9. Hardball: Are You Playing to Play or Playing to Win? by George Stalk and Rob Lachenauer (Harvard Business School Press, 2004).
10. Our discussion of HBO’s early days and strategic innovations draws extensively on Polly LaBarre’s in-depth profile of Chris Albrecht. See “Hit Man,” Fast Company (September 2002). There is no shortage of articles dissecting HBO’s far-reaching impact on the culture. Two of the best include Tad Friend’s New Yorker essays on the network, “The Next Big Bet” (May 14, 2001) and “You Can’t Say That” (November 19, 2001). Variety offers an exhaustive survey of HBO’s programming in its August 25, 2003, special report “Showman of the Year: Chris Albrecht.” In the New York Times, Bernard Weinraub chronicled the HBO effect in television (“HBO: The Tough Act TV Tries to Follow,” September 25,2004), while John Horn of the Los Angeles Times examined its growing impact on films (“HBO Emerges as a Mecca for Maverick Filmmakers,” September 19, 2004). Kurt Andersen dissected the premature Schadenfreude directed at the network in “I Want My HBO,” New York (August 1–8, 2005).
* Because ING Direct USA is a wholly-owned subsidiary of ING Group, it reports financials on a pretax basis. Thus, these profit figures reflect pretax results.
* Obviously, mortgages are a form of lending, not savings. But, as Kuhlmann and his colleagues are quick to point out, building equity in their homes is the most important way that Americans invest in their financial future—so it’s a natural fit with the company’s pro-saving strategy.
* The Muse Air saga ended badly for everyone. Lamar Muse never could get the better of his former colleagues, and Southwest wound up buying his company four years after it got off the ground. Southwest renamed the airline TranStar and operated it as an independent subsidiary. But TranStar found itself in brutal fare wars with Texas Air and its take-no-prisoners boss Frank Lorenzo, who would eventually become the most hated man in the airline business. TranStar ceased operations in 1987.
* Spence is serious about the pursuit of a higher calling. In 2004 a dismayed “Reverend Roy” responded to the election victory of fellow Texan George W. Bush by embarking on a road trip. He visited 112 churches trying to understand the religious divide that became such a big part of the presidential campaign. The result is The Amazing Faith of Texas (www.amazingfaithoftx.com), a book of photojournalism that highlights five values common to most religions.
* Thanks to DVD sales and syndication rights, original programming is the gift that keeps on giving. Industry analysts estimate that HBO’s Band of Brothers DVD generated sales of $186 million, while the Sex and the City DVDs pulled in $250 million and The Sopranos DVDs topped $300 million. A&E bought rights to The Sopranos for a reported $162.5 million for 65 episodes. That’s $2.5 million per episode—a record for a drama sold into syndication.
* Commentators call it the “HBO effect”—in an industry of copycats, it was only natural for other networks to mimic HBO. Pay-cable rival Showtime is openly borrowing from HBO’s playbook with such edgy series as The L Word (Sex and the City for the lesbian set) and highbrow movies ( The Lion in Winter with Glenn Close and Patrick Stewart). FX is making claims to being the “HBO of basic cable” with programs like The Shield , The Thief , and Nip/Tuck, and the 2005 breakout hit Desperate Housewives on ABC is unfailingly billed as an heir to Sex and the City .
Competition and Its Consequences: Disruptors, Diplomats, and a New Way to Talk About Business
We admit it: we’re suckers for entrepreneurs and company builders who relish the chance to shake up the establishment and champion a different and better future for their industry. In a business world defined by too much strategic mimicry and too many lowest-common-denominator competitive formulas, it’s exhilarating to get immersed in a brash young company like ING Direct USA, to follow the unorthodox flight to leadership of a breakthrough innovator like Southwest Airlines, or to watch the creative and financial performance of HBO. If the new arena of competition is value system versus value system, there’s nothing quite like companies and executives who step into the arena convinced of the virtue of their values—and prepared to communicate their confidence in no uncertain terms.
We also recognize that it can be unnerving. Business history is littered with the corpses of hard-charging Davids who weren’t afraid to look squarely into the eyes of slow-moving Goliaths, but who couldn’t contend with the inevitable response. Fanning the flames of competition is a great way to energize a marketplace and generate attention for your strategic agenda. It’s also an invitation for a fierce competitive backlash. To put it in the “hardball” vernacular of George Stalk and Rob Lachenauer, tossing your industry a strategic curveball just might earn you a damaging beanball from bigger, richer, harder-throwing rivals.
Marc Andreessen and Mike McCue learned this lesson the hard way in one of the most famous David-versus-Goliath stories in modern business history—the rise, retrenchment, and eventual sale of Netscape Communications. Andreessen, of course, was the twentysomething programming genius who launched Netscape and became an A-list celebrity when the company went public in 1995. McCue joined Netscape in 1996 as the company’s vice president of technology after his outfit, Paper Software, was bought by Andreessen. The two were lead protagonists as Netscape grew explosively. They carried the hopes and dreams of a generation of programmers and entrepreneurs determined to challenge Microsoft’s chokehold on the computer business, but then watched helplessly as Bill Gates responded with a blistering counterattack, driving a chastened Netscape into the waiting arms of America Online.*
Over the last seven years, Andreessen and McCue have been leading new companies, both of which are well funded, aggressive, ambitious—and decidedly more circumspect than Netscape. At first blush, McCue, a thirtysomething technologist with a quick, lopsided grin, a flop of brown hair, and fresh-scrubbed pink cheeks—looks every bit the poster boy for the eternally youthful face of Silicon Valley. He could easily be mistaken for one of the young techies gliding around his company’s parking lot on a Segway scooter. As cofounder of Tellme Networks, McCue raised funds from the world’s top venture capital firms to pursue a strategic plan that he calls Dial Tone 2.0—the prospect of marrying telephones and the Internet to reinvent how people use the phone and how companies communicate with and market to their customers. Imagine picking up the phone, McCue says, but rather than dialing ten digits or navigating a maze of frustrating prompts and menus, just stating your business: “Call Mom at home,” or, “Is my flight on time?” or, “Has my FedEx package arrived?”
There’s no denying the scale of Tellme’s business goals, especially in a world where people place one trillion phone calls a year, more than 100 billion of which go to 1-800 services. “We have a lot of ambition,” McCue says. “We talk about placing and answering every single phone call on earth.”* But this bold agenda does not inspire brash rhetoric: McCue sounds more like a diplomat than a disruptor, like someone