Business Growth Roshambo

I bet you’ve never thought how the game of Rock, Paper, Scissors (a.k.a. Roshambo) can be applied to business growth. Marty Neumeier has. And brilliantly at that. In ZAG, the book I’ve been pimping all week, Marty explains how growing businesses go through the stages of SCISSORS, ROCK, and PAPER during its maturation.

According to Neumeier, small businesses and startups are SCISSORS-like in their sharp focus which allows them to carve out a niche to better compete against much larger companies.

A successful SCISSORS company will grow into being a medium-sized ROCK company.

ROCK businesses have lots of sales momentum going for them. To maintain and grow their momentum, ROCK companies expand their brand portfolio and thus, lose the sharp focus they once had as a SCISSORS business. ROCK businesses can crush SCISSOR companies who lack the resources needed to compete against the momentum of larger and broader-based ROCK companies.

Eventually, the momentum at a ROCK company slows and it then morphs into a PAPER company.

PAPER companies are typified by having tremendous size, a cadre of brands, and fleeting focus. Because of their size and reach, PAPER companies can smother ROCK companies.

As in the game, SCISSORS cut PAPER … ROCK crushes SCISSORS … and, PAPER covers ROCK. The business interpretation of this is … focus beats size, momentum beats focus, and size beats momentum.

SCISSORS cut PAPER | “focus beats size”
SCISSOR businesses are able to compete (and beat) expansive PAPER companies because of their sharp, niche-minded focus. Dollar General and Family Dollar are SCISSOR companies focused on selling inexpensive and close-out/odd-lot general merchandise. Because of their tight focus, Dollar General and Family Dollar are able to beat much larger PAPER companies like Wal-Mart and Target.

ROCK crushes SCISSORS | “momentum beats focus”
Starbucks is a ROCK business which trumps more focused, SCISSOR-like coffee joints. It’s not necessarily that Starbucks is better than smaller, upstart coffee shops. It’s just that Starbucks has tremendous momentum (convenient locations, adoring customers, etc.) and significant resources (stockpiles of cash, relationships with suppliers, etc.) which make it very difficult for other coffee shops to thrive against them.

PAPER covers ROCK | “size beats momentum”
Wal-Mart is a PAPER company that beats its general merchandise ROCK competitors (Sears, Kmart, Meijer) and its grocery ROCK competitors (Kroger, H-E-B, Publix). However, since it is a PAPER company, Wal-Mart is vulnerable and can lose out to SCISSOR businesses like Dollar General and Family Dollar.

---

So … whattaya think about Marty Neumeier’s Business Growth Roshambo? Go ahead and punch holes in his thinking. Or, offer up more examples of how this Rock, Paper, Scissors thinking works. And by all means … read ZAG. It’s one the best business books I have read in not just 2006, but in the past 10 years.

Comments

[Chodolodo]

Chains like Family Dollar (FDO) occasionally sell close-out or odd-lot merchandise, but they are definitely not "focused" on that strategy, stocking instead a conservative range of quality, branded items their customers want, on a consistent basis, at reasonable prices. FDO stores are much smaller than Wal-Mart, K-Mart or Target stores, and they may stock fewer items, but they are just as price-competitive and are infinitely more convenient for shoppers who want to park near the door get in-and-out in just a few minutes. That's the FDO advantage, NOT close-outs or odd-lots, proving that David can often beat Golitath. How does that fit with rock-paper-scissors?

[johnmoore (from Brand Autopsy)]

Chodolodo ... thanks for the correction about FDO and its merch strategy. I've augmented the post slightly to reflect this correction.

And yeah, the SCISSORS cuts PAPER angle is a different way to say Davis can beat Goliath.

[Rob Fields]

John, thanks for the inspiration. By that, I mean, following your series on Marty's book switched on a light bulb in my head. There are a few business books that I think are fantastic, and look forward to giving a similar treatment in the days/weeks to come.

[johnmoore (from Brand Autopsy)]

Rob, so glad you found inspiration from a Brand Autopsy post. Inspiring others to think differently about something is one of the reasons why I blog.

[Douglas Walker]

As the Managing Director of the World Rock Paper Scissors Society, I applaud Mr. Neumeier's insight.

RPS relationships pop up all over the place from video game design to biology. Good to know that this thinking applies in the business world as well.

[Closeout King]

Well, the rock paper scissors analogy definitely kept my attention. A very interesting and informative article, thanks.