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Wednesday, February 20, 2013

How Chess Applies to Business: CEO Tips

Chess blog for latest chess news and chess trivia (c) Alexandra Kosteniuk, 2013

Hello everyone, 

While everyone compares business to chess, only a few people can teach the game's most profound lessons. Here, Justin Moore, CEO of the cloud company Axcient, does just that: In conversation with David Zax.

Justin Moore is the CEO of Axcient, a rapidly growing cloud services provider. Moore, now 31, is also a former star of the youth chess circuit. At 10, he found a chess book in his mother’s cabinet; by his teenage years, he was one of the 20 top-ranked youth chess players in the United States. With the seriousness of an athlete, Moore played chess for several hours every day for half a decade.

Moore doesn’t play much competitively anymore; by his college years, he was “probably a bit burnt out,” he confesses. Even so, the kinds of thinking that his days as a chess prodigy taught him has deeply informed the way he runs a successful startup. In a sense, Moore does still play chess every day--by running Axcient.


We caught up with Moore to extract a few lessons about how to apply the grandmaster mindset to the world of business.
Seeing All Possible Futures

Of course, it’s a business commonplace to recommend forethought. But in chess, the metaphor is literalized. “You’re constantly looking two, three, four moves ahead,” explains Moore. “If you do this move, what’s the countermove? What are all the countermoves? And then for all of those, what are all of my potential countermoves? Chess is constantly teaching you to think about what comes next, and what comes after that, and what the repercussions could be.”

In a chess game, your mind is constantly running permutations of decision trees. In business, your mind should be doing the same.

Eyes On The Endgame

A chess match is a war of attrition. If a soccer match is egregiously lopsided at halftime, the game still progresses, but if White accidentally loses his queen a few moves in, it’s likely he’ll resign. This means that a properly matched chess game is often fought out to a point where only a few pawns, pieces, and the opposing kings remain--a bare-board state known as endgame. In a real sense, the entirety of a chess game is all a prelude to endgame.

“Chess is about getting to endgame," says Moore. "What happens between the start and then doesn’t necessarily matter. You could lose more pieces or a more valuable piece, and at the end of the day, if you capture the opponent’s king, you win the game.”

So, too, in many sectors of business, in which many competitors vie for one or a few dominant, winner-takes-most slots (pending SEC approval).”You’re looking out a year, two years, three years,” says Moore. “Sometimes that means in the short term you make sacrifices.” You might make a tactical decision that appears to put you behind, but actually strengthens your position for when the smoke clears, and each side’s knights and bishops have fallen.

Relentless Focus

It's easy to chart a course to endgame; it can be difficult to stay on it.

“One of the biggest mistakes in business is to lose focus,” says Moore. It’s easy to get distracted by what your competitors are doing. But just because a competitor launched a flashy feature doesn’t mean that you need to match that feature. What you need to do is ask yourself whether matching that feature will advance you towards the goal you’ve already identified. All too many startups, says Moore, behave in a way that’s “reactionary to the market, to competitors, to the newest shiny object.”

Punches? Roll With Them

The annals of chess grandmasters are replete with stories of those who obsessively studied their losses. “In every single game,” says Moore, “you learn something.... ultimately you have to take all the lessons from every match you played.” Those earlier losses will be part of your mental makeup on the eve of a later victory.


“The vast majority of startups will fail,” says Moore. You have to believe that yours won’t. But part of you has to know, too, that though “it’ll sting, and part of me will be devastated” if yours does fail, ultimately any battle scars will make you stronger and smarter for the next venture.

Pattern Recognition

Playing chess teaches you to recognize patterns: the tempting bishop sacrifice that actually led you into a trap, the queen swap that looked favorable but prevented you from castling. You play, you learn.

And so with business. Moore tells a story of how pattern recognition helped his business:

In 2011, Moore's team was trying to improve customer satisfaction. They worked from the assumption that one metric in particular--case backlog--was the best predictor of customer satisfaction. It seemed reasonable to assume that if you had low or zero backlog, then your customers would be happy. “It turned out we were wrong,” says Moore. After three months of wandering through the weeds, Moore’s team realized that a better predictor of customer satisfaction was the time it took to respond to a customer request, combined with frequency of updates. For months, Axcient had been focusing on the wrong metric.

In 2012, with a larger customer base and a new playbook, Axcient was again trying to improve its customer satisfaction. It was working from the assumption that time-to-response and update frequency were still the key metrics to watch. And yet even as they lowered their response time, Axcient's survey data was “not necessarily supporting what we believed.”

Rather than labor under a false assumption for months, Moore and company quickly recognized a pattern--they needed to question and refine their metrics. They rapidly determined that while time-to-response mattered, Axcient customers also deeply cared about getting access to a live Axcient employee. “Now when people call Axcient, in a matter of minutes, they’re connected to a live person,” explains Moore. Crucially, Axcient put this fix into place in a matter of weeks, rather than months, having refused to fall into the same trap of relying on a false metric.

Axcient has since investigated and tested all of its key metrics, and has overhauled several.

Know Your Team

A great chess player has a deep awareness of each piece’s role on the board. A bishop has different abilities from those of a knight, and its powers are expanded or limited by a board’s pawn structure.

In some ways, chess is a laboratory for human resources problems. “You have to understand the strengths and weaknesses of the team, of your employees,” says Moore. “You have to understand that the pawn has its role, and it’s a very important one, just as important as the queen, rook, or bishop. Every piece is critical, and the only way to win is to leverage all those pieces' skill sets together.”
[Image: Flickr user Martin Lopatka]

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