In business, we live and die by it. It sharpens elbows and brightens brain cells. It brings accountability to what we do. And it can also get out of control.
For the longest time, conventional wisdom held that we or our companies could succeed only if others failed. We believed that in order to win in business, you had to outsmart and outdo your rival, to exploit his miscues and blunders, to steal market share — to pound your competitor into the ground.
In the 1990s, some of these old assumptions about strategy and competition gave way to something kinder and gentler. Business, we came to think, wasn’t like chess or poker where someone has to lose in order for you to win. In fact, often the best strategy was to team up with your rivals, not crush them. On one level, for example, Microsoft and Apple are fierce competitors. Yet the software giant stands to profit on every new computer Apple sells, and Apple clearly benefits from the application software Microsoft creates for Mac users.
So as we turn our attention to the state of competition and strategy in this issue, some readers may be surprised at what they’ll find. There’s an examination of the kill-or-be-killed war between XM and Sirius to dominate satellite radio. There’s the advice of George Stalk, one of the most brilliant strategists of our era, urging leaders to “unleash massive and overwhelming force” against their competition. And there’s the story of a serial entrepreneur who has invested $50 million of his own money to trounce the bureaucrats who control the space industry.
It is, after all, a tough world out there. What business teaches us is that even the best-loved companies with the warmest and fuzziest of images play hardball too. Don’t think for a minute that Amazon, JetBlue, or Starbucks fail to play as relentlessly hard as Wal-Mart at the game of business. The same is true of Dell, which had to fight and claw its way to dominant market share and profitability. When Hewlett-Packard announced weak results a few quarters ago because of price competition in PCs, Dell announced an across-the-board price cut. It delivered, as Stalk notes, “a swift kick to its rival when it was down.”
Of all the head-to-head battles in business today, the most intriguing may well be the ongoing fight between XM and Sirius. In most industries, many rivals challenge each other for a slice of the pie. But the satellite-radio industry is a rarity — a duopoly of combatants slugging it out for potentially huge gains.
For business junkies, it’s like sitting on the sidelines watching a high-stakes game of chess: Every move is visible and strategic; every move prompts a competitive reaction, sometimes sensible, sometimes desperate. If Sirius hadn’t fallen so far behind XM, it probably wouldn’t have signed shock jock Howard Stern to an outrageously expensive $500 million contract. Unlike chess, however, it may be possible for these two fierce rivals to coexist. Rather than a winner-take-all fight to the finish, we may be witnessing a combined struggle to persuade consumers to pay for radio.
Stalk would be quite amused by the Sirius-XM war. He believes that to declare victory today, you have to push your competitor into a corner and squash him like a bug. You need to press the limits and be willing to target your rival’s prices, change the rules, assume risks, do whatever it takes within the law to win. Our story on Stalk, however, offers much more than his latest thinking on strategy and competition. It’s also an inspiring profile of a man who played out his own version of hardball in coming back from a near-death experience. Obviously, it did little to mellow him.
Finally, we bring you Elon Musk, who as founder and CEO of SpaceX is aiming to toss the chessboard into the air and let all the pieces crash to the floor. With a team of bright underdogs, he wants to do nothing less than break the stranglehold that NASA, Boeing, Lockheed Martin, and other big, fat bureaucratic players have on the space industry. Musk’s secret: a unique approach to innovation that will allow him to create a rocket faster, cheaper, and better than anyone else.
Competition will never be the same.