LG and Samsung recently made smart decisions in the emerging OLED TV industry. Good for them, because competitive advantage comes from smart decision-making. What’s remarkable is that their smart decisions take them in opposite directions.
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Remember the bitter VHS versus Betamax war? Of course you don’t. You’re too young. I remember, though. I even took a stand in favor of Betamax. Betamax lost.

Remember the more-civil Blu-ray versus HD-DVD war? Of course you don’t. You were too busy pecking at your new iPhone. The iPhone came out in 2007. Blu-ray beat HD-DVD in 2008. That time my favorite won. No, that doesn’t mean I got smarter. It means the rest of the world did.

Now we have a war that didn’t happen, sort of, if we can imagine such a thing. According to Scott Wilkinson, Editor of AVS, LG is “forging ahead” with its OLED products for 4K/UHD TVs.1 (Don’t panic. That just means really, really good TVs.) Mr. Wilkinson also says Samsung has decided not to build a new facility to manufacture OLED panels for TVs, thereby calling off the war with LG.

LG and Samsung took opposite strategies, and both made smart decisions. The decisions would be equally smart if it were Samsung that was forging ahead and LG that was, as AVS said, “hitting the pause button.” But one of those smart firms is sure to be denounced later on for making a bad decision.

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Clear expectations inform and motivate. In competition they do more: they signal. That’s why people skilled at competing set expectations deliberately and strategically. Expectations declare boundaries to competitors: “this is my territory, stay away or we battle.” Expectations announce capabilities to customers: “this is what we will do for you.”

There are two ways to set expectations: unconditionally or conditionally. An unconditional expectation is a promise. A conditional expectation depends on something else. The unconditional type looks like this: “You will be able to keep your doctor.” The conditional type looks like this: “If enough young people sign up and pay for insurance then policies will be cheaper than they would be otherwise.” (On the concept of “otherwise,” see my co-editor’s essay “Success Is In a Word.”).

Conditional expectations are cautious and realistic. They spell out circumstances under which something may or may not happen. Given the no-place-to-hide ubiquity of Facebook and Twitter they are also wise. But they are far from exciting. In the age of millions of MBAs in marketing, apparently that is a no-no. We sacrifice the lesser good, wisdom, for the greater, hype! (That’s why I used an exclamation point instead of a period!)

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An important part of the skill of competing is the art of betting on future trends before they are obvious to everyone. Every company attempts to do so. Startups in particular are all about “seeing” things around the corner, and anticipating changing preferences. I call it an art because trying to apply the principles behind exact sciences like physics to predicting social behavior and the diffusion of new trends is shamanism. I have nothing against shamans as a profession, though. Some of my best friends are shamans. Some of the brightest scientists can be shamans. A case in point is Didier Sornette, a physicist who claims to have discovered a method to predict the exact time market bubbles will pop  based on the physical principles behind a spiraling coin. Unfortunately, he failed to predict the 2008 crash. Here is my prediction: he will fail in predicting the next one as well. And I did not even have to apply any fractal or quantum or other theories.

While trends cannot be verified by science before they are obvious, for me they are felt subcutaneously, as in goose bumps when something is not right. That’s what I felt when reading about Walmart going small. Walmart?

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Who is Company A? (We’ll get to the red dot later.)

 Company A Stock Price

Company A. Stock price data from Yahoo Finance.

Company A is Blackberry. The chart shows its stock price for the eight years through the end of September 2013. It’s not the whole history of the company. Even though its stock price at the end of the chart is down from the beginning of the chart, it’s still more than triple its initial price.

Who is Company B?

 Company B Stock Price

Company B. Stock price data from Yahoo Finance.

Company B’s chart also shows an eight-year span, though it’s a different eight years. The eight-year spans overlap by two years.

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Competing.com focuses on competing as a skill. Advantage in competing is the ultimate com­petitive advantage.

How do we know when someone is skillful at competing? Reflexively, unconsciously, and seem­ingly inevitably we turn to the person’s track record. A person with a string of competitive suc­cesses is more likely to be competitively skillful, we figure, than someone with a string of com­petitive failures.

The thing is, it’s hard to tell the difference between luck and skill. We all know luck plays a part. (Bad luck, anyway: we fail when we’re unlucky. Success always comes from skill, we assure our­selves.) That’s why we hesitate to call a person a genius after one good move or a dud after one bad move. But with a reasonably long track record it’s easy to fall into the track-record fallacy, the business equivalent of the prosecutor’s fallacy.

Stop! Do not let your brain recoil in fear of probabilities and actual logic! This is your chance to improve your skill at competing relative to the weaker souls who rely on lists of five magic se­crets of success.

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Businesspeople often cast critical thinking as a due-diligence gauntlet. Where did that number come from. How confident are you. What does [fill in author, authority, or celebrity] say.

Those aren’t bad questions; they’re just not good enough. They’re necessary but not sufficient. Saying you must be right because you survived the gauntlet is like saying you must be movie-star gorgeous because you floss your teeth.

Think of it this way. No strategy or business plan ever gets adopted without passing the gaunt­let, yet strategies and plans fail. We know that because companies go bankrupt (a severe form of failure), and it’s unlikely that bankruptcy was their goal.

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Meredith Whitney predicted the 2007 financial crisis. At the time, economists and Wall Street analysts attacked her prediction. In 2010, she predicted a wave of municipal-bond defaults. As USA Today reports, the director of the National League of Cities called her prediction a “stunning lack of understanding.” Three cities in California declared bankruptcy within three weeks in 2013, including Stockton, the largest in US history. Those bankruptcies still did not faze the critics who called them isolated events.

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