A surefire way to lose is to try to avoid doing so
A hand of poker comes down to the final card. You have a strong holding. You think you have the edge. There is a massive pot and you have pushed all in, betting all your money as the likely favorite. The river – the final card – is revealed. You win. You are overjoyed and are now substantially ahead in cash compared to your starting position. You start thinking about your winnings. You change the way you play. Your game now centers on protecting what you have, rather than continuing to make smart bets. Ironically, by playing not to lose many players start to lose.
As we look at disruption, we notice a similar pattern with very successful companies. Blockbuster Video turned down the chance to buy Netflix because it did not see the opportunity in online streaming for changing its business. Kodak invented the digital camera. But its successful film business was considered more important – and the opportunity to go digital was shelved. Nokia doubled down on the cellphone business as the world moved to mobile computing. Bed Bath & Beyond doubled down on physical stores and avoided online retail after 2017. All these companies started playing not to lose and focused on protecting what they had. The rest is history.
At the heart of the destructive disruptions of these great companies was a change from playing to win, to playing not to lose. It became about protecting what they had and resistance to change.
Playing not to lose
Companies that play not to lose become defensive and cautious. They become risk-averse and conservative in their decision-making. They focus on the products or services that made them successful and avoid trying new and novel things. They become short-term oriented and avoid what they perceive as threats. They stop doing the things that made them successful. We can term this the losers’ paradox: trying to avoid losing makes losing more likely.
Play to win
To achieve success in the first place, all the companies above took smart risks. They were aggressive and innovative. They were always looking for ways to gain advantage and were disrupting the status quo. The focus was growth, expansion, and seizing opportunities. They tended to look more long-term in their decision-making and didn’t try to optimize every short-term result.
Jeff Bezos has said that Amazon should always remain a Day One company and never become a Day Two company. Day One means that Amazon must always act as a startup, regardless of how big it gets. Its corporate headquarters is called the Day One building. Bezos built a culture and mentality that focuses on the customer and moves with the market. Its ethos can be summarized as act and adapt: continued innovation, taking smart risks and learning from potential failures. In other words, Amazon continues to play to win.
As leaders, we must establish and maintain a culture that allows our organizations to continue to play to win. We cannot allow ourselves to get caught up in the short-term earnings trap. Companies that focus solely on optimization and cost-cutting are not going to win in the future. We also must watch out for excessive conservatism in our decision-making and our financial metrics.
Like a poker player who prioritizes protecting his stack over making smart plays, leaders who try to hold what they have rather than forge paths to progress face likely defeat. We must stay aggressive. We must play to win.
