Beyond Competition

Competition is necessary forĀ  survival. Competition is part of housekeeping, part of maintenance, part of ensuring the baseline. Competition is based on comparing with others. In the classic case of the bear chasing two hunters, the hunter who flees faster than his companion will not get attacked by the bear. This is the essence of competition. One can survive but big success will still elude us.

Competition is the key ingredient in free-market economics. It prevents monopoly pricing & ensures that consumers get the best deal. It ensures that producersĀ  make every effort to be efficient & to provide quality. The purpose of competition is to benefit the consumer by keeping prices down & quality up. Competition also benefits the economy as a whole by ensuring the most efficient use of resources & encouraging enterprise.

But competition is designed for the benefit of the economy as a whole & for the consumer. Only part of the benefit of competition is for the producers. In short, competition puts pressures on producers. You have to be competitive in order to survive.

The word “management” implies that the energy, the ideas, the resources, the people & the markets are all there- & all that is needed is someone to manage these various things.

In this sense, management is all about housekeeping.

The western notion of improvement is to point out faults, defects, & weaknesses, & then set about putting them right. If we remove all faults, we believe, then the job has been done. Contrast this with the Japanese. They do not understand arguments, they prefer parallel thinking. When it comes to improvement, they are also concerned with removing obvious faults. But this is only the beginning, not the end, of the matter. The Japanese then go on to say,’this is perfect- now let us make this better.” The result is the Japanese habit of continuous improvement, of improving things even when there are no faults at all.

At lower levels, problem-solving & housekeeping skills are most important & are what gets noticed. They are all extremely important & have to be done. They are necessary but not sufficient. Water is necessary for soup, but soup is more than water. People are indeed promoted for these types of abilities. But at the most senior level there is a need for conceptual, creative & strategic thinking. Mere problem solving can be delegated to others.

Technology is fast becoming a commodity. What is really going to matter are the application concepts.

There is a need to create value monopolies. You do not need DVD’s in order to survive. You choose a particular one because that is the value you want. Similarly, if you produce high-quality machine tools & capital goods, then people want to buy them. No matter how high the cost may be, the quality is worth having. (Indeed, if the cost is high enough, then the machine becomes a good discriminator; the successful business can afford such a machine, and the less successful one cannot & so gets left behind.)

Without value monopolies, all would be commodity economics. There would be nowhere to spend money & no point in earning it. Value economics is concerned with creating opportunities for spending money as you wish.

If you ask a group of executives to list down the 5 most important problems they face, they have no difficulty in penning them down. But if I ask the same executives to put down points that are not problems but which might benefit from creative thinking, the result is totally different.

Perhaps one can now say that most progress comes from thinking about things that are not problems.

Instead of running the same race, you create your own race. Value monopolies are driven by concepts, & concepts are in turn driven by serious creativity. A new concept is unquestionably the best & cheapest way to getting added value out of existing resources.