I find strategy concepts that I would typically use in the business realm are often surprisingly useful when moved to determine strategy for one’s life and vice versa.
One idea in particular I’ve been thinking about over the years is developing a strategy to “win” as opposed to one designed to avoid loss. The two approaches are quite different.
About 10 years ago when I was in industry, I ran the ecommerce product line for a company called ATG (now owned by Oracle). ATG built enterprise software to run ecommerce websites. My old clients included J Crew, Martha Stewart, P&G, Neiman Marcus and the like.
At the time (and continuing to today), if you were going to build a website to handle up to $1 billion in sales online, you really only had two options. You could buy from IBM or you could buy from ATG.
It was my job to figure out how the heck we would compete against IBM. Corporate buyers are deathly afraid of screwing up, making a mistake and getting fired. It was not easy to compete against IBM, even though we had a far superior product.
The #1 obstacle we faced was a corporate buyer who in the back of his mind remembered IBM’s advertising campaign from the 1970’s that ran on national TV that said, “Nobody ever got fired for buying IBM.” Even though that campaign was decades old and had never been run since, these buyers were still thinking about it.
We were 99.9% smaller in revenue than IBM, we had far less brand recognition and we had a bunch of buyers afraid of losing their jobs by buying from the wrong vendor.
Here’s what I would say to prospective clients (and would train our sales team to do the same):
"Mr. Customer, it is true that nobody ever got fired for buying IBM. But you know what? Nobody ever got promoted for buying IBM either."
At the time, our best clients were literally appearing on magazine covers featuring the ground breaking work they were doing in ecommerce. Because our product was much more flexible and mature that IBM’s, these clients could use our product to execute their unique ecommerce vision. This was simply not possible with IBM’s product at the time.
So I came up with (what I would now call) a cognitive reframe to be more concerned about not getting promoted than getting fired. In the end, IBM and ATG split the market. We got the innovators who wanted to pursue differentiated strategies online. IBM got the conservatives who didn't care to be differentiated but simply wanted a solution that wouldn’t result in them getting fired.
The underlying dynamic at play is this concept of: What’s your goal? Is your goal to play to win? Or is it to play to not lose?
The two approaches are fundamentally quite different.
The big discrepancy between these two approaches comes from the willingness and ability to tolerate uncertainty and failures.
In the "play to not lose" approach, all failure is to be avoided even if that means diluting a positive outcome. In a "play to win" approach, failure is tolerated (and often necessary) in order to maximize the positive outcome.
I see many big companies play to not lose. I see many startups (especially in Silicon Valley) focused on playing to win.
This is quite ironic in many ways. The big companies that factually have more assets on hand (to weather any kind of short-term loss) avoid any kind of loss. Conversely, it’s the startup that has no resources that really can’t afford to lose that’s willing to risk it all to play to win.
I find that terribly ironic in so many ways.
I see a similar dynamic when it comes to strategic career planning. The person with multiple Ivy League degrees is surprisingly risk averse, even though she has factually the most assets to offset any potential loss. Meanwhile, it’s the high school drop-out that really doesn’t have any assets on hand to offset a loss that is willing to take risks.
I’ve been thinking about this fascinating dynamic for quite some time and have a theory as to why it exists.
It’s my hypothesis that it has to do with the structured education system that Ivy League grads successfully navigated to achieve their academic success.
In academic environments (I’m thinking mainly high school and undergrad here), there is a largely 1:1 relationship between hard work, reducing failures, and achieving success.
In other words, if you do your homework and study hard, you will make fewer mistakes and you will get high test scores. This logical relationship is so well ingrained we might as well call it the Hard Work = Good Grades theorem of academic success.
The powers that be designed the grading system to reinforce the theorem above. However, it is not a universal law applicable to all areas of life (though many erroneously assume that’s the case). It only applies to academic environments because those environments were deliberately designed that way.
However, as one leaves the academic world, most continue to operate by that theorem. If I work hard, I will reduce my mistakes and I will be more successful in my career and life.
