In 1936, a 21-year-old boxer from Detroit named Joe Louis Barrow (but referred to as Joe Louis by the press) had amassed a record of 24 fights with 20 knocks-outs.
The talent of young Mr. Louis was so great that none other than Ernest Hemingway himself, a boxer and an ardent admirer of boxing, said this after witnessing Joe Louis beat fellow heavyweight Buddy Baer: “He’s too good to be true, and absolutely true . . . the most beautiful fighting machine that I have ever seen.” To state that Joe Louis was considered the Champion in Waiting is not an understatement.
In fact, it was universally accepted within boxing that not only would Joe Louis become champion, but Joe Louis was also unbeatable.
A German fighter named Max Schmeling, the “Black Uhlan of the Rhine,” as the press referred to him, was selected to become the next victim of Joe Louis. At age 29 and with 49 wins, seven defeats, and four draws, Max was viewed as a good fighter who stood no chance against the great Joe Louis.
The fight, or as some writers whispered under their breath, the massacre, was scheduled to take place on June 19th, 1936, at the Yankee Stadium.
Overlooked at the time was the fact that Max Schmeling wasn’t playing the part of the victim. Instead, Max was extremely confident and truly believed he could beat Joe Louis. When asked by reporters why he, a 10-1 underdog, appeared to be so optimistic in the face of his impending execution at the fists of Joe Louis, Max replied, “I see something.”
Max saw that, contrary to what everyone was saying and writing about Joe Louis, Joe actually had a weakness. The weakness discovered by Max was that Joe had a tendency to drop his left hand during a fight and that he often pulled his left hand back low after throwing a jab.
To Max, this meant that Joe would be vulnerable to a counter right cross – something Max possessed in his arsenal of punches.
As with many scenarios where everything is supposed to work perfectly without any chance of disruption to the inevitable, things did not go as planned for the “The Brown Bomber” Joe Louis. When the fight took place, it quickly became evident that Max Schmeling had indeed seen something. He was clearly going for Joe Louis’ “flaw that could be exploited.” Max consistently tagged Joe with the right hands throughout the fight.
A knockdown of Joe by Max in round 4 was followed by a knockout of Joe in round 12. Shakespeare wouldn’t have dared write such an ending. The invincible Joe Louis had not only been defeated, but he had also been knocked out by a 10-1 underdog.
I have used the story above during conferences and round tables to explain what I term The Schmeling Effect.
The Schmeling Effect refers to the ability of an individual or a company to see a weakness in a competitor or a business model and exploit the weakness to gain market advantage regardless of how invincible a competitor may appear.
Below is a list of individuals who saw what others did not to create new companies and, in some cases, overcome larger, more established competitors:
The founder of the Ford Motor Company didn’t invent the automobile or the assembly line. He did, however, see an opportunity to build the first affordable car for the middle class, thus taking the automobile from a curiosity to a practical means of transportation.
The founder of Dell Computer saw the value of a manufacturer selling computers directly to consumers. In 2001, Dell surpassed Compaq as the world’s largest PC maker.
The co-founder of Apple saw the digital revolution and the need for digital appliances. Steve Jobs saw the future and chose to help shape it.
Michael Dell famously said on October 6th, 1997, at a Gartner Symposium, when asked what he would do if he ran the then-troubled Apple Computer company: “I’d shut it down and give the money back to the shareholders.”
By 2006, Apple’s market capitalization eclipsed Dell, proving that Steve Jobs could see further than Michael Dell.
The co-founder of Tesla and founder of SpaceX has proved to the world that he sees ways of disrupting established industries – from cars to rockets. He sees new ways of doing things that others do not.
Larry Page and Sergey Brin
The founders of Google saw an opportunity to apply page linking in academic writing to the web. Page and Brin’s breakthrough was to create an algorithm – dubbed PageRank – that managed to take into account both the number of links into a particular site and the number of links into each of the linking sites.
Google remains the number one search engine up to date.
The co-founder of Uber saw an opportunity to create new business models for ride-sharing and commercial transportation. He wanted to take advantage of the growth in the sharing economy.
Today, Uber is considered one of the most disruptive companies ever created and has a market capitalization of over $60B.
The co-founder of Facebook saw the potential in creating a social media and social networking site. Facebook is the largest social platform with over 2.5 billion users as of 2019.
The founder of Walmart saw a new retail business powered by logistics and technology to deliver ‘Everyday Low Prices’ to consumers. Throughout the 1990s and into the 2000s, most analysts viewed Walmart as an invincible 800 pound retail gorilla.
As of January 31st, 2019, Walmart had 11,000 stores and clubs in 28 countries, under a total of 63 banners generating over $400 billion in revenue.
Jeff Bezos is arguably the most influential executive in the history of business. In 1994, Jeff left his job at a New York City hedge fund because he could see the potential of the internet as a mechanism for commerce. He started Amazon as a way to sell books online.
Today, Amazon currently has a market capitalization larger than Walmart and impacts so many areas of business. The term The Amazon Effect has been created to explain the impact of Amazon in the business world.
Jeff Bezos continues to see further than anyone else in the business.
History proves the power of seeing what others do not to exploit a flaw or to create a business model to unseat a market leader. All it takes is someone to see something that others do not… The Schmeling Effect.
What do you see?
This article has been reprinted with permission from Brittain Ladd´s LinkedIn page.