The Book Corner - Review

The Book Corner

Featured in this issue:

HARDBALL: Are You Playing to Play or Are You Playing to Win?

By George Stalk and Rob Lachenauer
Harvard Business School Press, 2004

Reviewed by Jack C. Green, PhD, Associate Professor of Strategy

Hardball is a provocative book that uses the metaphors of “hardball” and “softball” to describe approaches to competition. Hardball players live by five principles: (1) They focus relentlessly on competitive advantage; (2) They strive to convert competitive advantage into decisive advantage; (3) They employ indirect attack; (4) They exploit their employees’ will to win; (5) They draw a bright line in the caution zone.

The authors argue that any strategy that provides a competitive advantage is a hardball move. This includes unleashing massive and overwhelming force. For example, Frito-Lay used its massive distribution force to overwhelm a sneak attack by Anheuser-Busch’s Eagle brand of potato chips.

A hardball player will exploit anomalies. Wausau Papers employed an interesting example of this strategy in its specialty paper business. These anomalies are often found in businesses characterized by high complexity—such as those that have a diverse customer base with many segments.

A hardball player will threaten a competitor’s profit sanctuaries. A good example of this was the attack of the Japanese automakers on the light truck profit sanctuary of the big three automakers. This is a straightforward example of an entire class of competitors attacking the profit sanctuaries of established leaders.

Hardball players “take it and make it their own.” They are not afraid of copying and doing better. For example, Sam Walton not only copied the concepts of Kmart, he strengthened them in his Wal-Mart stores.

Hardball players entice their competitors into retreat. In motorcycles, Honda, and later Yamaha and Suzuki, gutted the markets of western manufacturers such as Norton, Triumph, and Harley-Davidson by starting with small, low-priced motorcycles and then progressively moving upscale as Western manufacturers retreated to bigger and higher priced models.

Hardball players break compromises. Circuit City’s CarMax broke the compromise in used car retailing by offering a much bigger selection of cars of all brands and ages, thereby simplifying the search with a computerized inventory system and streamlining the sales process.

The book addresses hardball M&A and changes in the field of play. The authors emphasize that hardball players operate within the law at all times and must do so. They must not take short cuts that would “cross the line.”

The book is full of examples of both hardball players and the softball alternatives. Most of the companies cited as examples are familiar, and it is easy to relate to what they did and how they did it.

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Dealing with Financial Risk

By David Shirreff
Economist Books, 2004

Reviewed by Steve Ahn, supporting faculty in Finance and Mergers & Acquisitions

Everything we do with a purpose is necessarily affected by risk. Think of purpose as a benefit or return and the uncertainty of realizing any such return as risk. We then conduct risk versus return assessments in everything we do. This book, therefore, could interest nearly anyone.

For the street-smart, savvy, non-academic businessperson, I recommend this book as an informative, instructional primer on financial risk. For the technical risk manager and financial professional, the book provides refreshing and even entertaining insights. Shirreff’s writing and treatment of the complex and sometimes mundane subject of financial risk is easy to understand and enjoyable to read.

Shirreff contends that financial risk has traditionally been treated as a measurable, calculable, and manageable factor. Policy makers and business leaders have eventually learned that the art and science of risk management are inseparable. Like games of chance, however, risk management is a simple concept to grasp, but a difficult or impossible one to master in all its manifestations.

Shirreff clearly, concisely, and in an often colorful way guides the reader through many of the key concepts as well as specific techniques of risk assessment and management. He examines derivatives and derivative instruments such as swaps, futures, and options. Shirreff also covers traditional hedging principles, risk formulas, risk-adjusted returns on capital, and Monte Carlo simulations. Even more progressively, he covers chaos theory, neural networks, stress tests, multiple scenarios, and risk management “games.” Shirreff devotes ample attention to the players as well, particularly business leaders and policy makers whom he seems to portray sometimes as dysfunctional married couples. He also includes analyses of corporate disasters since the 1990’s, including Enron, which have added to the understanding of financial risk.

I think anyone, whether a financial type or not, would benefit significantly from reading this book—but then that’s just my speculation.

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Preventing Strategic Gridlock: Leading Over, Under & Around Organizational Jams to Achieve High-Performance Results

By Pamela S. Harper
Cameo Publications, Hilton Head Island, SC 2003

Reviewed by Jody Brightman, PhD (candidate), supporting faculty of Marketing, and Manager of Career Services, School of Public Policy

Pamela Harper is a strategic consultant and workshop facilitator who has written a deceptively simple handbook, a how-to on avoiding the pitfalls that befall most firms when they choose to execute strategic change. As she points out, we live in increasingly uncertain times that call for almost constant change. In the words of Bob Dylan, “If you ain’t busy bein’ born, you’re busy dyin’.” We regularly read about the mortal collapse of some Fortune 500 firms.

Has your firm faltered publicly, or were your quarterly numbers just a little shaky? Is your product pipeline so hollow it echoes, or did you look for all your best people and find them out fighting fires? Unless your firm is flourishing and leading its pack, Harper’s book might provide a helpful checklist for you.

Written in an easy-to-read style, Preventing Strategic Gridlock is structured as a useful tool. The chapters provide a diagnostic on “what went wrong with the last thing we tried,” giving useful tips on how to avoid that trap next time. The book also uses cartoons and bold chapter headings to emphasize her seven “strategic gridlocks.”

From the classic “One Size Fits All” management assumption that “if it worked for (fill in the market leader’s name), then that’s what we should do,” to the modern bloodbaths of “Management by Lobotomy,” in which executives excise the troubled organizations only to find they cut flesh, not fat, Harper nails each of American business’s most common strategic errors. She then suggests ways to examine practices in your own organization to see if that’s your corporate face in the mirror, and if so, Harper offers solutions.

The final three pages of the book are arguments for hiring a facilitator such as her company, Business Advancement, Inc. While her arguments are valid, I wish Harper had resisted the temptation to close her winning do-it-yourself book with a sales pitch for her company’s services.

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Blink

By Malcolm Gladwell
Little, Brown and Company, 2005

The Tipping Point

by Malcolm Gladwell
Little, Brown and Company, 2000, 2002

Reviewed by Marjorie Creswell Walsleben, PhD, Associate Editor, GBR

Malcolm Gladwell has written two books within the past five years that have become best sellers: The Tipping Poing and Blink. Both books derive their wide appeal from being based on abilities that most people possess to one degree or another and on trends that we all have observed exploding within and across cultures.

The Tipping Point (2000) describes events that seem isolated at one point, but which become phenonmena that spread, for good or ill, like wildfire for an indeterminate period of time: plane hijackings; pet rocks; rocks dropped from freeway overpasses; bullied students shooting up their classmates, teachers and schools. Gladwell examines in detail how and sometimes why such events morph into bizarre, fantastically affecting and encompassing events.

Blink can be termed a detailed account of the “ability to think without thinking.” Many interesting lengthy examples are given. The book begins with a fascinating account of how the J. Paul Getty Museum was advised, rightly so, by a number of experts in several different fields NOT to purchase a marble statue. Each gave the advice after merely seeing the statue for a few moments. In fact, however, each expert’s advice based on a mere glance was based on years of internalizing study and experience, what Gladwell terms “thin slicing.”

Indulge yourself. You will enjoy both books because you can identify with the recounted stories.

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