Readers will see how a “strong square” strategy drove Adobe’s rise from niche player to industry giant, as well as Western Union’s success through a hundred years of technology changes. They’ll learn how AOL has played a crucial “exchange sacrifice” to revive its fortunes, and how Google is taking turf from Microsoft with a “minority attack.” Most importantly these days, they’ll find out “what to do when you don’t know what to do,” and avoid the fate of companies like Polaroid, Gateway, and our dearly departed Ma Bell.

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Book Excerpts

From the Preface

As it turns out, Information Age business comes with a 1,000-year-old user’s guide. That’s fortunate, for our suddenly flat world is inflicting business disruptions of historic proportions. It has obliterated many of the traditional barriers to entry: physical plant, local suppliers, and guarded relationships. It has amped up the volume of information to deafening levels. It has introduced new competitors from places we didn’t even know existed. It has compressed the time for making decisions and shortened every sort of business cycle, from product launches to stock turnover time to CEO lifespans. Intellectual property, not physical property, has become the weapon of choice. This wave has overwhelmed standard business analytical tools. Nearly all of these operate off some variation of reducing possible choices to their present economic values, with the one that generates the biggest number winning. Problem is, doing that requires the business equivalent of a giant sloth: the kind of slow-moving, predictable market that is now nearly extinct. To a radically greater degree than has ever been true before, today’s strategic and operational decisions must be made without a clear understanding of their outcomes. That is, to compete successfully in the Information Revolution, you have to know what to do when you’re not sure what to do. Chess teaches that. And that’s why the greatest strategy and knowledge game in history is so relevant to today’s business issues.

On books that preach certainty

…readers of “Recipes for Success” books often fail to produce a nice cake for a very simple reason. In the kitchen, there are rarely opponents who fight you tooth and nail for access to the springform pan. The majority of business advice books do not account for this fact. Instead, they preach that it’s the internal factors that are primarily responsible for an entity’s success. But in real life, someone’s over there playing the Black pieces, and she gets just as many moves as you do.

On the First Mover Advantage, derived from Metcalf’s Law

Poor Mr. Metcalfe’s “law” was ideal for abuse by investment banks back in the bubble, for they could use it as absolutely genuine scientific proof that throwing insane amounts of money at any concept was a good idea. Of course, the Internet had to be involved somehow (that was the required “network”), which was perfect, as it explained why such an investment philosophy had not previously been smart. When uttered by the bankers, in fact, the words typically carried an air that implied that further questions would indicate a rather painful naïveté. To simplify matters, their rallying cry became “GBQ”, “get big quick;” less elegant, perhaps, but more to the point.

From “On the Clock”

Many companies only see the need to regenerate strategy when their profit margins go south. Why mess with a good thing? If it ain’t broke, don’t fix it! Well, that might have been fine in the fifties, but in the Information Age you’re always on the clock. Consider: where was the crisis point for Ford, or Polaroid, or Coke? It’s not that they made one big blunder somewhere, or that some opponent unleashed a single killer blow; it’s that they slowly got further and further behind on the clock. The moves just didn’t come fast enough. Of course, they saw change coming (we’re talking about good management teams), but couldn’t figure out exactly how to respond. They froze as their clocks ticked down, thinking ever harder and meeting ever more furiously, but not acting. The simple fact is this: If you make moves, you can help shape the future that you’re worried about; otherwise, you’re just its sitting duck.

From “Bad Bishops”

Can working with the six kinds of wooden pieces that comprise a chess team really tell us anything about managing people effectively? Yes, it can. In chess, unlike the other big strategy games (go, checkers), each side is composed of pieces with different abilities and values to the organization. And, as in any company, the most basic abilities are held by the greatest number of participants (the pawns; each side has eight, and the commonly ascribed numerical value of each is one); while the greatest ability, and value, is held by the fewest number of participants, the Queen (each side has just one, and its value is 10). And in the middle we have a few players with moderate abilities, the manager-level knights (3 points), director-level bishops (3.5 points); and SVP rooks, 5 each.

The really telling point concerns the big dog himself, the King, who has almost no power at all but, because his loss is the end of the game, is considered of infinite value (judging by the size of the now common exit package, about the same as current CEOs).

From “Lucky or Good?”

Here’s an interesting exercise. Do some research on the topic “business and luck”. You will find almost nothing. Apparently, every success business was well planned; every failure, explicable. A bit fishy, eh? Indeed. Think back again about Yahoo! One rather doubts that Jerry and David foresaw how aggregating their favorite URLs would become a $40 billion business. So, then, were these guys just lucky? Let’s hold on to that thought for just one minute…