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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Evidence of Strategy Everywhere: “The New Entrepreneurial Spirit: Bypass”

You might think I’m announcing that today there is strategy in the United States. Such a discovery would indeed be welcome but it’s not what I mean. I mean that you can see strategy in almost every newspaper article. All you need is to want to see it!
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In Disruptive Innovation versus Old-Fashioned Strategy I admired the smart strategy of Elio Motors in bypassing some regulatory costs. It seems that type of entrepreneurial thinking is becoming a major theme of entrepreneurial strategies.

USA Today reported on the success of Uber and Lyft, startups that use smartphone apps to connect passengers with private drivers. In just four years Uber expanded to serve 128 cities in 37 countries; Lyft serves 67 cities. The companies’ strategies depend directly on skirting government regulations: they claim not to be taxis and therefore not subject to taxi regulations.

Sure enough, taxi companies are fighting back. (That’s strategy too, as not fighting back would be worse for them.) The taxi companies assert that someone who summons a stranger and pays for a ride in their car is in a taxi. In some locations the startups had to either stop operations or change their practice. This doesn’t seem to worry Lyft or Uber, or their investors.

Evidence of strategy: recognizing that a barrier to entry (in this case, taxi-company regulations) is effective only if the barrier is so wide you cannot drive around it.

 

Share your thoughts in the comments below. 

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The Extraordinary Industry of Literary Agents

Competition among writers has been reviewed on this site in a wonderful piece by Daniel Quinn. This piece looks at the other side – how literary agents compete and how market forces created an extraordinary market with headquarters in…Brooklyn.
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Beware, males! Let my personal experience serve as a warning for you who aspire to see your names on a best-selling novel.

Barriers to entry into a market can be obvious: a dominant incumbent, the need for economies of scale, etc. Sometimes they’re less obvious, such as political connections with government officials (e.g., see my article on Elon Musk’s Telsa).

But what do you do, and how do you compete, when the barrier is… sex?

No, not that. Gender.

We all know Silicon Valley is friendliest to males, especially white or Asian, especially young. But sometimes the sex barrier sneaks up on you, or at least on me, when least expected. Specifically, in writing and publishing.

After many years of writing — I’ve published dozens of professional articles and seven books — I finally fulfilled an old dream: I wrote my first novel. Hooray for me, right? Not so fast. Writing a novel is the easy part, a mere gut-wrenching, sleep-depriving joy ride. The hard part is getting an agent to represent the novel.

For the past few months I have researched the fiction-publishing industry, which doesn’t work like the non-fiction I’m used to. My goal was to find a literary agent. An agent is a kind of a broker who connects the buyer (the publisher) with the seller (the author, i.e., me). The literary agent represents the author. Like real-estate agents, the literary agent earns a commission from the seller only if the manuscript is sold. The buyer (publisher) pays nothing to the agent. How does the buyer get such a sweet deal? It’s an absolute buyer’s market.

In a buyer’s market, the buyer dictates the terms. The buyer has more than enough options and can tell anyone to get lost. With this power the buyer pays lower prices than would happen otherwise, except for the unique properties such as books by Hillary Clinton or Glenn Beck that say nothing new but are sure to sell to devoted fans. In other words, having a “platform,” as it is called in publishing, raises the bargaining power of the seller.

Platforms are essential in non-fiction publishing. In fiction they are less obvious, unless you are J.K. Rowling. But even J.K. started without a platform, because in “debut fiction” there is no platform. No one knows you or Harry Potter. So, the bargaining power of debut authors is low. I mean, really, really low. “I’ll go to your competitors!” is met by “Here’s their phone number.”

And yet there are 313.8 million potential writers out of 313.9 million Americans. (The others have real jobs.) Defying odds lower than winning Powerball, those starry-eyed hopefuls keep sending their horrible manuscripts to the agents I’m trying to contact.

My manuscript is different. It is unique, hilarious, suspenseful, quirky, and politically incorrect. There isn’t an agent or publisher who wouldn’t see its blockbuster potential immediately.

