Sometimes you or your organization might find yourself in a disadvantageous situation.

In 1912 in the USA, Theodore Roosevelt was running for president and his campaign manager had printed 3 million copies of a leaflet which included a photograph that he had not been granted permission to use. According to the laws at the time, the photographer could have demanded $1 per photograph for a total of $3 million – an astronomical sum in 1912. There was no time to reshoot the photograph. How did the campaign manager resolve this situation? It seems there were only two options: 1) pay $3 million dollars for the pictures, or 2) cancel the pictures and go without the important campaign leaflet. Which would you choose?

Was a third option available? This is what Roosevelt’s campaign manager told the copyright owner of the picture: “We are planning to distribute millions of pamphlets with Roosevelt’s picture on the cover. It will be great publicity for the studio whose photograph we use. How much will you pay us to use yours? Respond immediately.” The copyright owner replied: “We’ve never done this before, but under the circumstances we’d be pleased to offer you $250.”

The campaign manager took advantage of the situation to negotiate a better deal for Roosevelt. Some may believe this was unscrupulous, and others may believe this was just a shrewd negotiating tactic. Regardless of how you viewed the tactics of the campaign manager, the important issue here is that he thought of a third option. So often our organizational strategies rely on finding a competitive advantage in our field and sometimes the greatest competitive advantage is merely finding a third (or fourth) option when the others only can think of two.

What is the ultimate scarce asset? Money? Gold? Human Capital? Petroleum?

Some, like Tarun Khanna, believe that the ultimate scarce asset is “being clean in a sea of corruption.” The idea is that all other resources can be bought or if one is lucky, it can fall into one’s lap. However, being clean – especially in an era of corporate corruption and ethical mudslides – is an individual and organizational choice. It requires someone (or many people in the case of an organization) to make the choice to work and conduct business a particular way. It requires organizations not to pay bribes or go about doing business in an unfair manner. This is easier said than done, since one mistake or one bribe can derail an entire organization.

This is a significant challenge in emerging economies. However, there is a strong commercial value to doing the right thing since a clean organization often draws much more business from outside investors and even from the general public. The problem is that if one is clean only for commercial reasons, eventually the temptation will probably prove too great. Clean organizations in corrupt economies often have great profits. Of course if profits were the only goal, then the organization most likely wouldn’t be very clean since they would most likely cut corners to achieve greater profits. Once they achieve these greater profits in the short-term, it would lead to less profits in the long run since investors and others would know they’re not a clean organization and would not be able to trust them.

So it seems that being a clean organization ethically is important to an organization’s profits, but they must have other values that are equal to the goal of profits for them to maintain being a clean organization. Organizations and individuals who make up the organizations need something more the mere goal of profits to continue and maintain their cleanliness. Again, this is not an easy thing to do for a business. It requires a strong conviction and actions beyond the conviction for the long-term. This is probably the very reason why Tarun Khanna is convinced that “being clean in a sea of corruption” may be the ultimate scarce asset. I wholeheartedly agree. Going further, perhaps one can argue that “being clean in a sea of corruption” may be a very important strategy in addition to being a scarce asset.

I once heard Jack Welch, well-known former CEO of General Electric talk about employee performance clauses during his time at GE. He gave details on how he would reward/promote the top 10% of his employees based on certain metrics, and then fire the bottom 10% of his employees. There would consistently be new employees being hired, and then the next year the top 10% of the entire pool of employees would be rewarded/promoted, and then the bottom 10% again would be fired, etc.

Some, however, have questioned whether this is the best way to get the most out of one’s workers. After all, if you knew that out of 10 people on your team one of you would get fired you may be tempted to sabotage or just do the minimum so that you wouldn’t get fired. Prospect theory is a theory on loss aversion developed by Daniel Kahneman and Amos Tversky. The basic idea is that humans hate losses more than they love to win. If their research is correct, rather than striving to be the best or be in the top 10 % the focal point of most of the employees will be on not being in the bottom 10%. Of course if that’s the focal point, then the workers will be doing the minimum rather than the maximum for the company. What about your company? Would you or your colleagues be more productive in such a system? Or would you simply do the minimum as to not be in the bottom 10%?

Apple in 2010 passed Microsoft as the world’s largest tech company. This year, fresh off their success of the iPad2 they are now the second largest company in the world (in terms of market cap) behind only Exxon Mobil. They have had success after success with the iMac, MacBooks, iPod, iPhone, iPad, and updates of each of these products. Steve Jobs has become a legendary CEO with the success of Pixar, and his now famous return to Apple. There have been many business articles written on Apple including 2004, 2007, and 2010.

Although I don’t have an endless budget, I use lots of Apple products daily including their keyboard, trackpad, router, hard drives, in addition to the iPhone and Macbook. There is much to say about Apple’s success but I became a true believer the first time I walked into an Apple Store. I have heard several business strategists claim that:  Apple’s retail store IS the product. This is in stark contrast to companies like Dell, Gateway, or other computer companies. Of course, there was no guarantee that the retail store would succeed. Many intelligent analysts disagreed (here and here) with Apple’s retail store strategy back in 2001.

Apple has many competitive advantages, but one of their strategic moves is simplicity. Apple stores, although they’re designed very well, are simple. If you compare the shopping experience at an Apple Store vs. a typical retail store, you find that there’s not much choice or distraction. Of course that may or may not be good for the consumer, but with their sales it looks like the consumers also agree. Competitive strategy basically boils down to saying yes to some things, and saying no to other things. It’s a matter, sometimes, of saying no to good ideas. So often in a competitive market, to be excellent at X often times means that one has to let go or be intentionally bad at Y. In the case of Apple, their retail stores are not merely a channel to sell their products but rather they are the product themselves. In your company, what is your strategy with respect to sales?