Success Secrets Poach, But With Caution

Even social tennis players know that in doubles fine line exists when it comes to encroaching on your partner’s half of the court to pursue shot. Lunge once too often, and you’re poaching. Keep it up and your partner’s trust falters. Easy shots become difficult and soon, the partnership disintegrates.

Things are different in business. Poaching means invading the space of partner or representative or distributor. It is serious step, but perfectly acceptable one – not like tennis at all. Executives should regard it as useful tactic in their repertoire.

Recent examples of poaching in practice include US bookseller Barnes & Noble’s purchase of Sterling Publishing for $100 million; various attempts by athletic shoe companies to create destination stores for their products; and the decision by some US-based entertainment industry agents to bill themselves as managers, taking advantage of change in legal limits previously placed on their profession. Each of these developments has provoked controversy and perhaps even outrage, enough to make observers wonder if poaching is worth the effort.

Marketing tool or coup d’etat?

Before the advent of the Barnes & Noble or Borders megastores decade ago, bookseller making books would have seemed quixotic – best reserved for fine-print or limited-run editions. It would not have seemed threatening.

But with the megastore’s arrival and publishing house consolidations simultaneously taking place, people flocked to the megastores for deep discounts and social reasons; buying habits changed. Suddenly, power shifted from the publisher – who previously coexisted in cosy relationship with the small bookseller – to the giant outlets. Just like the movie You’ve Got Mail.

The Barnes & Noble heyday was, in retrospect, short one, threatened immediately by the internet selling revolution. Amazon cut into megastore profits, so the B&Ns of the world looked for other ways to shore-up cash flow – but selling more coffee, pastries and calendars didn’t really help. Soon books began appearing with B&N’s imprint on the spine. At first these were old, out-of-print, public domain volumes. But they were pure profit, and they changed the dynamic.

Publishers found they could do nothing about it. Many small publishers who might have provided counter-balance were squeezed out of existence by the megastores. In truth, the publishers had become too dependent on B&N to do little more than grumble.

This is the classic coup d’etat style of poaching, driven by matter-of-fact calculation. In the case of athletic shoe companies, the situation is dicier for the traditional manufacturers. New Balance or Nike flagship store in major urban centre may be justified for marketing reasons, but fallout to second-tier cities may very well result in retaliatory measures by distributors. The distribution system is less concentrated, and stores have more brand options they can carry. Any would-be manufacturer/distributor will have to be confident enough about market share before going up against outlets like Athlete’s Foot.

Compaq gave computer retailers similar lesson when it opened its own stores in the late 1980s. Customers proved far less loyal to brand than to deal, and fled to discounters. Compaq eventually capitulated.

This seems to be what has happened in Hollywood too. The new terrain opened by the change in the agent/artist-manager regulations attracted some early forays – most prominently by Michael Ovitz – but has generally sputtered or failed altogether.

The situation will undoubtedly evolve, but for now in Hollywood the old way still holds sway. There are too many entrenched relationships, too much turf crisscrossed by boundaries and parcell ed out by unwritten understandings, for player to get away with being poacher for very long.

Poaching can be the foundation of turn-around, or way to gather information on or present yourself to your market. But it’s best to remember that when you poach in business, you won’t be using tennis racket – rather double-edged sword that can cut both ways.

Mark McCormack is the founder of International Management Group. www.successsecrets.com.

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