“If you can’t run with the big dogs, stay on the porch.”
** Popular saying (probably of Southern origin)
Last Saturday, in the season opening football game, University of Southern California trounced University of Virginia, 52 to 7. Going into the game, everyone knew that USC has one of the strongest collegiate teams in the U.S. The day before, the odds makers put the point spread at 19, in USC’s favor. Therefore, the outcome should have been no surprise. Yet, as my wife and I were walking home from the game, disappointed fans murmured: it was an unfair match; terrible thing to start a season this way; we didn’t have a fighting chance because of __________ (fill in the blank with your favorite excuse). Then too, we heard “They aren’t in our athletic league. Whose bright idea was this match? What were they thinking, pitting us against USC?” Such kvetching boiled down to: “We’re not a big dog. We should have stayed on the porch.” All of this fueled some reflections on choosing your competition, a subject on which businesses and business schools have a lot to teach.
On one hand, it certainly seems rational to go where the competition is easy. Economics teaches that investment returns will tend to be higher where the degree of competition is lower. Anyway, you have to make a profit sooner or later, or else you don’t survive. This would suggest the virtue of going after the low-hanging fruit; go where the competition isn’t.
Of course, you can help the competitors decide to stay out of your field. The practice of building entry barriers to competition is now a sophisticated art. With a little help from allies, these practices get easier. Nobel Laureate James Buchanan and others have illuminated the co-option of government regulators by the very firms they are charged with regulating. A prominent example is the Interstate Commerce Commission that regulated railroads and trucking in the U.S. The ICC was abolished in 1995 after the public got fed up with rates and inefficiencies in transportation.
But sometimes your competition chooses you. You might be a small shop owner when a big-box retailer (Wal-Mart, Barnes and Noble, Kroger) roars into your neighborhood. You still have a choice. You can exit from the business. You can reposition the business (toward being a premium retailer, like Gumps). You can relocate (again, go where the competition isn’t). You can go online. Or you can stand and compete. In effect, you are still choosing your competition.
Why might it be rational to choose to compete with the “big dogs”?
**To learn. This kind of competition is likely to teach you how to compete better in the next contest—that is, if you survive. The art form to this kind of competition is to enter lots of small non-fatal contests with the big dogs. In effect, you are probing the big dog’s defenses without so enraging the beast that the contest becomes a fight to the death. For this kind of learning-by-doing, don’t tempt fate with overly-aggressive action. Remember the words of the songwriter Jim Croce: “You don’t step on Superman’s cape / You don’t spit into the wind / You don’t pull the mask off the ole’ Lone Ranger / And you don’t mess around with Jim.” Competing with the big dogs in order to learn requires great discipline: you must actually try to learn from the experience and change your practices, rather than to limp away from a defeat and simply nurse regret.
**To develop. Emily Hartman, D’10, used to compete in track and field events. She told me that runners don’t push themselves if they are competing against slow rivals; they push themselves much harder when competing with fast rivals. Do you want to grow stronger and run faster? Choose a strong and fast rival.
**To test. Competing with the big dogs is a way to resolve uncertainty about how good you are. By entering any competition you are buying an option on an uncertain outcome. Entrepreneurs do this every day. They think they have a good idea, but aren’t sure. Often the option isn’t very expensive. Even out-of-the-money options are valuable (even when the odds makers give a large point spread in favor of the big dogs). And if the option pays off, it can pay handsomely: business history is full of David-and-Goliath stories—think of MCI, Google, Virgin Atlantic, Genentech and scores of others. As the field of risk management teaches us, the art form here is to manage the contest somehow: limit the downside exposure; alter the probability of success in your favor; and keep enough capital in reserve so that if the test fails, you can live to compete another day.
Every year, I see these motives played out at Darden with good success. Behind the smiling faces and can-do attitudes of each new MBA class is not a little anxiety. Applicants know full well that Darden’s program is demanding, the “high octane” part of our mantra. At some point, each student wonders, “What was I thinking when I applied…?” But by graduation and in the years thereafter, we hear the answers. The students believed they had real talent; they certainly had high aspirations. They didn’t want to spend two years of their lives (and a lot of money) in a boring, passive activity. They wanted to be stretched with the benefit of plenty of support (learning teams, tutors, mentors, high faculty engagement). They wanted to emerge and stronger, more confident, and more competent people. And they achieved all that.
In the final analysis, I believe that very good people—people with high talent, high integrity, and high aspirations—want to be with other very good people. Partly they want to find out how good they are; they want to learn from the people around them; they want to stretch themselves in the company of such people. Students of high potential hanker to know where they stand relative to other people of high potential. As the moral philosopher, Harry Frankfurt, has written, “As conscious beings, we exist only in response to other things, and we cannot know ourselves at all without knowing them.” This sense of relative standing is important to one’s growth in leadership and is certainly the foundation for emotional intelligence. Kevin Sharer, CEO of Amgen, who spoke at Darden three years ago, emphasized that self-awareness relative to others is vitally important to the development of corporate leaders. Through self-awareness and mastery one is better prepared to serve others.
For these reasons, if you have talent and ambition it is very costly to “stay on the porch.” In business or in business school, no one can guarantee that you will be as big or as fast as the big dogs. But what you gain might prepare you for an even more important success in a later contest. Therefore, it makes sense to get off the porch and run.
UVA will play Southern Cal again in two years. I am delighted with the prospect—for our team, our school, and the example it sets.
Posted by Robert Bruner at 09/06/2008 09:42:29 PM