Business vs. sports competition
What some analogies miss about how to compete
I love sports, but applying sports analogies to business can be misleading. Competition is one example. Sports teach us to compete by “beating”, “crushing” or “squashing” the opponent. It’s easy to assume the same is true in business, where competition is abundant. But competition in business is more about creativity than combat. It’s better to compete to be unique instead of the best.
If I go to Whole Foods, it’s not because it’s “better” than Trader Joe’s. It’s because it’s different—it has different products that cater to a different set of needs. If Whole Foods tried to be “better” than Trader Joe’s starting tomorrow, it would destroy what makes it unique: organic ingredients and a premium experience. These grocery stores still compete, but they compete to be different from each other, not better than one another.
The sports-driven mindset of trying to be “better” than competitors leads to two problems. First, you can get sucked into an escalating, head-to-head conflict that’s nearly impossible to win, and second, you can become more like your competition in the process. Airlines have dealt with this for decades, often getting sucked into costly price wars that turn them into commodities. OpenAI, Anthropic, and other large language model developers are dealing with this now. They’re locked into costly and escalating wars to build the “best” AI (i.e. increasingly complex models that are basically the same). Michael Porter observed that this is the biggest mistake businesses make about competition. It leads to what he called competitive convergence. Each competitor repeatedly tries to copy and one-up the other, becoming more like the other and less like itself in the process. Undifferentiated, each cannot stand out to the customer. Profits sink.
His prescription to avoid this kind of mutual destruction is to remain unique. Uniqueness is not just being quirky or weird. It involves being highly specific about who you serve and highly differentiated in how you serve them. For example, the underdog search engine DuckDuckGo, headquartered 15 minutes from my Pennsylvania hometown, is unique. It doesn’t try to “squash” Google or Bing—competitors 1,000 times its size. Prioritizing security and user anonymity, DuckDuckGo appeals to a specific user skeptical of Big Tech search engines. It’s been profitable for over 10 years.
A competitor often can copy what makes you unique. You can respond not by trying to “beat” them, but by finding new ways to be different. This is innovation, and its value demonstrates another difference between business and sports competition. A business challenged to play a losing game can invent a different one to play. Finding a new game is difficult, but it’s much more sustainable than grinding out a costly, head-to-head battle. All great companies continue to innovate and find new games to suit their uniqueness. Netflix pioneered internet streaming to differentiate itself from other DVD rental companies. When new competitors (e.g. Hulu) inevitably copied them, they started producing their own content.
There are many benefits of choosing to be unique instead of the best:
By embracing innovation, you can avoid the worst part of head-to-head competition: the tiring and icky struggle for one-upmanship.
By standing out, you can charge a premium for your product.
By choosing your own path, you can work on something truly unique and exciting—something only you (or your team) can create.
As I watch football this weekend, I’ll also remember that sports are artificially designed to find a winner and a loser. In business, if a market is growing, multiple winners can co-exist. Each can carve out its own niche instead of struggling to painfully overwhelm its opponents. They can follow Kevin Kelly’s advice:
“Don’t be the best, be the only.”
Further Reading
Understanding Michael Porter, Joan Magretta
Excellent Advice for Living, Kevin Kelly
Credits
Thank you to Jacqueline, Austin, Kranthi, Alexandros, Dave, and Kevin for feedback on a draft of this essay.
People love sports analogies but in a game, you can only win or lose. You can lose by 1 point or by 100 and its still a loss, so taking excessive risk and getting blown out is not as costly as the business world. You can always lose more money in business and I think managers and people sometimes miss this aspect because they are blinded by the "competitive spirit" aspect. Sometimes quitting is the optimal business strategy.
Great read!