The Nuclear Option

Business is rife with tough talk -- we want to "dominate" the competition, "strong-arm" our suppliers, and "lock-in" our customers.  Business writing is full of war analogies, from Sun Tzu's The Art of War, to my own humble effort with Navigating Corporate Politics.

But does this rush of testosterone really make any sense?  Are these objectives plausible goals?  What is the likely outcome when we attempt to dominate, strong-arm, or lock in?

The answer is both yes and no.

At one level, tough business talk is inspirational.  It provides easily related to objectives that rally the troops, and align the organization's activities toward a common goal.  I've seen this magic work more than once, galvanizing seemingly self-interested employees into rapid and well-cordinated action to accomplish the seemingly impossible -- particularly when survival of the company is at risk (or seems to be).

But when it comes to actually trying to dominate, strong-arm, or lock in, it is my humble opinion that it rarely works, sometimes backfires, and often results in a worse financial outcome for everyone involved.

During my career, I had the opportunity to watch, in some detail, the latter stages of a prolonged competitive battle among two distributors.  I don't know which of the organizations first decided they would use the nuclear option, but by the time I was seeing it, the battle had been going on for many years.  Both organizations were beaten down, financially weak, had demonized employees of their opponent firm, and couldn't seem to see any way out other than taking their competitor into bankruptcy.  But even that was a false horizon.

What they missed, even if either was successful in driving the other to liquidate, was the assets of the bankrupt company would undoubtedly be purchased for pennies on the dollar by a new owner.  Then, odds were good that the battle would continue much as it had before.

In watching the antics of these two companies, a number of conclusions struck me.

  1. The nuclear option -- initiating a war of survival -- is almost never profitable for either firm.
  2. The battle almost always lasts far longer than the aggressor anticipates.
  3. Since most of these battles are fought with price, both companies end up taking major hits to their profitability.
  4. The enemy camp is nearly always characterized as "evil" or "stupid", making any redress of differences, and the ending of battles difficult.  Anti-competitive laws also make settling disputes difficult and sometimes risky.
  5. Success is elusive.  Companies go through bankruptcy and emerge recapitalized and with lower costs, ready to fight on.

So while battling competitors, suppliers or customers may make a good rallying cry, actually taking the nuclear option rarely (dare I say, never) is.


Other Recent Posts:

Selling your less than stellar outcome

It's Never too Late to Rethink Strategy

Don't Rely on the Courts

Brilliant Strategy, Bad Execution

A License to Steal

If you enjoy the ideas presented in my blog posts, then check out my other writing.

Non-Fiction:  NAVIGATING CORPORATE POLITICS (released 7/19/12)

Corporate Thriller novels: LEVERAGEINCENTIVIZE, and DELIVERABLES.  These are all based on extensions of my basic experiences in the world of corporate management.