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Taking the Edge

Taking the edge is the gamesmanship of business. It is taking everything you know about others and everything you have allowed them to know about yourself, and using this information to load the deck – to tilt a business situation slightly to your advantage. It is winning through intuition.

In the beginning it is a matter of doing your homework, knowing the players and all knowable aspects of the game. And in the end it is knowing how to play the game itself – figuring out what people want or convincing them of what they want and finding a way to give it to them. The idea, of course, is to give slightly less than you get in return.

I strongly believe that in any business situation there is an edge out there for the taking. Don’t be greedy, don’t be pushy, don’t be impatient, but keep looking for the edge. Eventually it will show itself, and when it does be ready to do whatever you have to do to take it.

Know The Particulars

You can’t take an edge until you have first taken a look at the facts. Facts alone won’t guarantee you an edge, but they can protect you from handing it over to someone else. Unless you know all or most of the pertinent ‘givens’ that define the situation, you are dealing from a partial deck. Assume that the one fact you don’t know – maybe because it’s a little harder to find out – is the one that will make the difference.

There are many shortcuts in business, but this isn’t one of them. Do the necessary spade-work. Take the time and make the effort to learn everything you can about the companies and the people you are dealing with. The operative facts, the ones that define the situation, will start to present themselves.

There is a second set of facts which must often be intuited. These are the ones that arise out of the situation itself – things that people say and do which can provide new and useful insights. I have seen, heard of, or been involved in countless business situations where the emergence or the sensing of a single fact totally altered the dynamics or the tactics of everything that followed.

The first time I attempted to sell the American television rights to the British Open Golf Championship, that is exactly what happened. I had been negotiating with the Head of Sports for one of the networks. When we met to close the deal, I brought along one of our top television executives and he brought along someone from his ‘Business Affairs’ department (networkese for lawyers and accountants).

Within minutes I knew the meeting would go nowhere. The Head of Sports, who was doing the talking, was not about to concede anything in front of his Business Affairs guy or to depart in any way – to ‘break’ – from what the two of them had discussed prior to the meeting. The presence of my television executive, with whom they dealt more frequently, only exacerbated the situation. They did not want to appear to fold to any of my demands in front of him.

These were the operative facts that far outweighed all the others. It no longer mattered what I was selling or what they were buying or if we kept talking for a week. This meeting simply wasn’t going anywhere and to try to make it would only pull it further apart.

As soon as I could, I suggested we end the meeting and take some more time to think about our positions. The next day I called the network executive, and, away from the influences of others, we concluded negotiations for a rights agreement that has been in effect ever since.

Know The Players

The whole point in reading people, determining ego, finding soft spots, etc. is obviously to use this information to your advantage – by exposing what you know about someone to the right stimuli.

For several years I had been trying to convince André Heiniger, the world-wide chairman of Rolex, to sponsor the construction of a new electronic scoreboard and timing system at Wimbledon. He felt it was a waste of money, and he equated the sponsoring of time clocks at sporting events with the mass-market watch-makers, the Seikos and the Timexes of the world.

I knew the only chance I had of ever changing his mind was to get him there, which I finally managed to do during the Wimbledon fortnight of 1979.

As we sat in the Royal Box, sipping tea and watching the match in progress, I could see him taking everything in: the antiquated elegance of the Centre Court, the excitement of the match, the beauty and the charm of this very special place.

When the match was over, Heiniger turned to me and made a slow sweeping gesture with his hand.

‘This,’ he said, ‘is Rolex.’

Size Up The Situation

Once you know the particulars and the players and have analysed all the ramifications, you can start to size up a situation. Step back and see what opportunities exist at the outset.

I am a great believer in ‘stepping back’, in taking a moment to place any significant business event – good or bad – in a larger perspective. I force distance between myself and events as a matter of business course, and treat the need to do so no differently than the need to make phone calls or attend meetings. This may not be ‘teachable’, but it is ‘learnable’, because I have had to learn to do it myself. If everyone did this more regularly, we might see the GNP jump overnight.

Several years ago I met a Venezuelan oil and shipping businessman by the name of Raphael Tudela. As I have come to know, respect and admire him, he has impressed me as the quintessential street-smart executive. He has built a billion-dollar business from scratch in less than twenty years. He seldom deals in written contracts, because his word is his bond. He has always made his own breaks. And his principal business, which is oil speculation, relies on his constant process of seeing opportunities where no one else does and taking advantage of them.

In other words, Raphael Tudela is a genius at taking the edge. One of the best illustrations of this – of how he has the facts, knows what people want, and figures out a way to give it to them – is the story of how he got into the oil business in the first place.