Literary agents have proliferated after publishing houses started cutting out editors to save cost. That was a move of accidental genius brought about by rapid consolidation; there are only a handful of major publishing houses left today. Declining readership of books didn’t help either. Hundreds if not thousands of talented, laid-off editors started free-lance editing businesses, and in a short decade or two, the big publishing houses discovered the benefit of not paying anyone to read unsolicited manuscripts. This is not unlike large companies letting venture capitalists find the next startup gem for them.

I figured I would look into online directories of literary agents and select the lucky one on whom to bestow my masterpiece. To my astonishment, I discovered that 99.999 percent of agents (and I am talking hundreds) are women. But that wasn’t what stunned me most. The most amazing fact I found was this: while almost 100% of literary agencies reside in New York City — they surround those big publishing houses — ALL of their agents state on their profiles that they’re “living in Brooklyn with (fill in the blank: my husband and two kids, two dogs and a cat, two cats and seven dogs, etc.)” Such homogeneity defies explanation with economics. It must be a sociological phenomenon!

The Brooklyn-resident female-agent phenomenon intrigued me. As a believer in the power of the market, I wondered where all the men went. I knew that in the old days, male editors dominated the publishing firms.

I found out the answer is simple. Wherever they went, it wasn’t to read books. It turns out only women read books (some estimates are by a margin of 4:1). So the cruel Darwinian invisible hand selected out all the male agents in favor of female agents, who pitch to female publishers, who sell to female readers, who read female authors, who write about female travails and adventures. The result is amazing uniformity in what the agents state on their sites: “Especially seeking upmarket women’s fiction.” I have no idea what upmarket means, but I suppose it is the opposite of downmarket. Is it like the S&P after good news?

Even the few hapless males who live underground in this Alice in Womenland territory had to adapt. They too are looking for “character-driven literary women’s fiction with emotional depth.” All these years women have been looking for men who understand emotional depth. There they are, a few literary agents in Brooklyn.

Back to my masterpiece. My character is a tough policeman, a libertarian with zero emotional depth and a lot of anger issues at those who seek to impose their political correctness on him. He likes logic instead of psychological babbling. And he is not very complicated.

I stand no chance.

I need your advice.

At this point I have these possible strategies:

1. Pretend my name is Ellison Gilad. Paula or Carol might work too.

2. Turn my protagonist into a strong but complicated emotionally driven woman with interesting psychological issues.

3. Place her in some foreign locale (I’m thinking Iran, Afghanistan or India) and make her life hard as she journeys to a better place (or not) and overcomes a broken heart (or not).

4. Lobby the government to require agents to take on some percentage of male-driven, inconsequential novels with direct language and awesome hardware, citing fairness and equal opportunity.

5. Give up on publishing my book or finding a male agent who likes fast-paced, hilarious Christopher Moore-type plots with little attempt to change the world or move the reader into cathartic fits of weeping.

6. Publish a cry for help on this site.

Now I know that among you readers there is at least one who is smarter than I am, and all of you are better connected. Do you have a better strategy? Tell me! Comment below!

Sincerely yours,

Evelyn “Ben” Gilad

 

Share your thoughts in the comments below.

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Evidence of Strategy Everywhere: “The Biggest May Not be the Best”

You might think I’m announcing that today there is strategy in the United States. Such a discovery would indeed be welcome but it’s not what I mean. I mean that you can see strategy in almost every newspaper article. All you need is to want to see it!
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Myth: to be number one you need to be the best. USA Today reported on a Consumer Reports survey of fast-food customers. They ranked McDonald’s last in burgers (The Habit Burger Grill, a regional chain, was first), KFC last in chicken (Chick-fil-A was first), and Taco Bell last in burritos (Chipotle was first).

It’s not that Taco Bell placed last in salads or McDonald’s had the worst egg sandwich. The chains were at the bottom with their core products.

Consumer Reports’ project editor explains the ranking as a result of Millennials caring about things other than mere value for money, such as quality and social issues. I wonder if it is because they still live with parents who pay their bills. That seems unlikely in light of analysis that shows most millennials living at home for economic reasons. Perhaps a few slackers go out to restaurants better than the bottom-feeder fast-food giants while their parents pick up their expenses, but most are probably still eating at the McDonald’s of the world while realizing it is not the best, it is the cheapest.

