Sunday, February 25, 2007

Winning is Incompatible With Business

In my last post in this series, I mentioned briefly that the idea of winning is incompatible with the business world. However, I glossed over this, so I expand on it in this post.

I will repeat some of the themes that I have already covered, as well as add a few new ones, and apply these to the world of business, marketing, and sales.

A Recap on Winning

Winning is what happens at the end of a competition. When you apply the idea of winning to a competition, you take whatever results occurred, discard them, and in their place assign a value of "1" to the winner (possibly winners), and 0 to all others (losers).

I assert that scores should stay as they are at the end of the competition, and not be squashed down to the binary result of win or loss. Many times we already do this:
  • When a series of results are added together to result in a final score, then the "swing" of each competition is what is valued, and not the win or loss. An example of this would be a Bridge tournament.
  • When assessing personal or world records, the relative win against the other players is unimportant with respect to the determination.
  • When teaching sportsmanship, we tell our children, and ourselves, that it's not whether you win or lose, but how you play the game.
Unfortunately, this last one leads to severe cognitive dissonance in today's society. If we really believed that it doesn't matter if you win or lose, then why do we reward the winner in the Olympics? And if winning isn't important, why try? If trying is important, why isn't it rewarded more explicitly?

What we mean is that effort and achievement are important, and that success relative to your expected performance is important, but success relative to others is less so. So you have to try, and try your hardest, and that's what matters.

Labeling one winner at the end of a game is then a problem. It is what I call an arbitrarily scarce reward. It doesn't matter that a professional next to you did better than you did, if you did better than you've ever done before.

It is a disincentive to those in the lead, or far from the lead, to try harder, when win or loss is already guaranteed and all that is rewarded. It results in people forgetting that "how" you play the game is important and concentrating only on winning. They may not break legal laws to do so, but they will break ethical ones.

The solution is as follows: Keep results as a lifetime of achievement. Each time you perform, you reward a sliding scale of rewards based on how well you did relative to how well you were expected to do. The difference in performance between different players still acts as a competition; players will still feel the need to perform better than others do - not absolutely, but relative to personal expectation.

Winning and Business

Today, winning is integral to business in several ways. The major way is the idea of "winning" a contract.

Businesses compete for your money. A successful business plays by offering the best products, best service, or lowest prices, and tries to "win" by collecting the payment or contract. From the other side, governments offer tenders and accept bids for contracts, and consumers judge the performances of competing businesses, rewarding the "winner" with their money.

When the real reward is actually scarce, such as money, there's is no denying that someone is going to "win" it or "lose" it in the short term.

However, there are several problems with the way we approach the idea of competition in business today, and that revolves around the idea of "winning" or "losing".

Winning Implies the End of Competition

The first thing to note about winning is that winning occurs at the end of competition. Up until winning is scored, competition flourishes. After winning, the winner has a monopoly on the business. The competition is over.

Like any other time when someone has a monopoly, winners become complacent. If your company believes that it has "won", then it has some rethinking to do. You don't "win" contracts or money. You "win" attention.

Once you have a client's attention, you have to continuously win the client over and over. Every service call, every document, every training, and every product is another competition, against your client's expectations. If you "lose" this competition, you may end up having won the battle but lost the war.

Winning Implies an Absolute Choice

If you win a competition to provide service, you are likely to think that your client loves everything about you, when the truth is that the client may simply have chosen the best of the available alternatives.

Winning service doesn't mean that everything you did was right. Nor does it mean that the client is not still longing for the parts of the total service that you don't do as well as your competitors. They may be wondering to themselves how they can integrate the best parts of what you offer with the best parts of what your competitors offer.

Your job is either of two things at that point: a) either match or exceed your clients expectations as to the parts they weren't really happy about, or b) until you can do that, find a way for your client to integrate the best parts of what you offer with the best parts of what your competition offers.

Some people might argue that by letting another company get a foothold into your client, you open the door for them to dump you entirely when the client decides that it wants to simplify its accounting. But remember that you were the "winner"; if the client is going to dump a company, you're starting with the better odds. By showing flexibility, you increase those odds.

Winning Implies an Unequal Partnership

Most subtly, perhaps, winning implies "you", not the client. The client is giving out scarce rewards - money and attention. But that's not really what business is about.

If you think in terms of arbitrary awards like winning, rather than a mutual exchange of benefits (your good service for their good money), you are likely to focus on short term rewards, sometimes in ways that are more about winning than about actual service, which will eventually lead to long term disaster.

Business is mutual. Both partners have to reward each other. Both partners are supposed to win, not just the one who gets the money.


It would serve your business well to stop thinking about "winning" contracts and service, and more about "performing" well. Performing is something that doesn't have a goal line or an end point. You start performing well, and you keep performing well. You don't get to have a breather after the contract is landed.

On the flip side, organizations that ask for tenders and then award contracts to the "winning" bidder should reconsider the relationships that they are trying to establish.

In Israel, companies often "win" tenders by promising low prices and then, after the work is begun, try to change the terms of the contract, charge extra for items that weren't specified in the contract, and so on. This is what the "winning" mindset gets you.

Instead, consider finding ways to keep companies on their toes until after the project is complete, either by dividing projects into smaller pieces, or by including successful performance reviews as part of the contract, with the option to move to another provider if this one fails to many reviews.


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