Business, according to The Boston Consulting Group Senior Vice President George Stalk (HBS ’78), is not about “playing nice” or being “soft.” Rather, Stalk claimed in a talk about his new book Hardball: Are You Playing to Play or Playing to Win? with the HBS Management Consulting Club, business is about erecting an “unassailable” and even “unfair competitive advantage…that helps customers and hurts competitors.”
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.
The heart of the matter in hardball mindset posits the need for hardball players. According to Stalk, a hardball-ready company has players who do not respond to change by being victims, waiters, cynics, functional optimizers (those who respond to systemic problems with “but we’re doing our jobs just fine.”), or in denial. Hardball-ready leadership is also prepared. Citing Jack Welch, Stalk profiled the hardball executive as one who is decisive with his decisions and never says maybe, produces cash instead of fuzzy accounting, and does not tolerate “failure to deliver…more than once.”
As the leading proponent of hardball strategy, Stalk has been met with both rousing applause for standing up to the ‘school of soft management’ (which he accuses HBS of being) and blistering criticism for advocating Machiavellian methods of management-both of which he read examples of during his talk. But at this setting of HBS students, questions tended to avoid the poles and instead addressed complementary tactics to hardball management such as the importance of stealth, and general applications of hardball strategy, including questions about the longstanding Coca-Cola and Pepsi wars, and the role of hardball among competing management consultant firms. One question, however, seemed to catch Stalk unawares: When a student asked whether there might be a danger of playing “too much hardball” and result in having an entire industry gang-up on one company, Stalk mentioned Microsoft and Intel as examples of such hardball firms that resorted to “softball” tactics like “changing the rules,” but ultimately conceded that he did not know.
As the presentation concluded, students appeared to have had their curiosity piqued, and many approached Stalk to inquire about complimentary copies. (There were none.) Regardless of whether or not students bought his pitch for hardball, they appeared to find his talk entertaining – as Stalk originally intended for his work to be.