Edit ModuleShow Tags

Is your business chess or checkers?


Published:

There is a scene in the movie Training Day-a great, but disturbing flick-where Denzel Washington schools a new police detective on the complexity of a situation and sums it up by saying, "This is Chess, it Ain't Checkers!" (That's not quite what he says, but in the words of Bob Haldeman from the Nixon Whitehouse, "Expletive Deleted".) Is your business chess or checkers?

Different businesses have different levels of complexity. Some have many moving parts and a very complex competitive environment with threats from direct competitors, substitute products, rapid product changes, new entrants, limited suppliers, powerful buyers and significant working capital needs. This is chess ... perhaps 3-dimensional chess in the dark! You have to play it well to even survive. It would be worthwhile asking how you might turn it into a game a checkers and eliminate some of the complexity.

I know of a consumer products company that had all of these characteristics. They were on the verge of death several times before they were finally sold. Only some very creative product development and financial fancy-footwork kept them afloat. A sale to a larger company was a good option as it eliminated some of the challenges listed above. You need Kings and Queens to play chess and they didn't have them.

Other businesses are much simpler. They require lots of hard work but have less complexity. They might be driven by a strong brand, natural resources, captive customer relationships, a monopolistic business environment or have significant barriers to entry. Their revenue stream is not constantly at risk from a new product entry. They do not have severe concentration issues (i.e. much of their revenue or supply coming from one source). They might have a negative cash conversion cycle (i.e. they are paid by their customers before they must pay their suppliers).

I've worked with several companies that have many of these characteristics, though not all. Their owners/CEOs sleep much easier. If you look at Warren Buffet's portfolio, you will find companies that look like this. How do you change from chess to checkers? Sometimes you can't without leaving your industry as it is currently defined. It likely requires dramatic change (e.g. new sales channel, new delivery mechanism, proprietary products, etc.).

From my experience, it is well worth the time to ask the right questions that might lead you to a better playing field, fewer headaches and higher profit. At the end of Training Day, Denzel Washington's character continues to play chess when in fact the game changed to checkers. He didn't see it, and he lost.

{pagebreak:Page 1}

Edit Module
Todd Ordal

Todd Ordal is president of Applied Strategy®. Todd helps CEOs achieve better financial results, become more effective leaders and sleep easier at night. He is a former CEO and has led teams as large as 7,000. Todd is the author of Never Kick a Cow Chip On A Hot Day: Real Lessons for Real CEOs and Those Who Want To Be (Morgan James Publishing, 2016). Connect with Todd on LinkedIn, Twitter, call 303-527-0417 or email todd@toddordal.com.

Get more content like this: Subscribe to the magazine | Sign up for our Free e-newsletter

Edit ModuleShow Tags

Archive »Related Articles

Three tips for businesses to improve energy conservation

Despite the substantial energy consumption of commercial buildings in the United States, technologies that focus on clean energy sustainability are being developed in order to increase energy conservation and improve sustainability to better protect future generations.

How to weather the financial implications of a divorce smartly

Divorce is a transition that offers many options in terms of selling and splitting assets. Be sure to do your research and talk to your advisors about which options best suit your situation.

11 Colorado-based Hogan Lovells attorneys recognized

Hogan Lovells, a global legal practice providing business-oriented legal advice, announced that 11 lawyers in its Colorado offices have been selected for inclusion in the 2018 edition of The Best Lawyers in America.
Edit ModuleShow Tags
Edit ModuleEdit ModuleShow Tags
Edit ModuleShow Tags Edit ModuleShow Tags
Edit ModuleShow Tags Edit ModuleShow Tags
Edit ModuleShow Tags Edit ModuleShow Tags
Edit Module