In the mid-1960s Tudela owned a glass manufacturing company in Caracas, but, a petroleum engineer by training, he longed to be in the oil business. When he learned from a business associate that Argentina was about to be in the market for a $20 million supply of Butane gas, he went there to see if he could secure the contract. ‘If I could get the contract,’ he told me, ‘then I’d start to worry about where I’d get the butane.’

When he – a glass manufacturer operating alone with no previous connections or experience in the oil business – got to Argentina, he discovered his competition was formidable: British Petroleum and Shell Oil.

But feeling around a little bit he also discovered something else: Argentina had an oversupply of beef which they were desperately trying to sell. By knowing this one fact – his first ‘edge’, so-to-speak – he became at least an equal to Shell and BP. ‘If you will buy $20 million of butane from me,’ he told the Argentine government, ‘I will buy $20 million of beef from you.’ Argentina gave him the contract contingent upon his buying the beef.

Tudela then flew to Spain where a major shipyard was about to close down from lack of work. It was a political hot potato and an extremely sensitive issue for the Spanish government. ‘If you will buy $20 million of beef from me,’ he told them, ‘I will build a $20 million super-tanker in your shipyard.’ The Spanish were ecstatic and delivered a message to Argentina through their ambassador there that Raphael Tudela’s $20 million of beef should be sent directly to Spain. Once again he had found the edge and taken it.

Tudela’s final stop was in Philadelphia at the Sun Oil Company. ‘If you will charter my $20 million super-tanker which is being built in Spain,’ he told them, ‘I will buy $20 million of butane gas from you.’

Sun Oil agreed and Raphael Tudela fulfilled his desire to get into the gas and oil business.

Thinking On Your Feet

As a general business rule I am dedicated to the importance of acting instead of reacting – and so never over-reacting – to or within any business situation. The one exception to this may be the circumstance in which an edge or opportunity must be taken advantage of immediately or it will disappear for ever.

The need to be opportunistic, to think on your feet, again underscores the importance of tuning in to people – of hearing not only what they are saying but the larger and underlying meaning as well. This alone can tell you when taking an edge is dependent upon an instant reaction.

We recently had a meeting in Chicago with McDonald’s for the purpose of renewing their commitment to the World Triathlon Championship, which we produce and televise for them.

As the meeting progressed, though no one really came out and said it, we began to sense that they were much more reluctant to renew than we had anticipated. For one thing, they were less than pleased with the international coverage. Furthermore, the timing of our meeting was terrible. McDonald’s had just recently committed themselves to constructing the swimming pool for the 1984 LA Olympics, and this preoccupied all their promotional thoughts.

Still, we could sense that there was in the room a mood to buy – to commit to something – and who knew how long that kind of momentum was going to continue? Probably not a second longer than the meeting itself.

Out of the blue, our head of television sales suggested that maybe the Triathlon idea had run its course, and that what we really should be talking about was an all-new yet conceptually similar event: an international diving championship that would take place annually at McDonald’s new pool.

Because this one executive understood the ripeness of the moment, instead of walking out with a failure we walked away with a commitment.

How To Get Lucky

‘Luck,’ the cliché goes, ‘is the residue of diligence.’ As Gary Player once said, ‘The harder I practise, the luckier I get.’

Over the years, we have had more than our share of luck. But over the years we have known how to take advantage of it – and we haven’t waited for it to hit us in the face.

This, indeed, is the essential difference between those who are ‘fortunate’ in business and those who aren’t. The group that is ‘naturally lucky’ can see the tiniest crack and turn it into a crevice. The group that ‘never gets a break’ wouldn’t see opportunity if it jumped up and down and then mugged them.

‘Getting lucky’ is mostly a matter of recognizing when you have been. Knowing then how to turn it into an edge is the easy part.

Consider the good fortune of Mr Goodfather:

Mr Goodfather (that’s his real name) is a commercial horticulturalist who waters and cares for the office greenery for a number of Cleveland companies, including Jones and Laughlin Steel. He learned that the Eaton Corporation, another big Cleveland firm – and a major customer of Jones and Laughlin – was moving to the same building, and he called Eaton to see if he could get their account as well.

When he asked to speak to the person in charge of the office, he was mistakenly connected to the person who was really in charge, Del DeWindt, Chairman and CEO of Eaton.

‘I take care of all the plants for Jones and Laughlin Steel,’ Mr Goodfather said. ‘And I’d like to see someone about your account.’

The next morning, Mr Goodfather, wearing his work clothes and his trademark black beret, was ushered into a conference room to meet with several high-ranking Eaton executives, all of whom had their ‘Jones and Laughlin’ files in front of them.

