth, Minnesota sit up and say: “Hmmm… I didn’t think about it that way before.”

We live, or at least we write, for John in Duluth. John, thanks for your comment. And if you like this site, please tell your buddy Paul and your neighbor George and your uncle Ringo…

Contact us  or if you would like to write for us click here.

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Conference Goers Beware!

In my previous post, “Competing in the Age of Bill Ackerman,” I held that many executives insulate themselves from a diversity of views. This problem doesn’t plague executives alone. Managers, unaware of the biased source of their external perspectives, seem to follow some bad habits as well.

For one, an important way managers develop external perspective is by attending conferences where they can meet people with different perspectives, and hear a variety of views, some controversial, some less.

Alas, as a recent article in USA Today claims, the conference business has gone to the dogs. Worse, dogs without perspective.

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Competing in the Age of Bill Ackerman

In one of the most intriguing articles I’ve read in a long time, The Economist’s Capitalism’s unlikely heroes suggests a different perspective on the rise of activist hedge-fund investors. These brash and vocal billionaires take small positions in public companies and act to fix mismanagement by trying to convince other shareholders to support cost-cutting, spin-offs, and returning cash to shareholders.

Unlike buy-out private equity, the activist hedge funds buy only a small amount of shares, and so they neither burden the target with loads of debt nor strip companies of their assets (that’s so 1980s). Unlike Wall Street investors, activists get actively involved in management decisions. Naturally, companies’ chiefs abhor them. Critics call them vultures. Boards try to poison-pill them.

More interesting than the acrimony between companies’ top executives and tormentors like Bill Ackerman and Dan Loeb is the phenomenal rise in the level of activity of these activists’ funds. According to The Economist, they’ve got $100 billion in their war chests (about 20% of all hedge-fund capital inflows in 2014). Last year they launched 344 campaigns against public companies including P&G, Apple, Microsoft, Pepsi, and even Netflix. As shocking as it may sound, one out of two companies on the S&P 500 index has shown an activist shareholder on its stock registry in the past five years.

Why is there such an increase in activists’ funds? Have companies gotten worse and caused an immune response?

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One-Trial Learning: Or, Counting on Luck

My colleague Ben Gilad posted a terrific essay on the shortcomings of “data-driven” decision-making.

I love data. I spent 15 years playing with the PIMS database alongside luminaries such as Michael Porter, Sidney Schoeffler, Robert Buzzell, and more. Many years later, I can run a few hundred million simulations before breakfast and tell you what they mean before the coffee’s temperature drops to 80 degrees F. I told you, I love data.

But data isn’t learning, and learning isn’t just about the amount of data. Is one data point enough for learning? How about a trillion?

When smart people fail, their failures are often (not always) because what they think they know is wrong. There’s often a deeper failure, a failure of knowledge, learning, and framing, rather than a failure of execution or data.

To see why, let’s look at rats.1

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Breathing Jumps in Beijing, Even with Pollution

If you were to see a newspaper headline such as “Breathing Jumps in Beijing, Even with Pollution,” you’d think it awfully odd. After all, Beijing’s population is rising, and everyone breathes as long as they can. More people, more breathing. Pollution doesn’t diminish breathing’s popularity.

You’d be right that such a headline would be odd, even if the headline appeared in one of the world’s great newspapers; say, the New York Times. Yet exactly that oddity appeared, in the Times, when 2015 was still crisp and new: “2014 Auto Sales Jump in U.S., Even With Recalls.”

Don’t worry. This essay isn’t about illogic in journalism. It’s about illogic that pollutes business, too. It’s about a dragon I thought I slew not long ago in Success Is In a Word. (Another headline: “World Doesn’t Heed Indignant Strategist.”)

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The Butt of All Strategies

Have you seen the recent commercial by Weight Watchers, dubbed My Butt? It’s a beauty. I admit, when I read about it in the USA Today article “Weight Watchers: Butts are in for 2015”, I was male-curious. Sorry, evolution gave my brain an instinctive admiration for the female derriere. But when you watch the ad and read about the strategy behind it, you realize there is much more than meets the eye behind the behinds.

The story of how Weight Watchers came about to run the ad featuring female butts through a woman’s life is instructive of how strategy changes take effect in real life. Weight Watchers was founded on the premise that people who want to diet will find a structured program both convenient and supportive and will therefore be less price-sensitive. That has been true for many years as WW became a successful giant. On the way it used celebrities as the face of diet. That marketing mindset comes naturally to consumer-oriented companies in this field. Nutrisystem did the same with Marie Osmond, and who among baby boomers doesn’t remember Jenny Craig’s Valerie Bertinelli with great fondness?

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Strategy in the Modular Economy

“Modular economy”? What, the economy now comes in easy-to-assemble pieces from Ikea?

Yes, except for the Ikea part. And it makes a difference in strategy for everyone from entrepreneurs to investors to competitors.

There was a time when vertical integration was in vogue. Ford, for example, could transform raw materials out of the ground into finished vehicles at its gargantuan (1½ square miles!) River Rouge Complex.1 Vertical integration is attractive because you control everything and it’s hard for competitors to duplicate. The downside is that it can be hugely expensive, difficult to modify or update, and hard to manage. Ford found it so. Other than a 3,000-place parking lot for a nearby Ford facility, the old Rouge was gone as of 2008.

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