What they don't realize is that in the “real” world, the underlying grading system is not the same as in school. (It may be true with certain employers, such as McKinsey, that replicate the academic system, but it is absolutely not universally true.)
For example, in school there is only one performance metric to be optimized — grades. In life, you can choose from an infinite number of variables to optimize. You could optimize for money, power, prestige, or you could optimize for health, peace, joy or literally anything else.
In school, you are assigned a single master “grading” system. In life, you get to choose the “grading” system you’ll use to measure the progress of your life.
Stated differently, school environment favors those who are good at following the rules.
The real world favors both those who follow a presumed set of rules and those who write their own rules.
Those are very different skill sets.
In corporate strategic planning, one of the concepts often discussed is the idea of “changing the rules of the game.” If the market competes on price, and your company will never have the lowest price (because your cost structure is too high), you can change the rules of the game such that design or product quality becomes the dominant competitive attribute.
(This is basically what Steve Jobs at Apple did. He didn’t try to create cheaper versions of his competitors' products. He created new categories of products that were substantially more expensive than the alternatives. In short, Jobs didn’t follow the rules of the industry, he opted to rewrite the rules instead.)
One of the challenges I see with professionals in their 20s (and frankly all the way up to their 40s and 50s) is that they’ve assumed that the old academic theorem of "work hard, reduce mistakes, and get more success" holds true outside of the academic environment.
It may still be true, but they fail to realize that out in the real world, there’s more than one way to be right (and more than one “grading” system to use to measure the progress of your life).
In classic strategic planning circles, if your assets are not suited to winning the game (of the industry) based on how the rules are written, the right strategic move is to rewrite the rules of the game to favor the type of assets you do have.
If you are brilliant creatively, it is strategically a bad idea to keep seeking jobs where creativity is an irrelevant skill. If you’re bad a math, don’t go applying for jobs that require strong math skills.
I see similar strategic concepts used in military strategy. I’ve been a beginning student in studying special forces strategy. How do you take a numerically inferior fighting force and defeat a numerically superior fighting force?
Well what I’ve learned is this: You definitely do not structure the fight to be one where size of force is the dominant determinant of success.
If you’re the special forces strategist, you attack in the middle of the night when 95% of the opponent's force is asleep and unarmed. You use surprise or deception to catch the opposing force off guard — usually attacking their weakest area. Then you use speed to accomplish your objective in the small window of time where you have a temporary advantage.
Then you get the hell out of there before the opposing force has had time to wake up, get armed, get oriented, and get coordinated. In military strategy, when you can’t win with the normal set of rules for how military engagements are fought, you change the rules.
The same applies in business strategy and in career strategy too. This strategic principle is transferable across domains.
Getting back to the idea of playing to win vs. to not lose, once you get out of the academic environment, there are multiple ways to succeed, not just one. There are also multiple definitions of success to choose from, not just one.
Often the path to “winning” in the real world can not always be defined in advance. There are uncertainties and insights that can only be discovered in the middle of the journey.
In contrast, the path to avoid losing often is more predictable and certain.
Whether you play to win or to avoid losing in the “game” of life is a personal choice and a matter of your personal values. If you play to avoid losing, that path is generally fairly predictable and knowable in advance. If the most likely outcome of a “not losing” scenario is quite attractive to you, you should focus on that.
If you play to win, that path isn’t always predictable in advance — accept that as a trait of this particular path. If the "playing not to lose" outcome is not sufficient for you, then aim higher (with whatever definition of winning you choose to use).
What is not okay (or at least sub-optimal in my opinion) is when someone says they want to play to win, but display through their actions that they’re actually playing to avoid losing.
You can’t end up at a destination in the East by driving your car towards the West.
The key is to figure out what you want and get comfortable with the path that leads to what you want. If you’re not willing to take the path, then consider changing what you want to match what you are willing (or not willing) to do.
The strategic goal is your choice. Getting your strategic goal aligned with the actions you plan to take to achieve the goal is not a choice, it’s a requirement.