Soccer Ball Management™ Theory

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The chart shows how the Soccer Ball System works. In 1996 Dell was much smaller than Compaq and in the same cash and capital velocity position. Dell moved rapidly to increase its capital velocity to the point where it was being paid 24 days before incurring expense. It had transformed itself into a Soccer Ball: a high cash and capital velocity company capable of doing more than its competitors with a lot less.

Compaq moved in exactly the opposite direction. By acquiring DEC it added rapidly to the number of days it took to turn a sale into cash and by 2001 had ceded a two-month cash advantage to Dell. Compaq began to implode and in 2002 was bought by Hewlett-Packard.

H-P worked hard from 1996 to 2001 to improve its cash velocity but not nearly hard enough. And in doing so it let its capital velocity fall. By 2002, H-P’s position too had become parlous as it ceded a 70+ day advantage to Dell.

Soccer Balls are not just better competitors; they are killing machines. Once one is loose in your market, recovery is next to impossible.

Press

Harvard Business Review - Review of Panasonic by Francis McInerney

The Avaya Sale: Tech buyouts bear risks (Network World)

ISP Planet: Book Review: FutureWealth: Investing in the Second Great Wave of Technology by Francis McInerney and Sean White

Michael Urlocker, The Disruption Group: Q&A With Francis McInerney, Doomsday Prophet & Turnaround Artist

The Frager Factor: 7 Year Old Book Predicts Future of YouTube

Journal of Business Strategy: The Time Advantage, Courtesy of Francis McInerney

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