Once the case of mistaken identity was cleared up, everyone had a good laugh, and that might be the end of a cute, rather pointless story. But as Mr Goodfather was leaving he turned to one of the executives and said, ‘Now, about your plants …’

He got the account.

Turn Crises Into Opportunities

People tend to deal with crises only in terms of their potential for disaster. And yet, in a crisis, people are more on edge and agitated than they might otherwise be and their vulnerability can be turned into a great advantage.

Recently a major, major client called up in a state of panic. One of the client’s biggest licensees had decided not to pick up its option, which meant the potential loss of a seven-figure income and a great deal of exposure. The executive in charge of this particular client panicked also, and by the time I learned about the situation the executive had replaced the deal with an even better one.

That sounds like good news. But it just so happens that this particular client is paying us far less than we’re worth. The client is a prestigious one for us and took advantage of that in working out our representation agreement.

Had our executive not been so quick to solve this crisis, I would have used the opportunity to explain some facts to this client: yes, it was too bad about the particular licensee pulling out; yes, we felt we could replace it, but only by a great deal of time and effort and maybe by calling in a favour or two (which actually happened). I would have then brought up the subject of our fee, to see whether the client might consider paying us what we were worth in the first place.

One of the best rules I know is when a crisis occurs or is in the process of occurring, don’t react. Just say you’d like to think about it. Make any excuse, but don’t respond. Once you have analysed the crisis in terms of its potential for opportunity as well as its potential for disaster, then you can respond. This at least allows for clear-headedness in dealing with the problem, and if you’re shrewd about what’s going on, and haven’t become caught up in the crisis yourself, it may present a very interesting edge.

Learn To Wait

People who deal with me often marvel at my capacity for handling bad news. This wasn’t always the case and, though I haven’t learned to like bad news, I have learned to deal with it. Bad news is seldom as bad as it first sounds, and most business disasters are rarely as disastrous as they first seem. Over the years I have learned – and am still learning – the importance of patience, and how destructive the lack of it can be.

It is still amazing to me how the simple passing of time can totally alter a situation, solve problems, render other problems meaningless, cool down confrontations and add a whole new perspective. ‘What goes around comes around’ should be tattooed on the chest of every new, hyperactive executive.

What does this have to do with taking an edge? A lot. Part of being opportunistic is waiting, like a cat in a forest, for an opportunity to come along. Learning to wait, learning to be patient has so many applications and ramifications it is difficult for me to give one or two examples without trivializing its importance. I would say, however, that in our twenty-odd years in business 90% of our successes have involved in some way the need for patience, and 90% of our failures have been caused in part because of lack of it.

Recently, we finalized negotiations of Herschel Walker’s new contract with the New Jersey Generals, which in real dollar value is the largest contract in the history of team sports. The mere fact that we were the ones doing the negotiating is a testament to patience.

We were poised to sign Herschel two years ago, and after several meetings with Vince Dooley, his coach at the University of Georgia, we were convinced we would be successful.

In early 1983 I received a letter from Vince thanking us for our patience (!) and suggesting an appropriate time for a meeting with Herschel. I received this letter the same day that the news of Herschel’s having signed a professional contract as an undergraduate hit the papers.

Our Team Sports Division was devastated, but I suggested to them that we didn’t know all the facts, that both Herschel and Vince were impressed with our approach to sports management, and that the contract he had signed was only for two years. I implied that with a little patience we might indeed hear from Herschel Walker again, and I strongly advised that this should not be the last he heard from us.

Herschel became a client twelve months later.

Discipline Yourself

There is a wide gap between the number of executives who are street-smart and the number of executives who think they are. Those who account for this numerical discrepancy are often found languishing in middle and lower-middle management, usually blaming anything and anybody but themselves for their lack of advancement. The irony is that many of these executives are quite perceptive, even intuitive.

But their instincts are bad. What they pick up perceptively they always manage to misuse. Deep down inside they know what should or should not be said and when or when not to say it, but they can’t help themselves. They blurt out some indiscretion, or can’t check their need to ‘tell it like it is’, even when they are aware that it is in their own worst interest to do so. This, of course, is business immaturity, and it afflicts as many people in their forties, fifties and sixties as it does in their twenties and thirties.

When a business situation must be handled discreetly, how do you rank your discretion? When a humorous or conciliatory remark might have taken the heat out of an exchange, how cooling was your influence? The next time you are ready to act impulsively, how good are you at resisting the urge?

How effectively have you used what you know about others and how efficiently have you controlled what they know about you?