Spearfishing for opportunities in turbulent markets

A bias for action counts as a cardinal virtue in business. In turbulent markets, however, a bias for action can cause companies to chase every opportunity as if it were the chance of a lifetime or responding to every threat as if it could destroy the company. Frantic activity dissipates an organization’s war chest and focus and leaves it poorly positioned to seize golden opportunities when they do arise. (There are other risks to a bias for action, as I argued in an earlier post). Managers require discipline to say no to potential distractions to maintain reserves for golden opportunities and major crises when they arise.

When conducting research on Brazilian multinationals, I learned about the sport of spearfishing, which serves as a graphic metaphor to illustrate  the importance of disciplined opportunism. Spearfishermen dive underwater without oxygen tanks, armed only with a gun with a single spear. Once submerged, they surround themselves with kelp, which both attracts fish and hides the fisherman from his prey. Then he waits, motionless in the murky water, conserving oxygen and energy while waiting for the right fish to approach. A good fisherman can stay underwater for up to four minutes, and during this time needs the discipline to let the small fish swim by, while preserving his spear for the big prey, which can be as large as a person. At the right time, the fisherman shoots his spear with deadly accuracy. If he succeeds in spearing the fish, he must then reel it in and quickly kill it before surfacing with his catch.

Not a sport for the impatient or faint of heart, spearfishing provides a graphic metaphor to illustrate the process by which companies can effectively wait for, identify and seize opportunities in a turbulent market. The sport illustrates three steps required to effectively seize golden opportunities in a business context:

  1. Decide where to fish. Just as a spear fisherman scouts for the best waters to fish, top executives must clearly define the domain where their company will look for opportunities. In this case, it is as important to define which opportunities not pursue as to identify those the company will consider.
  2. Actively wait for golden opportunities. Just as the fisherman waits for the big prey, companies should wait for golden opportunities.  Active waiting is not the same as doing nothing, and companies should run experiments, explore multiple scenarios, and constantly discuss the emerging situation to identify emerging opportunities.
  3. Go for the kill. When a golden opportunity does arise a company, like a spearfisherman, should finish strong by deploying slack resources and focusing the entire organization on seizing the chance.


Seasoned spearfishers succeed, in part, because they know where to drop anchor and dive. Managers in unpredictable environments must likewise clearly define their business domain. This definition allows them to sort out attractive opportunities from those which would distract their focus.

In the early 1990’s, the top executives of Banco Itaú defined their organization as one focused only on “financial activities”. This domain definition entailed more than commercial banking alone, and was broad enough to expose the firm to opportunities in wholesale banking, for example. On the other hand, it was narrow enough to preclude the widespread diversification pursued by rivals such as Banco Bradesco, which invested in energy and cable television among other activities.

This clear definition of strategic domain was not an accident. In 1992, Roberto Setubal led a series of internal discussions with senior management, board members, and external consultants to articulate Banco Itaú’s business domain, and later recalled:

We spent a lot of time discussing what kind of institution we would become. We asked ourselves whether we should play a role in other activities (industry, direct investments), and decided that we are a bank and had to focus entirely on financial activities.

The logic of selecting a domain is fairly straightforward for companies that compete in a single, well-defined industry. It is also possible to establish criteria for selecting a domain even in more diversified groups. Consider Brazil’s Votorantim Group, which participates in a wide variety of businesses including cement, zinc, nickel, pulp and paper, hydrofluoric acid, and nitrocellulose. Despite the variety in the group’s portfolio, all the constituent businesses share a few common traits. They are industries where Votorantim can be globally competitive based on Brazil’s natural resource advantages. In pulp and paper, for example, Brazil’s 2002 cash cost per ton of pulp was of $140, compared to $213 in Indonesia (the next lowest cost producer), and $300 in the U.S. The group also favors businesses with global markets for its products and dollar- denominated prices, which provide a natural hedge against currency fluctuations.

Simple rules are a particularly useful tool for defining and communicating which opportunities a company should consider and which are out of bounds. Simple rules work in practice as well as in theory when a company faces opportunities or threats that exceed its available resources.

My next posts will describe how companies can wait actively and go for the kill.

Leading in turbulent times

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Don Sull is professor of management practice in strategic and international management, and faculty director of executive education at London Business School. This blog is dedicated to helping entrepreneurs, managers, and outside directors to lead more effectively in a turbulent world.

Over the past decade, Prof Sull has studied volatile industries including telecommunications, airlines, fast fashion, and information technology, as well as turbulent countries including Brazil and China, and found specific behaviours that consistently differentiate more, and less, successful firms. His conclusion is that actions, not an individual’s traits, increase the odds of success in turbulent markets, and these actions can be learned.