Comment on Belmont's "Pretty Pictures"
In "Pretty Pictures" Wretchard analyzes the situation in Iraq by "drawing diagrams." He offered these thoughts on the assessment of the now (June 8, 2006) deceased Abu Musab Zarqawi on Iraq's political situation:
Zarqawi, whatever his moral infirmities, is a man with a firm grasp of the facts. He would not have survived as long as he has without it. He understands when he has a losing hand and when to start a new game. It's an instinct common to survivors but amazingly rare among people who write for a living. By way of example, the richest man in Australia, Kerry Packer, recently died heart and renal disease. He was something of winner at making commercial bets and the tune that was played at his funeral was one that Zarqawi would have approved of, in a manner of speaking. " You got to know when to hold ’em, know when to fold ’em, Know when to walk away and know when to run. ..."
My comment was as follows:
Wretchard, there is an analogous situation here to business strategy. Good "gamblers" know when to hold and fold; good business strategists do the same. They also know, as well as, how to shape the competitive playing field to their advantage.
One way of doing this is to recognize that there are two distinctly different, yet related, arenas for competition- the market and the non-market environments.
In the former, firms vie with one another for valuable and rare resources and capabilities. They configure them into unique, hard to imitate, and hopefully profitable business models. The end toward which such activity is directed is the attainment of temporary, or better yet, sustained competitive advantage.
In the non-market environment, the rivals are the same but the competition takes another form. Competition isn't for market share any longer and it doesn't take place in the marketplace or distribution channels.
Rather, it's for legitimacy and primacy and other "force multipliers" that only widely respected and powerful institutions can confer. Among the most important are government and regulatory bodies ,the media, the courts, and the court of public opinion.
Through laws, regulations, sympathetic media coverage, and public (dis)affection, the competitive playing field can be reshaped to one player's advantage and to another's disadvantage.
Smart strategists know that these institutions have a unique role as arbiters of fairness, legality, and normative expectations. They know that the non-market environment is where the rules of the game are written and rewritten.
The smart strategists know how and when to shift the locus of competition from the market to the non-market environment and know what to acquire from the latter so that they may better compete on the playing field.
Although most of the ink in business textbooks is devoted to operational and tactical methods for prevailing in the marketplace, more attention is now being given by business academics to the whys and wherefores of non-market strategy. I'd be happy to recommend some readings in this area to anyone who's interested.