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18 FEDA News & Views S unday, December 7, 1941. Admiral Chester Nimitz was attending a concert in Washington D.C. He was paged and told there was a phone call for him. When he answered the phone, it was President Franklin Delano Roosevelt. He told Admiral Nimitz that he (Nimitz) would now be Commander of the Pacifi c Fleet. Admiral Nimitz fl ew to Hawaii to assume command of the Pacifi c Fleet. He landed at Pearl Harbor on Christmas Eve, 1941. There was a spirit of despair, dejection, and defeat, as if the United States had already lost the war. On Christmas day, 1941, Admiral Nimitz was given a boat tour of the destruction wrought on Pearl Harbor. Big sunken battleships and navy vessels cluttered the waters. As the tour boat returned to dock, the young helmsman of the boat asked, "Well, Admiral, what do you think after seeing all this destruc- tion?" Admiral Nimitz's reply shocked every- one. "The Japanese made three of the biggest mistakes an attack force could ever make, or God was taking care of America. Which do you think it was?" Shocked and surprised, the helmsman asked, "What do you mean by saying the Japanese made three of the biggest mistakes an attack force could ever make?" Nimitz explained: Mistake No. 1 The Japanese attacked on Sunday morning. Nine out of 10 crewmen on those ships were ashore on leave. If those same ships had been lured to sea and been sunk, we would have lost 38,000 men, instead of 3,800. Mistake No. 2 When the Japanese saw all those battleships lined in a row, they got so carried away sinking those battleships, they never once bombed our dry docks opposite those ships. If they had destroyed our dry docks, we would have had to tow every one of those ships to the mainland to be repaired. As it is now, they are in shallow water, and can be raised. One tug can pull them How to Win the Battle and Lose the War A Strategic Lesson on Creating Value & Distance in the Market over to the dry docks, and we can have them repaired and at sea by the time we could have towed them to the mainland. And I already have crews ashore anxious to man those ships. Mistake No. 3 Every drop of fuel in the Pacifi c theater of war is on top of the ground in storage tanks fi ve miles away over that hill. One attack plane could have strafed those tanks and destroyed our fuel supply. That's why I say the Japanese made three of the biggest mistakes an attack force could make, or God was tak- ing care of America. My friend and classmate, Fred Hooper, sent me this story. Supposedly it came from a book that Admiral Nimitz wrote, which is now out of print. Whether it is factual or merely a very compelling urban legend, the story offers important stra- tegic lessons. Pause Before Leaping I thought about this anecdote during a recent meeting. I was reviewing a company's situation with one of its top offi cers. A com- petitor had developed an innovation and was deploying it rapidly. The action question was how the company should respond. The seemingly obvious answer was to pick up the pace and try to match the competitor. When I thought about how other companies I had worked with had responded in similar situa- tions, two things became clear: The competi- tor had indeed made tactical gains that raised concerns, but it was not at all clear that this innovation would produce a clear long-term strategic win. The answer was to look very carefully at the customer value proposition that the tactical initiative created, and to set this against the broader opportunity to develop a more sweeping, strategic value proposition. Was the tactical initiative a long- term win strategy, or merely a short-term gain? Would it win the battle, or win the war? By Jonathan Byrnes, author of Islands of Profi t in a Sea of Red Ink continued on page 26 The competitor had indeed made tactical gains that raised concerns, but it was not at all clear that this innovation would produce a clear long- term strategic win.