Hardball: Are You Playing to Play or Playing to Win?
Arar Han (RA), Contributing Writer
Issue date: 10/18/04 Section: News
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In Stalk's and coauthor (also in attendance) Rob Lachenauer's combined four decades of experience advising corporations like General Electric, Harley-Davidson, and Toyota, Stalk contended that six strategies always worked to secure a company's upper hand in a market. These strategies, said Stalk, range from "overwhelming force," as in the case of Wal-Mart's entry into the warehouse club channel, to "break[ing] compromises that the industry accepts." Each strategy is designed to secure a company's competitive advantage by driving value creation.
Stalk gave a number of examples to illustrate the efficacy of playing hardball. For one: Toyota versus Ford and GM. Toyota, which made its entry into the U.S. automobile market in 1966 with the unpopular Corona sedan, was then a bit player in a car industry dominated by Ford and GM. In the years since its debut, however, Toyota wrested vast share away from its American counterparts, eventually striking at the heart of Ford by introducing the Tundra to compete with Ford's F-150 pickup truck - the crown jewel responsible for the lion's share of Ford's profits. Similarly, Stalk continued, the ascendancy of Cadillac's Escalade SUV was imperiled when Toyota luxury maker Lexus unveiled its LX model. Today, he announced, "Toyota controls the cash flow of the big three [U.S. automobile manufacturers]." As a result, Stalk pronounced, Toyota also "controls the strategies of the Big Three."
Playing hardball, Stalk maintained, hinges on the right strategy. The right strategy, he lectured in ominous overtones, includes "helping a competitor commit suicide" by "raising his costs," or, as in the case of Toyota, threatening a company's "profit sanctuaries" - cash cows like the F-150 or the Escalade. And if a competitor does not retreat quickly enough, reminded Stalk, "some competitors are dumb enough that they need to be hit a few times."
While Stalk touted hardball strategies as the tools of choice for corporate domination, he also emphasized the need for a prior "hardball mindset": the knowledge of the key issues besieging an organization, and the discipline to zero-in on fixing internal systemic problems like inefficient production chains in a "fast, focused, and fundamental" way. Before thriving off one's competitors, explained Stalk, one must survive first by plugging away at the heart of the matter: internal issues that undermine a company's ability to execute a hardball strategy.