Evidence of strategy: The winners showed how to compete against the biggest. As for the losers, let’s see what McDonald’s, KFC, and Taco Bell do. They’re doing OK financially but it doesn’t help to have superior-quality competitors. On the other hand, who says the best wins?

2. In another story, USA Today reported that teachers and postal workers are weighing a possible boycott of Staples. The reason is that Staples plans to offer postal services in its stores and staff them with its own employees. The Postal Service pays on average $25 to its employees, while Staples’ sales associates earn $8.25 an hour. The Postal Service is also slowly going bankrupt, despite its monopoly over first-class mail. The five-million-strong unions are free to boycott Staples; that’s their strategy. As strategy goes, it is an interesting one- after all teachers don’t work at Staples. So what’s next for unions? Maybe boycotting McDonald’s, Wal-Mart and Honda? The first, for its low wages; the second, for its competitive muscle; and the last for its nonunionized car plant. At the end, teachers will have to stay home, eat little and not drive around.

Evidence of strategy: Postal unions fight back.

Evidence of strategy: Staples succeeds because enough people don’t care that Staples pays less. They care that Staples offers a service they want at a price they like.

 

Share your thoughts in the comments below. 

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Celebrity and Strategy

The cult of celebrity is not only present in entertainment, sports, and politics, it’s in business as well. CEOs that get the most attention aren’t necessarily competing better than the rest. In the news doesn’t mean in the know.
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Here’s a true story. A friend of mine, Bruce Hamilton, won the Professional Bowlers Association (PBA) championship some years ago. He laments that his skill is in bowling and not in golf. His prize was nice but the Professional Golf Association (PGA) championship paid seven times as much in that year. Would we say the PGA champ was seven times as skillful as my friend?

In 2013, the PGA champ was paid 28.9 times as much as the PBA champ, up from seven times. Would we say that skill at golfing is growing faster than skill at bowling?

How many top golfers can you name? How many top bowlers? (I can name one.)

We have, in business, a cult of celebrity rather than a cult of strategy. Try this: who’s the CEO of Facebook and who’s the CEO of DuPont?

Facebook was founded in 2004. If you’re reading this essay you surely know Facebook’s CEO is Mark Zuckerberg, a person I previously acknowledged might already be very smart even if other people want to wait and see (We’ll See How Smart Mark Zuckerberg Is.) Facebook will make it onto the 2015 Fortune 500 if, for a year, it maintains anything close to its second-quarter 2014 sales of $2.9 billion.

E. I. du Pont de Nemours and Company was founded in 1802. It is one of the oldest companies in the United States. DuPont has been in the Fortune 500 as long as there’s been a Fortune 500. It is #86 in the 2014 list, with annual revenue of $36.5 billion and profits of $4.8 billion. I didn’t know Ellen Kullman is the CEO of DuPont until I read it here a moment ago.

DuPont employs 58,000 people. Facebook employs 7,185 people.

DuPont makes products ranging from additives and modifiers to wire and cable material. Their index of brands and trademarks covers every letter of the alphabet except for J, Q, and X.

Facebook’s product — that is, what it sells — is advertising space on electronic screens. Tiny billboards. Of Facebook’s $2.9 billion in Q2 revenue, $2.7 billion came from advertising.

If all traces of DuPont were suddenly to vanish, buildings wouldn’t breathe while remaining watertight (Tyvek®), firefighters and Air Force pilots wouldn’t be protected from fire (Nomex®), “ballistic and stab-resistant armor…[wouldn’t] allow heroes to be heroes” (Kevlar®), and fried eggs wouldn’t slide off ungreased pans (Teflon®).

If all traces of Facebook were suddenly to vanish, advertisers would have to find other means to intrude and people would have to find other ways to like one another.

I don’t mean to express approval or disapproval of either company. It’s not about them; this Teflon-slick essay would be equally likeable if I’d focused on General Electric and Twitter. As a jaded practitioner and curious student of competitive strategy, I just like to notice things and ask questions about them. For example, why is Facebook so much more celebrated than DuPont?

