The Slow Motion Bike Race

In last year’s Olympic Games in London, I happened to catch the gold-medal round of the shortest sprint race in velodrome bicycle racing. The race is comprised of three circuits around the steeply banked 250-meter track, but only over the last two laps are the competitors racing in any recognizable sense of the word. Over the first lap, the two cyclists inch along at a snail’s pace, eying each other suspiciously, each one waiting for the other to make a move, all the way around the track. It is hilarious. Eventually, of course, one of them does make a move, at which point they pitch themselves into a dead sprint to the finish, moving at speeds which mere mortals can achieve only with motorized vehicles.

The reason for the bizarre behavior over the first lap is drafting – the practice of following closely behind another cyclist, letting him do the hard work of meeting the air head-on while you glide along in his wake. The idea is to do this until you are close enough to the finish line to sprint past the now-exhausted-or-at-least-far-more-tired-than-you-are leader, and snatch victory from his cramping fingers (or calves). At the start of the race, therefore, the guy in back goes slowly because he doesn’t want to take the lead yet; the guy in front doesn’t want to take off and let the other guy coast along behind him, so he goes slowly, too. The result is a tortoise vs. tortoise race for one lap, followed by hare vs. hare for two.

This is the athletic equivalent of the “fast follower” strategy in business. Let someone else shell out the research and development capital, let someone else pilot the test versions of the technology, let someone else get the costs down with the second and third generation versions, and then once it’s been proven to be profitable, jump in and copy it. “Fast following” has been a very successful strategy for many companies in many industries.

Let’s return to the velodrome for a moment. One quirk of this type of race is that it must always be head-to-head; the actual times recorded in the race are meaningless because of the initial “strategy” lap in which everyone is crawling.

But what if that weren’t the case? What if it mattered how quickly the cyclists completed the race? What if – and this is a conceptual leap, I grant you, but bear with me – what if the long-term well-being of all the people in the velodrome (including you and the other racer) depended on how quickly the race was completed? Shouldn’t that change your priorities and your strategy, even if your immediate reward depends on whether you win the race?

This is where we find ourselves when it comes to some of the major problems we face as a global society today. Nobody wants to go first. Nobody wants to take the plunge to develop energy sources that don’t contribute to global warming because in the short run, that takes capital which my competitors aren’t spending and I am put at a disadvantage. Nobody wants to cut back on the fishing permits off their own shores because if their neighbors simply fish as usual, the one who cuts back cannot compete and goes out of business. Everyone wants to be the cyclist who drafts along behind the leader. But that slow-motion first lap is wasting precious time while CO2 builds up in the atmosphere and natural resources are depleted at unsustainable rates.

This doesn’t have to be the case. In a previous posting, I talked about why I believe that there is enormous referent power – and therefore, competitive advantage – to be had by a company which takes the lead in dealing with some of the key problems of the day, like resource limitations and sustainability in the long run. Referent power, as defined by French and Raven in their 1959 paper, comes into play when someone is willing to do what you want them to do simply out of respect for who you are as a person. It is the strongest and most robust of the five bases of power identified by the authors. I maintain that referent power comes into play not just with individuals, but also with companies, resulting in brand loyalty and enhanced corporate reputations. People are willing to pay more to buy from companies they respect and trust to do the right thing.

An article in the Houston Chronicle on December 29^th described one company who appears to have taken this message to heart. Waste Management has begun building plants which convert plastics thrown away as trash into oil that can be sold on the global crude market. This is a great example of doing something good for the world at large, thereby enhancing one’s corporate reputation, and – in the long run – making a profit to boot.

The company’s CEO, David Steiner, says he was spurred into action on this front by an ad for a car which boasted that it had been manufactured without generating any waste to go into landfills. Landfills are Waste Management’s business, and here was a company touting its zero-landfill credentials. What if the idea caught on, and other companies started minimizing or eliminating landfill waste? Steiner said, “We could say that’s a huge threat, let’s go out and try to fight it….Or we could embrace it as an opportunity” – a green, reputation-enhancing opportunity, no less. And over time, the technology will improve and the costs will come down, making the venture more profitable. Yes, some of Steiner’s competitors might jump in and reap the benefits from Waste Management’s investments, but that is apparently a risk he is willing to take.

This is a terrific idea. Steiner and his company aren’t waiting for public opinion surveys to tell them that people are willing to pay more for green waste management solutions. They’re investing now; they’re leading. Waste Management is serving as an example for companies in other industries where everyone is afraid to make the first move and spend the initial capital, lest someone else ride their coattails with a “fast follower” strategy.

I would love to see major companies in those other industries follow suit. Executives who exercise this sort of leadership are freer to set their own course than those who employ a reactive, follow-the-leader approach. There are risks, of course; one’s strategy must be robust enough to deal with greater levels of uncertainty. That’s why I advocate integrating risk management into one’s strategy development process. With a richer understanding of the full range of possible outcomes, you can develop contingency plans to mitigate downsides and position your company to take advantage of upside opportunities which may arise. Your company will be the better for it. In fact, given the importance of solving some of our more pressing resource and environmental problems, we will all be the better for it.

People respect that in a company.