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The Cost of Ignoring an Underdog
A very strange thing happened on December 29, 2019 at a football game between the New England Patriots, the 2018 Super Bowl defending champion, and the long-time lackluster Miami Dolphins. In fact, it was considered by most sports experts and game aficionados (which does not include the writer of this post) as one of the strangest things to happen in football in the entire 2010—2020 decade. And, with just two days left in the decade, this was saying a lot. What happened? The Dolphins won. While it might seem that in any game there is a 50/50 chance of one team beating the other, this was not the case heading into this particular matchup. The Dolphins entered the game as 16.5 underdogs. Why?
It was a David-and-Goliath matchup. Consider each team’s records at that point. On the one hand was the mediocre Miami Dolphins. Entering the tail end of the 2019 regular football season, the Dolphins had only won four games the entire season. In fact, the undistinguished Miami team had already lost once to the Patriots early in the season, on September 15, with a crushing score of 43-0. And, what’s more, they really had nothing to gain by winning that game against the Patriots. Whether they won or lost, the Dolphins would not make it into the playoffs. For them, the season was hours away from being over no matter what they did. Some reporters even said in jest that the Dolphins were busy scheduling tee times to go golfing come January. In fact, the Dolphins had not made it to the Super Bowl in 25 years, so it made perfect sense that they were expected to lose by, well…, practically everyone.
On the other hand was the New England Patriots, the defending Super Bowl champions. In fact, the Patriots had been to the Super Bowl four out of the last five consecutive years and won the Super Bowl three times in those five years. And, they had been to the Super Bowl six times since 2008. By all accounts, theirs was a formidable team led by legendary coach Bill Belichick. And, the team’s lead Quarterback was Tom Brady. Brady had already played in nine Super Bowls and won six of them (the most of any player in NFL history) and — due to his numerous accomplishments, records, and accolades — is considered by many sports analysts to be the greatest quarterback of all time. The Patriots were a powerhouse in their industry, arguably at the top of their game.
So how was it that this particularly unimpressive ‘David’ beat that quite formidable ‘Goliath’? There are, of course, many detailed explanations for what the Dolphins did right and even more analysis of what the Patriots did wrong. Twitter was awash with Monday morning commentary. But ultimately it boiled down to one simple statement: the Dolphins came to win (if for no other reason than self-respect) while the Patriots were asleep at the wheel and grossly underestimated their underdog opponent. And, if the game loss for the Patriots had meant nothing more than a small adjustment to their otherwise solid 12-3 record for the season, then perhaps it would not have even been worth mentioning. As they say, you win some and lost some. However, this loss was particularly painful because it prevented the New England Patriots from getting a first-round playoff bye (which, for those who don’t follow football means they would get to go bye-bye and rest for a week before playing their first play-off game). After playing for 16 out of the previous 17 weeks, a bye week would have been crucial to help any team prepare for the upcoming post-season games. In fact, it was the first time in 10 years that the Patriots had lost the bye and had to play in the Wild Card round the following week. That could well explain why the Patriots lost the following week against the Tennessee Titans and were eliminated from contention for the Super Bowl. So one might conclude that the Patriot loss to the Dolphins became the first Domino in the short chain that cost this impressive team their otherwise solid season.
For those who think it’s just a game, consider this. The Patriots underestimated an unlikely underdog opponent and it cost them a year’s worth of hard work and a lot of money. How much? Each player from the team that wins Super Bowl LIV (54) on February 2, 2020, will get $124,000 along with the rest of the spoils that come with victory, including endorsements and salary raises. Many former Super Bowl stars see their total endorsement and salary dollars skyrocket after a win. After the Indianapolis Colts’ 2007 Super Bowl win, Quarterback Peyton Manning saw his salary jump by $12 million and his endorsement earnings nearly tripled. And that was 13 years ago. Today, those numbers are sure to be considerably higher.
Take Every Competitor Seriously
So what does the outcome of a single football game have to do with business? Besides the fact that the National Football League is part of a multi-billion dollar industry, the story of the Pats vs. the Fins is an important reminder to any business about the risk of success inflating egos and swelling heads. Many a company – huge multi-million dollar organizations – have also fallen from their illustrious perch of success to smaller, weaker, less formidable opponents because of the sin of underestimating them. The list is long and grisly. Blockbuster was felled by Netflix. Borders was brought down by fledgling Amazon. The list goes go on and on.
For those who think that those kinds of David-n-Goliath battles are a thing of the past, consider that in 2019 Tesla delivered far more electric cars than any other brand worldwide. Its Model 3 is the most popular electric car in the world, selling three times the number of the second most popular model, China’s BAIC EU-Series, in the first 11 months of 2019. By year end, Tesla announced it had delivered 367,500 electric cars — 50 percent more than the previous year. While that still makes Tesla a relatively small player in the auto industry — Toyota delivered more than two million cars in North America alone in 2019 – the company is making huge progress in scaling up car production. It is not hard to envision this automotive David taking down some other automobile manufacturers who dared to underestimate this small but increasingly formidable competitor.
Technology and gaming companies are also particularly apt to underestimate their competition, particularly when responding to a competitor’s product or game. The thinking is that a competitor needs to be nine times better in order to get someone to switch to another product. Established companies also believe most startups and small companies will go the way of most new businesses and fail within the first five years. This mindset leads many successful, thriving businesses to nose-dive when the underdog brings its A-game and succeeds.
What does underestimating the Competition look like?
1. The competitor is viewed as foolish or futile.
The most basic mistake is when a company acts as if it is smarter than the competition. The leaders of competing companies are often pretty sharp. They have great teams who are looking at the market and understanding the products in order to find true competitive advantages.
2. The competitive response is not anticipated.
Another common mistake is treating the competition as static. Any company that launches a product or service in an established space will eventually need to adjust their offering to compete. Competitors might reduce pricing, add features that negate the benefit of other competing products or swamp the market with advertising so that people learn of its offering. Established companies must continually anticipate what competitors are doing and have a roadmap in place to stay ahead.
Case in point. Square largely pioneered using a small dongle coupled with a mobile device to enable anyone to accept credit cards. Once they demonstrated traction in the market, major players like Paypal as well as other start-ups created a competitive offering. Paypal was not about to underestimate that underdog. Even if a company has no competition when entering a market, it needs to stay ahead of the curve as competitors emerge.
3. The competitor is viewed as not proactive.
A common mistake is thinking that an idea was not considered by the competition. The truth is that the competition may have already tried or at least conceived of a solution and not implemented it. It is important to consider why a competitor might not have pursued it. There are millions of smart people out there and many have probably thought of the product, feature, or service. Don’t assume they are asleep at the wheel. Consider why established players or other start-ups did not pursue a similar strategy.
4. The competition is not well understood.
Don’t assume that a startup will be unwilling to disrupt an established industry or grow in a competitive industry. Anticipate and understand competitors. This understanding helps a business not only gain market share but also retain and grow by not underestimating the competition. It also helps anticipate potential roadblocks and preempt them.
Here is the key takeaway. Do not underestimate competitors. It’s not enough to be smarter. To be successful, it is important to remain alert and then adapt to remain competitive. And, always deliver the highest level of quality, service, and fierce determination to win and keep every customer. When other successful companies relax and fall asleep at the wheel, it is the company that stays humble and hungry that will remain on top.
Quote of the Week
“There is no greater danger than underestimating your opponent.” Lao Tzu
© 2020, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.