Here’s what I mean by so much more celebrated. I had Google search for “DuPont news” and “Facebook news.” The DuPont search turned up “about 27,700,000 results.” The Facebook search: “about 7,640,000,000 results.” People are creating, or at least Google is finding, 275.8 times more results for Facebook than for DuPont.

A search for “DuPont strategy” and “Facebook strategy” turned up 6,390,000 and 236,000,000 results, respectively, for a 36.9-fold difference. “Kullman strategy” and “Zuckerberg strategy” produced a 33.7-fold difference: 48,100 versus 1,620,000. It seems Facebook’s celebrity advantage over DuPont is greater than golf’s is to bowling.

It’s not a big shock. It’s much more exciting when a toddler takes its first steps than when a middle-aged person keeps strolling along. But who’s got more to say about the skill of competing? To whom should we be listening?

The issue isn’t Ms. Kullman or Mr. Zuckerberg. They’re not the ones creating all the Google “results.” The issue is what’s considered important enough for people to write “results” about.

People pay 33.7 to 275.8 times more attention to fast and social than to steady and stuff. Why? By any metric DuPont is more consequential than Facebook unless you consider a mere increase in human interaction (which was already plentiful in my opinion) as consequential as healthy homes, safer firefighters and pilots, unshot and unstabbed heroes, and foods cooked without grease. Moreover, it has demonstrated the skill it takes to thrive for centuries. That skill goes beyond any individual CEO (Ms. Kullman is DuPont’s 19th).

I don’t doubt that Mr. Zuckerberg is a smart guy driven to work hard to establish his business. That said, and with no disrespect, he’s got a ten-year-old business, highly focused in one area, where he won a there-at-the-right-time lottery as much as he displayed competitive skill. There’s no question, too, that Ms. Kullman is not responsible for the centuries of positive results in numerous product lines that preceded her arrival at DuPont. On the other hand, a highly successful company with a long track record chose Ms. Kullman as its CEO.

I don’t know whether Ms. Kullman is more-skilled or less-skilled than Mr. Zuckerberg. I haven’t met either of them and I haven’t studied their decision-making. The question I’m raising is whether that 33.7-to-275.8-fold difference in attention makes sense with what we do know. What we know is that Mr. Zuckerberg hit a hole in one on his first swing. That doesn’t tell us he’s a celebrity or a strategist. It tells us he hit a hole in one on his first swing.

Here’s another true story. Years ago I tried bowling. I’m left-handed and I was doing miserably. I switched to my right hand. The first ball I rolled: a strike! The next ball I dropped on my foot. What, exactly, is my level of right-handed skill? On average, five pins and a semi-painful foot?

When we search for advice on competitive strategy, we should seek not fame but skill. The trick is to tell the difference. It’s not easy — see, for example, “Success Is In a Word” — and it’s especially not easy when we have little evidence. It’s such a tough issue I’m writing a book on it. Meanwhile, I recommend this: when you choose whom to admire and emulate, consider whether you’re choosing a celebrity or a strategist.

 

Of companies founded in the last decade or two, which do you think might make it to a century or two? Share your thoughts in the comments below.

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Do Marketers Market?

When it comes to competing, marketers are missing the mark. A recent study reveals that most marketing professionals focus on customers over their competitors. 
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I have never thought of myself as a Luddite. I own a smartphone and a scanner, and I use them as needed (i.e., less often than every waking minute). Progress, science, and rigorous analysis are my guiding lights.

I wouldn’t bother you with such personal reflections if I hadn’t stumbled on an article in a prestigious academic marketing journal. The article made me feel, for the first time, a total Luddite, unable to understand progress and the contribution of science to humanity.

The article, “From academic research to marketing practice: Exploring the marketing science value chain” by John H. Roberts, Ujwal Kayande, and Stefan Stremersch, was published in the June 2014 issue of the International Journal of Research in Marketing. It is one of the most sophisticated, elaborate, careful studies I’ve seen in years. Its admirable objective was to test this question empirically: Does marketing-science research affect marketing practice?

