This article also appeared in Finweek Magazine in their 6-Dec-2012 issue
In American football, Green Bay Packers coach, Vince Lombardi, famously said, “Winning is the only thing that matters.” But is winning at costs really worth it? And is winning more important than the learning that happens on the journey?
I ran middle distance competitively in high school. I remember one particular Saturday morning track meet at the Germiston Stadium as clearly as if it were yesterday. One of the fathers was shouting at his seven year old son during his sprint race, “Jannie, run faster! You must win this! No TV for you this week if you don’t win!” Jannie gave it everything he had, his small face blood-red with the effort, but it wasn’t enough for his father. Jannie came second. His father shouted at him so loudly and got so flustered that he looked as though he would burst a blood vessel. He stormed off the track, leaving Jannie in tears on the podium, throwing his second place medal on the ground as if it was a virus. Although I was only 16 at the time, my immediate thoughts were, “This can’t be healthy. Jannie is just a seven year old kid, not a professional athlete! If his father is already obsessed with winning at this young age, Jannie will end up hating running and wasting his talent. And he will end up losing his father in the process. Is winning really worth it?”
WINNING AT ALL COSTS
This fixation with winning at all costs is as unhealthy in business as it is in personal relationships, like Jannie’s with his father. Why is it important that we stop our unhealthy focus on “winning is everything”?
Large organisations such as Enron rose to power through this win-at-all-costs outlook, only to come crashing down when the magnitude of their deception became known. The outcome? Yes, the company’s leaders suffered as they should have, but the damage was much more widespread: 20,000 employees lost their jobs and they lost billions in pension and retirement funds. Investors lost $11 bill as Enron’s stock plummeted.
Apple is another powerful example. Apple has grown into one of the most powerful, richest and most successful companies worldwide, partly by mastering global manufacturing. However, at whose expense? In 2006, news broke that, in China’s iPod-producing factories of Apple’s supplier Foxconn, workers laboured in sweatshop conditions. They were paid around $100 per month and worked more than 60 hours per week, while severe — sometimes deadly — safety issues prevailed. Although Apple executives say the company has made significant improvements in factories in recent years, substantial problems still remain. In 2011 Apple admitted there were more and more child labourers in their factories. Sadly, Apple is not the only electronics company with a worrying supply chain. Poor working conditions have been identified at factories manufacturing products for Dell, Hewlett-Packard, IBM, Lenovo, Motorola, Nokia and others.
BLAME IT ON THE MBA
Much of the blame for the global economic crisis fell on the shoulders of MBA graduates. High-profile MBA alumni tainted the once highly regarded MBA degree. These included Richard Fuld (Stern’s MBA of 1973), who led Lehman Brothers deep into subprime debt and ultimate bankruptcy while amassing nearly half a billion dollars for himself, and John Thain (Harvard 1979), who gave billions in bonuses to Merrill Lynch staff before disclosing that the company had lost $15 billion. For years, provocative academic Henry Mintzberg of McGill University’ has maintained that traditional business programs stimulate arrogance and detachment in young people who gain little or no practical experience. He blames this largely on overemphasis on theory and case-study analysis. In Mintzberg’s view, the “monumental failure of management” caused the financial meltdown, and business schools were “the perpetrators of this mess.” Others have criticised business schools’ emphasis on star leaders, their focus on individualism and the single-minded monetary definition of success. Since then, Harvard Business School’s MBA oath – a pledge to “serve the greater good” – has become a global drive, with thousands of students worldwide signing the promise. The oath movement is only one of the ways that business management degrees are adapting. MBA programs around the globe are hurrying to show that they teach students to be good – not just wealthy – by reinventing their MBA curricula, adding courses on ethics and governance, and promoting debates about ethical corporate behaviour.
WHEN GREEN MEANS DISASTER
BP is one of the largest companies on the globe, with revenue dwarfing that of some countries. However, being an oil corporation, it is directly linked with the use of fossil fuels and major environmental challenges like global warming. Also, BP was at the heart of one of the worst man-made environmental catastrophes in history. In 2010, the Deepwater Horizon oil rig in the Gulf of Mexico exploded, killing 11 people and rupturing BP’s Macondo oil well. As a result 4.9m barrels of oil were discharged into the ocean, threatening marine life and hundreds of miles of coastline. We’ll only know the full extent of environmental damage from this devastating oil spill in years, perhaps decades. Was it worth it?
COMPETITION CAN BE DESTRUCTIVE
Competition is healthy. A competitive marketplace improves efficiency and productivity, lowers prices and gives us more product choices. Together these raise living standards. However, the hyper-competitiveness of sports can be destructive and counterproductive when played out in the business world. Although it may bring short term gains to the company and its shareholders, too often it brings longer term losses to many more people. When competitiveness runs wild in business, it is just as likely to hurt customers as it is to annihilate competitors. In the Nineties, Microsoft was so intensely competitive it destroyed other companies. When Microsoft entered the Internet browser space, its competitive moves against Netscape were so aggressive that the federal government intervened. But it was too late for Netscape and the company went under. Worldwide, Microsoft’s monopolistic activities lead to restricted choices and greater costs for customers. So the outcome was widespread consumer resentment. The company’s bullying practices even extended into the customer relationship. “Winning at all costs” landed Microsoft in federal court and deepened customer hostility. Microsoft has worked to improve its image. While the company is still very competitive – Microsoft is in a neck-to-neck race with Google and Yahoo to be the leader of search marketing – the brutal tactics of the NIneties are no longer part of Microsoft’s modus operandi. With search, Microsoft is competing to produce a better product, not to create a monopoly.
BLINDED BY THE BLING
The quest for short-term wins causes many business catastrophes. Excessive monetary incentives only make things worse. In 2010, the average CEO earned an astronomical 325 times as much as the average US worker, up from 263-to-1 in 2009. Unfortunately, these bonuses and hyper-focus on financial gain makes leaders and their companies blind to many risks. Financially motivated leaders tend to overlook alternatives that don’t increase profit. On top of this, external motivators like bonuses, which depend on specific milestones being met, often decrease our actual performance. By focusing our attention only on the end result, it limits our creative thinking and decision-making.
WINNERS DON’T QUIT
The “Winners don’t quit” mentality can block your objectivity and cause bad business decisions. This mind-set can keep a company emotionally clinging to an idea, a project or a product or service, even when all signs suggest that it isn’t working. Many of us have heard a team or an entrepreneur saying, “We’ve invested so much money, time and effort in this, we cannot give up now!” Yet often that’s exactly what you need to do. Sometimes you need to close the door on a bad product, learn from the experience and move on. Rather than coming back with a new offering, by following the “winning is everything” view, you could misread the market’s lukewarm reaction to a new product or service as the signal to push its sales harder. A more effective attitude would be to “launch then iterate”, in other words, to tweak or reinvent your offering until you find what the market wants and is willing to pay for.
In 1839 Philip James Bailey said, “It matters not how long we live, but how (we live).”
Ultimately, there is a lot more to business than beating the competition. Although winning in business is important, it’s how we win that matters. Winning the goodwill of customers by giving them better service or a better product is much more critical. Winning should notbe about making more money. It’s about doing the best that you can AND doing what’s in the long-term best interests of all your stakeholders, be they customers, your staff or the environment. We should demand this much from companies’ leaders and their boards.