Playing To Win

The Tragic Futility of Investing to Catch Up

Why Investing to Win is Your Only Fruitful Strategy Choice

Roger Martin
6 min readMar 1, 2021


Source: Sophie Louisnard (1erv4C1_Fjk-unsplash)

Across four decades of strategy advising, I have watched companies make two distinctly different kinds of investments, one of which produces consistently disappointing results. I am dedicating this Playing to Win/Practitioner Insights (PTW/PI) piece, my 22nd in the series, to The Tragic Futility of Investing to Catch Up in order to help readers avoid that fate. (Links for the rest of the PTW/PI series can be found here.)

Two Kinds of Investments

Companies make all sorts of investments in all kinds of things. They invest capital, time, reputation, etc., with which they buy plant & equipment, software, advertising, distribution, etc. Typically, some individual or group in the company must make a formal case for the investment, which lays out an expected return on the investment, usually a financial return, such as ROIC or IRR, but sometimes reputational impact, such as Net Promoter Score increase, or human resource enhancement, such as improved retention.

Looking back, I can divide the many such investments that I have seen into two distinct categories: investments to catch up versus investments to leapfrog.

In the former category, a competitor has some position or capability that appears to be producing superior results, which causes the company to benchmark that competitor and invest to catch up. It might be to match the competitor’s distribution system or shelf space or sales force or a particular product/service feature. I see this kind of investment on a daily basis. They have added this feature; we must add this feature. They have data; we must acquire data. They went public; we must go public.

The other kind of investment seeks to leapfrog competitors by investing in distinctiveness. It chooses a different Where-to-Play/How-to-Win combination than the leading competitor(s). Since I only give advice that I use in my own work, I will provide a personal example. I joined the board of Tennis Canada in 2004 and at that time Canada literally trailed dozens of nations in tennis performance. We had never had a male singles player ranked in the top 20 and only two women, the last of which achieved that ranking 15 years earlier. We had never had a Canadian singles player get to a Grand Slam semifinal, let alone win a final, while 31 countries boast at least one Grand Slam winner. And we were woefully behind on financial resources. But rather than invest to catch up, the strategy we embarked on in 2005 chose to develop players differently than any competitive nation, a unique hybrid of the French and American systems — more on the results below.

The Fundamental Flaw of Investing to Catch Up

In my long experience, the returns to investing to catch up are almost always lower than the forecasted business case. My experience with an Olympic sailor, who tried unsuccessfully to turn me into a competent dinghy sailor, gave me an insight into why. He explained to me that if your competitor’s boat gets ahead of you at the starting line, the instinct is to chase it. To tack where it tacks on the same path. But if you do, you will always be behind, because you will be sailing on the same path, subject to the same wind. And in fact for much of the time, you will be sailing in its ‘dirty air’ — i.e., it gets the full wind in its sails, which breaks the wind diminishing its effect on your sails. Your only hope is for the leader to make a terrible blunder. Otherwise, you will race for hours and hours, tacking dutifully behind the leader and crossing the finish line behind. His advice was that if you want to end up in some place other than last, you need to tack away and plot a different course that will get you to the finish line ahead.

In business, I think there are two phenomena that create this sailing-like result to investing to catch up. First, possession is at least nine-tenths of the law. As and when you catch up, you don’t get your ‘fair share’ of the rewards. The leader to whom you have caught up is the default provider to customers. While you may be able to compete away some customers, it will be fewer customers than you imagine and at a higher cost. By simply catching up, you have nothing unique to offer and the leader is likely to defend aggressively. It would be like the trailing boat getting so close to the lead boat that its bow is almost touching the lead boat’s stern, making it clear to the leader that it needs to defend its lead aggressively.

Second, the leader tends not to stand still. By the time you catch up to where they were, they aren’t there anymore. It is the story of the decades-long battle between GE and Westinghouse in power generation. GE got an early lead and enjoyed a superior position in cost per kilowatt-hour (kWh). Repeatedly, over decades, Westinghouse invested to match GE’s cost/kWh. But by the time Westinghouse got there, GE had moved to a lower cost still. Eventually Westinghouse gave up and exited the business.

The Rewards to Leapfrogging

In contrast, my experience is that attempting to leapfrog the leader, on average, outperforms expectations. I say “on average” because sometimes the leapfrog strategy just doesn’t work. Remember that strategy can never be perfect. It is a bet that at best can shorten the odds of success. But across the attempts to set a unique path to outflank the leading competitor, I have observed that the results exceed the projections because success knows no bounds.

That was certainly the case for the Tennis Canada strategy above. We were aggressive and optimistic, but I don’t believe that any of us in 2005 would have imagined that in 2021 Canada would be tied with historic tennis powerhouse Spain as the only two countries with three top 20 male singles players, when as of 2005, we had none in history. Or that we would have had our first two ever top 5 women’s singles players including our first Grand Slam champion (2019 US Open), Bianca Andreescu. We hoped and dreamed that we could take our place among the leading tennis nations — not become “a tennis superpower,” which is what tennis commentator and seven-time Grand Slam singles champion John McEnroe called Canada during a Wimbledon broadcast.

Despite the higher rewards, catching up will always seem like the sensible thing to do and leapfrogging the dangerous one. To call on yet another personal example, I have vivid memories of taking over as Dean of the Rotman School of Management. We trailed the unquestioned and seemingly unassailable Canadian business school leader by a wide margin. In fact, we weren’t even in second place. I proposed a strategy to tack in a completely unique direction — A New Way to Think featuring Integrative Thinking and the Design of Business — entirely ignoring what the Canadian leader was doing and instead seeking to become globally consequential. During the Faculty Council discussion on my proposed strategy, a senior faculty member beseeched me to abandon my crazy and dangerous idea, and instead just work to narrow the gap with the leader so we wouldn’t be so embarrassingly far behind. Had I listened, Rotman would still be behind and inconsequential. Instead, we blew by the leader on the fly, so much so that there is no longer any question about which is Canada’s leading and globally consequential business school. But that only happened because we invested for unique advantage, not to catch up.

Practitioner Insights

Resist the urge to invest to catch up. It is too much work for too little reward. Mirroring a successful leader may feel like the less risky avenue to pursue, but there is no safety in losing. Winning begets more winning — until and unless the winner becomes complacent — and losing begets more losing. Winning builds the assets of winners — whether cheap capital or reputation. Losing doesn’t build assets; it depreciates them.

Set a higher standard for yourself: Play to Win. Does that mean not investing to catch up in any respect? No. There may be features of what you do that must be upgraded to the level of the leading competitor as part of the strategy for leapfrogging. But the absolute key is to have a unique theory of advantage. Without one, you are doomed to working hard while remaining in the dirty air of the leader. That is simply not worth the time and effort in the one life you have to live.



Roger Martin

Professor Roger Martin is a writer, strategy advisor and in 2017 was named the #1 management thinker in world. He is also former Dean of the Rotman School.