The winners in business have always played hardball. When companies play hardball it means they use every legitimate resource and strategy available to them to gain advantage over their competitors. When they achieve competitive advantage they attract more customers, gain market share, boost profits, reward their employees, and weaken their competitors’ positions. They then reinvest their gains in their businesses to improve product quality, expand their offerings, and improve their processes, to further strengthen their competitive advantage. When they can continue this virtuous cycle of activity for a prolonged period, they can transform their competitive advantage into a position even more powerful and desirable—they can achieve decisive advantage. With that, they put themselves into a far more powerful and influential position than that of just the market leader. They can use their decisive advantage to bring about fundamental change to an entire industry, put their competitors into a reactive position, cause their partners and suppliers to make adjustments, and deliver so much value to their customers that their market share grows larger still.
This kind of winning through competitive advantage may sound like nothing more than good, serious, and sensible business practice. But hardball companies are further distinguished by their attitude and behavior. They play with such a total commitment to the game, such a fierceness of execution, and such a relentless drive to maximize their strengths that they look very different from other companies that have admirable performance and sound business skills. Hardball players always play to win, in every aspect of the game. They always seek decisive victory. They don’t want to win a 2–1 squeaker. They would prefer a 9–2 rout.
Softball players have no competitive advantage or, if they have one, may not know what it is or may be unable to exploit it. Some softballers can drift along for years, finding ways—through trade loading, for example, or cost cutting—to stay afloat from quarter to quarter. A few may seek to disguise their poor performance through activities—such as creating shell customers—that are questionable, if not illegal. In the parlance of pitching, such companies are throwing junk.
We believe that in our society it is the fundamental purpose of companies to compete as hard as they can against one another. In the September 13, 1970, edition of the New York Times Magazine Nobel laureate Milton Friedman quoted from his book Capitalism and Freedom when he wrote, “There is one and only one social responsibility of business— to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”
Friedman’s comments sparked a debate about corporate purpose that raged in corporate suites across the country and around the world, in the halls of academe, and in the influential “chat societies” of our nation’s capital. The debate continues to this day.