The researchers devised a “marketing science value chain.” They surmised that academic research on marketing doesn’t go straight to masses of eager marketers in the trenches. Rather, they thought — “postulated,” in journal jargon — research goes through “marketing intermediaries,” the expert consultants and marketing agencies who translate the research into tools that the eager marketers can use.

The authors went through the painstaking process of validating every possible thought that crossed their minds. (At least I felt pain reading it.) For example, they thoroughly documented four steps to select which marketing-science research to study. They expended effort sufficient to send a human to the moon to select the twenty articles that their prestigious referees agreed represent academic work at its best. They left no stone unturned in selecting the sample of “intermediates.”

They had only one problem. The 94 managers in their survey, supposedly representing the masses of eager marketers who put research into practice, were not exactly masses-like.

The researchers said, “Our sample of senior marketing managers consisted of Marketing Science Institute (MSI) and Institute for the Study of Business Markets (ISBM) members and company contacts.” As you might guess, MSI and ISBM members devour cutting-edge research. They hardly represent the thousands of marketing managers I encounter (and I am sure you do too) in the trenches.

We might expect the judgment of those highly sophisticated managers, many of whom might be former academics or practitioners with Ph.D.’s, to mirror the judgment of academics and “intermediaries.” In fact, the groups’ judgments correlated only moderately about the effect of the 20 most-cited articles (and the tools derived from them) on the practice of marketing.

And as the authors themselves observed in summation, “A more appropriate benchmark might perhaps be, ‘Of all the situations to which these tools could have provided insight, in what per cent are the tools actually being applied?’” The authors admitted that the number might be low. ”If this is indeed the case,” they added thoughtfully, “it is presumably hard for us to argue that the marketing science tools currently in the market are in any way ‘standard’ approaches to marketing and the measurement of its effect.”

All that hard work, computer time, and cutting-edge testing to come out with a conclusion I could have provided for, well, free: Marketing managers don’t use much cutting-edge statistical science in making decisions.

That’s bad enough. But here’s something worse.

The study reveals that the average impact of marketing-science tools on marketing practice, according to academics, intermediaries, and sophisticated marketing managers, was highest for segmentation tools, followed by survey-based choice models and customer-satisfaction tools. The practice that came in dead last on the list of 12 tools, by a huge margin? Game theory.

In other words, the only tool that forces marketing managers and their academics and consultants to look at competition wasn’t even held in such esteem as “perceptual models” and “marketing metrics.”

My conclusion from that study: marketers prefer statistically rigorous navel-gazing. Give us a surgical app so we can dissect customers on 134 dimensions, they say. Never mind the competition. We’re not marketing to them.

My advice from that study: marketing academics and their devoted consultants might want to give cutting-edge navel-gazing statistical tools a rest. Instead, at least for a while, return marketing to the need it was designed to satisfy: Compete more-effectively against competitors who are using the same intermediaries as they do.

 

Why aren’t most marketers examining the activities of their competitors? Share your thoughts in the comments below. 

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The Best Ad Ever

When it comes to corporate advertising, being unique creates a competitive advantage. See how these companies decided to be unique, resulting in “the best ad ever.”

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According to Michael Porter, competing effectively means providing some customers with unique value, where “unique” means not offered by competitors and “value” means of worth to some customers. To do that, a company must design its set of activities in a unique way as well, or it will be imitated quickly and its uniqueness will evaporate.

Part of the activity chain, and therefore part of competing, is a company’s message delivered via its advertising. Many advertising agencies just spit out commoditized ads. (Where’s their unique value?) Once a year, in honor of the Super Bowl delirium, they try to be funny. The goal isn’t unique and the formula isn’t unique. Film a cute dog or a cute toddler or a cute dog with a cute toddler, and you have it. The cuteness and humor needn’t have anything to do with the other activities of, say, Budweiser or Pepsi. Or with sales, as Darth Vader can testify against VW. So, the activity chain is not internally very consistent.

They can all learn from Las Vegas and Cirque du Soleil.

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