It is one thing to "Monday morning quarterback" the missteps of companies like Kodak, Blockbuster, Nokia, Neiman Marcus and others who were fatally disrupted. It is quite another to put forth what you would do if you were leading an organization in the crosshairs of a disruptive threat, such as the PGA Tour just now.
For those of you who don't follow golf, a few details: In October 2021, Saudi Arabia's sovereign wealth fund suddenly announced formation of a new golf league, LIV (pronounced as in "Live well"), which poses what PGA considers an existential threat to its organization.
Beginning late last year, LIV began secretly poaching players away from the PGA. Signing bonuses and purses far exceeded what even the winningest players received. Tiger Woods turned down a package said to be worth $700 to $800 million; Dustin Johnson signed with LIV reportedly for a hundred and twenty-five million dollars.
As I am addressing a group of golf industry executives next month in, I've been soliciting opinions from friends, family members, and fans regarding this international dust up. In the past, numerous groups (but not LIV) have brought me over to advise them on innovation, and I've seen the role innovation is playing as this epic battle unfolds.
"LIV clearly represents a disruptive threat to the PGA," notes golfer Timothy McQuay, a retired investment banker, and my brother-in-law. "My sense is that they are taking LIV very seriously but are not certain how best to combat it."
No surprise there. My research inside disrupted organizations suggests that, in the fog of war, initial missteps are almost guaranteed. The CEO of Blackberry shrugged off the iPhone as a mere "niche product" and didn't think about it for over a year. Leaders can easily lapse into a state of "denial"; they mask fear by exhibiting hubris; they downplay and underestimate the threat.
For PGA officials, working out your strategy while operating in the fishbowl of media attention is especially unnerving. Overall, golfers I spoke with didn't seem to think the PGA was off to a good start combating the threat.
Colin McQuay, my nephew and also an avid golfer, explained his view: "The PGA has done a very poor job, from a PR standpoint, combating the LIV threat. I was pretty turned off by all the comments made in the early days. They made the PGA seem entitled, anti-golfer, and whiny."
Initial missteps aside, where the PGA-LIV dustup gets interesting is how both leagues recognized the vital role innovation would play from the starting gun.
First, LIV coaxed away players with their innovative business model. They promised payouts, not just to tournament winners, but to all golfers playing in their events. PGA Tour events, while open to anyone who could qualify to play, paid losers nothing in what was long-celebrated as the American-individualist ideal, "the purest form of meritocracy," as one golfer put it. LIV innovated different formats such as shotgun starts and team play in addition to individual play.
All of these moves brought novelty to LIV events and caused some fans to anticipate what PGA Tour might do in response. "This is a once-in-a-lifetime opportunity to reshape how the PGA Tour operates," Phil Mickelson, one of PGA's biggest stars told Golf Digest.
One of the biggest surprises to me in my casual interviews was how little loyalty the PGA engenders, especially among younger players. LIV's entrance has turned a gentlemanly sport, where members doffed their hats before shaking hands, into a money grab. "I thought golf was supposed to be gentlemanly," one golfer told New Yorker writer Zach Helfand. "All of a sudden they've turned into animals."
Golfers I spoke with were surprisingly neutral on LIV's gambit. Though not fans of Saudi Arabia, especially after the country's ruler ordered the murder and dismemberment of a critic, they turned out not to be diehard fans of PGA Tour either. The fact that PGA Tour makes contributions to local nonprofit entities seemed not to matter as much as one would assume.
Opening skirmishes aside, these are early days. LIV has no television deal, though it's said to be closing in on one with Fox Sports. Where this dogfight will end up is probably a matter of who keeps innovating best for both viewers and players alike.
"If I were the PGA," sums up Colin McQuay, "what I’d be focused on is what LIV could be, and how I beat them to the punch where it makes sense for me (the PGA) to do so. There is no doubt LIV has staying power, and when they do land a major network TV deal, that changes the game for them. But they’ll still have to figure out how to get their golfers to actually care about winning their tournaments though, which to-date, I don’t think they have a great solve for."
I would greatly appreciate and value your thoughts on what PGA Tour might do to best countervail LIV, and wish you a great holiday season. See you next month.