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A businessman pulling on boxing gloves

It's official: business is no longer a competition

24th May 2018
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The industrial age created an economy based on competition, but in the digital age the business landscape is far more nuanced than that.

When I first started working with leaders and their teams, they would tell me that their strategic goal was to be number one in their market.

At first I found this charming. Then I found it bland. Now I find it passé.

I’m all for being bold in your ambitions. Why not be number one, I thought? Someone has to be. In school it’s all about being top of the class, being picked first, getting an A. Why not in business?

After a while, companies stopped talking about being first in their market and started talking about being first in something grander.

It was about delighting customers and having the best customer service scores in the industry. Or maybe being the best place to work, having the lowest staff turnover or the highest employee engagement.

Reinventing the market

Business has always been a competition. But I predict those days will soon be gone. They aren’t yet. But the days when beating the rest of your market is seen as a healthy and legitimate focus for all activity are numbered. And here’s why.

When you compete against others in your market you take your eye off the real threat. While you’re trying to beat your known enemies a disrupter is coming up your blind side.

A competitive mindset is based on a belief in 'lack' – there isn’t enough to go around.

They aren’t interested in being number one in your market. They are interested in reinventing your market to such an extent that you can’t play the game any more.

Competing for the number one slot is a short-sighted game. It’s about tweaking what already works. It doesn’t require innovating.

Everyone playing this game is just following the same basic pattern but trying to do it cheaper, quicker, slightly better quality, slightly better service. Companies like this succeed by trading off past success.

When someone new comes along, stands back and takes a fresh look at your customers, what they really need today and how you and your buddies are failing to really consider that at all, they will blast you out of the water.

It’s happening in industry after industry. If it hasn’t happened in yours yet, it’s just a matter of time.

Inward-looking competition

While companies talk about competing with others in their market, what they actually do is turn their competitive instincts internally. Teams within the business compete for resources, recognition, perks, floor-space and desks.

Whenever I ask a mid-level employee who the external competition is they don’t know - but they can certainly tell me which team in their own business gets favouritism (and it’s never their own).

Many companies don’t lose business to a competitor. They lose business to the status quo.

When you create a business based on a competitive model, you hire competitive people. Don’t be surprised when they then compete with each other.  A competitive mindset is based on a belief in 'lack' – there isn’t enough to go around. We must secure our limited resources so that no one else can have them.

In negotiations we must make sure that we get the better deal. We demonstrate our value by beating others – we only know we are the best because others are worse. I only win if you lose.

In such an environment, almost any behaviour is tolerated that achieves a winning result.

Research in the USA showed that 56% of MBA students admit to cheating. Extreme competitiveness makes people do some pretty crazy stuff.

Customer-centric thinking

Who needs you to be number one in your market? Do your customers care? Sometimes, although those customers are usually happy if you are in the top four. They aren’t that interested in the details. Many customers don’t care at all.

Buying decisions are based on a variety of factors – price, service, speed of delivery, brand, relationships, recommendation, simplicity of purchase, awareness, habit, difficulty changing provider, fashion - the list goes on.

You might be the top in one criteria but 27th in another, and it turns out the customer eventually chose the one that gave them a free meerkat.

The people who really care about market position are market analysts, business journalists and competitors of yours hoping you’ll drop down the rankings so they can snap you up for a decent price.

Does it really make sense to build your whole business strategy around what they think matters?

Competition vs. creativity

Many companies don’t lose business to a competitor. They lose business to the status quo. The decision by the client to a) do nothing, b) do it themselves or c) do it later are the reason they don’t buy.

This is especially true if you don’t sell by pitching but by building relationships.

Your prospective clients don’t go elsewhere. They just go nowhere...until such time that their decision to do nothing, do it themselves or do it later catches up with them and they are back on the phone asking for your help.

Competition doesn’t engender creativity. You would think it does, wouldn’t you? Competitors trying to outwit each other must lead to fabulous new ideas, right?

Industrial Age thinking created an economy based on competition, but business today can be a lot more interesting than that.

Not really, because creativity occurs when seemingly unrelated concepts collide. Competition is about protecting ideas, holding them close to you so that no one else can have them - you develop your ideas in great secrecy and then go to market, taking all your competitors by surprise.

They are presumably so busy scrabbling to catch up with you for the next two years that you dominate the field.

Collaboration as a disruptive force

While you are keeping your ideas to yourself, so is everyone else. Maybe the innovation that will transform your product or industry will only happen if you collide your ideas with ideas coming from another business.

Even industries that rely heavily on patents (pharmaceuticals, for instance) are dipping their toe in to the collaborative economy.

Some pharmaceutical companies we work with are becoming curious about open-sourcing of data, sharing research and collaborating closely with academic research institutions, finding patterns in data generated by other scientists in order to speed up the development of new, life-saving drugs.

This year, ex-employees from BMW and Apple collaborated to create a futuristic 'truly smart car'. Now that's interesting.

I’m less confident that McDonalds and Burger King will collaborate on a McWhopper - but only time will tell.

Sharing brainpower

A new generation of high-minded companies is evolving where market position or even multi-million pound exit strategies are not the driving motivation.

Industrial Age thinking created an economy based on competition, but business today can be a lot more interesting than that.

When leaders take their eye off the league table, move away from a place of 'lack' and consider instead a bigger sense of purpose, a sustainable long game and forming partnerships with anyone with the brainpower to assist them in serving their customers, they could really win - without anyone else having to lose.

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