Great Business Ideas: Hardball

Great Small Business Ideas to Start: Hardball

Competing means striving to get ahead of the competition, but hardball goes further: it is about relentlessly developing and then sustaining a clear gap between you and your nearest rivals. It is highlighted in the article “Hardball Strategies” (Harvard Business Review, September 2006, by Lachenauer, R.; MacMillan, Ian C.; van Putten, Alexander B.; Gunther McGrath, Rita; Stalk, George Jr.).

The idea

It is fashionable to think that playing tough is doomed to failure: that playing hardball is inherently cynical, bereft of virtue, values, or decency, and lies behind the high-profile failures of Enron and others.

This is untrue. Hardball does not mean being criminal or even unethical, but it does mean being determined and single-minded.

Wal-Mart became hugely profit able and the biggest retailer in the world by explaining to suppliers exactly how goods should be delivered. Suppliers were given computer information enabling them to track consumer purchases and to help manage inventory, they were told when to resupply Wal-Mart warehouses, and told to deliver only full truckloads at a given time. This system, which is constantly refined, enables Wal-Mart to remove wastage and cost from its supply chain, improving efficiency and margins.

In practice

Hardball has several guiding principles. First, strive for “extreme” competitive advantage. Regulators may worry about market dominance, hardball players do not. Dominance only occurs in extreme situations, and is rightly prevented, but, by trying to dominate, a firm becomes better and actually benefits customers.

This links closely with two other points: know the limits to what you can do, and go no further. It is vital that your business is accepted in the markets where you operate, so go as far as possible without alienating customers and communities.

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Several key questions will help you decide the limit. Is the action good for the customer? Does it break any laws? Will it directly hurt a competitor? Will it antagonize increasingly influential special interest groups? The right and only answers are, in order: yes, no, no, and no. Serving a customer better than anyone else is vital; targeting a competitor without producing any real benefit for the customer is unnecessary and counter-productive (customers may resent you).

Also important is the need to maintain a relentless focus on competitiveness. This means taking action in two ways. Instill a competitive, customer-focused, entrepreneurial culture, understand what your competitive advantage is—and then exploit it ruthlessly and continually.

Two other points are significant. Use your competitors’ weaknesses to your advantage, but avoid going head to head or competing directly. The danger of direct confrontation is that you will focus too much on competitors at the expense of customers. Finally, develop the right attitudes in yourself and your colleagues. Most people have a natural will to win, so use this. This requires restless impatience, an action-oriented approach, and a desire to change the status quo and constantly improve.