Co-Opetition - Adam M. Brandenburger [99]
Cordiant found itself facing a new competitor and, worse still, had lost some of its best people to that new competitor. But Cordiant had a rule that gave it some protection, so it seemed. Because the people that Saatchi took with him had had a noncompete clause in their employment contracts, they couldn’t do anything that would take the British Airways business away from Cordiant.
So when Maurice Saatchi pitched the British Airways account, he couldn’t use any of these people. Instead, he sat life-sized color cutouts of his excluded colleagues around the table. Saatchi then told British Airways that to do the best work possible, he’d need these people on the account. He suggested that British Airways go back to Cordiant and pressure it to drop the noncompete clause.
Cordiant was put in a no-win position. Saying no wouldn’t exactly please British Airways. And remember, British Airways was Cordiant’s customer—a jumbo-sized one, at that. Turning down a customer’s request is hardly a recipe for keeping the customer’s business, but saying yes would make the new Saatchi agency a more formidable contender for the account. Either way, the British Airways account would be put at greater risk.
In this game, British Airways had the real power. Saatchi leveraged the power of British Airways and succeeded in changing the rules. He got his people freed to work on the British Airways account. And he got the account, too.
Even when a rule seems firmly established, you always need to remember it might get renegotiated. If you can’t control a rule, it’s risky to base your strategy on it.
In the marketplace, it’s the party with the power who gets to make the rules. A straight flush is almost unbeatable in poker. But, as they said in the Old West: “A Smith & Wesson beats a straight flush.”
7. Tactics
Perception is reality.
—Bishop Berkeley
Games in business are played in a fog—not von Clausewitz’s fog of war, perhaps, but a fog nonetheless. That’s why perceptions are a fundamental element of any game.
It’s perceptions of the world, regardless of whether they are accurate, that drive behavior. Mike Marn, management consultant at McKinsey, recounts a striking example: “One price war in industrial electrical products started when an industry trade journal mistakenly inflated the total market volume by 15%. The four major players all thought they had lost market share and dropped prices to recover what was really never lost.”1
The job of managing and shaping competitors’ perceptions is an essential part of business strategy. In 1994, for example, Rupert Murdoch’s New York Post cleverly averted a price war with the rival Daily News by creating the perception that it was ready to start one. Presently, we’ll see how this came about.
Sometimes it’s customers or suppliers, not competitors, that need convincing. How can Federal Express absolutely, positively convince people of its reliability? How can a job candidate convince a prospective employer that it won’t go wrong by giving him a chance? How can an author convince a publisher that he has a great book to write—and that he’ll complete it on time?2 The need to convince goes both ways. How can the employer convince the job candidate that it will provide valuable training and experience? How can the publisher convince the author that it will invest in marketing the book? These are some of the questions we’ll answer in this chapter.
Perceptions play a central role in negotiations. Buyers and sellers often have different views of the pie; sellers portray what they have to offer as valuable, while buyers remain skeptical. Perhaps these are honest assessments, or perhaps they are negotiating ploys. How can buyers and sellers