Competition?

by

John Wright

 

My wife and I were driving home from the Thanksgiving holiday and she mentioned a conversation that took place in my absence. The topic was the importance of competition to personal and business success. Now, all of us know that under capitalism it is competition that leads to better, cheaper, higher quality products, right? Uh, huh Ö yes, I do remember reading that sometime in my youth. In this instance, the combined business and life experiences of my wife and myself lead to a rather different conclusion, or set of conclusions. I am talking about the differences between theory and fact. That is what this article is about.

I wonít make you wait for a thesis or a problem statement. Problem number one is that competition combined with prejudicial legislation has led to endgames with winner take all Ö permanently. They are called monopolies, or, the amassing of wealth that precludes new competitors. Mergers and acquisitions on a grand scale are a good example. Problem number two is that people competing with each other within a business enterprise frequently hurt the enterprise. What is good for manufacturing is not good for marketing or finance, etc. We used to call that the "Eternal Triangle." Local cost minimization can kill enlightened expansion and create outsourcing disasters. Problem number three is something we might call time compression. Endless competition for survival within a business leads to "solutions" that are purely tactical, not strategic. Programs that result from focusing on short-term stock values are an example. I call that lethal sub-optimization, yet it is a form of competition.

Typically we think of sports or gaming when we use the word competition. Basically, results from any professional sport are irrelevant to societal progress, so competitiveness in the sports environment is viewed simply as a necessary part of doing a good job. So it is. In gaming people typically believe results to be a combination of skill and something they call luck, which can be good or bad. There is no such thing as luck. It is a silly mental construct designed for self-delusion, that generates absurd confidence when winning and plenty of excuses when losing. Attributing results to luck masks deficiencies in skill and judgment, which leads to later and possibly chronic competitiveness that is foolhardy. Can any gamer really believe that he can beat mathematical odds in a casino over the long term? Where is the competition?

One of the more telling and damning aspects of business competitiveness can be seen in the drug industry. Super large advertising budgets and simpleminded repackaging of older drugs have become the most notable behavior of the large drug companies, while they whine about high research and development costs for new drugs as an excuse for charging very high prices for their products. It is a war for profits that characterizes the actual competitive behavior of drug giants. This leads to consideration of other human activities in which competitiveness is completely inappropriate.

Scientists compete with each other to small extent, and that is seen in their research publishing, which tends to share the wealth of knowledge. Mainly they compete personally with their lack of knowledge in some area that is profoundly interesting to them. Their competition with the reality of the physical universe takes the form of careful and dedicated work to discover what we need to know to advance. Imagine if our scientists in universities worked only in areas where they could be highly successful in the name of profit. That would be a disaster.

Think about what happens in industry when the short view of the future drives management to force their scientists to focus purely on development of commercial products, instead of doing basic research to discover and create a new generation of products and types of products. I worked for an R&D based manufacturing company that lost its sense of identity and directed massive amounts of money to commercial ventures that were foolish in some instances and timewise inappropriate in other instances. They failed to properly fund basic research over many decades. Finally, they had no new product pipeline resulting from altogether new discoveries. Today they are fighting to stay solvent. This means that competition for money within an R&D based manufacturing corporation can destroy the corporation when marketing replaces basic R&D in importance.

Now consider what would happen if local churches and community relief agencies were operated competitively. What percentage of collected monies would go towards advertising instead of to the needy? You get my point. The whole idea of caring for our fellow humans and giving of ourselves to help them is utterly contrary to any notion of competition. Competition is radically inappropriate in that environment.

What about competition within a family or with friends? On one hand we learn to demand consideration from others by competing with them for limited resources. Yet, unless it is a trivial board game or something of that nature, competing within a family is generally not good. Young family members need to learn that loving and supporting each other is the best way to live. Competing for the last piece of cake is normal for young children and maturing is learning when support of others, and a sense of fairness, are far more important than getting the piece of cake.

Some of our competition with friends is related to growing up and establishing our individuality. This is preparation for adulthood and living in the larger world where others do not love us. That we compete as adults in zero-sum employment scenarios is an inescapable fact. I could say that much of that competition is silly but I cannot deny its existence or our fundamental survival instincts.

 

One of the measures I have for other people is the measure of their character when competing in the workplace or other external environments. It comes down to what they are ready and willing to do to win. Poor character is evident when destruction of another competitorís career means little or nothing. Good character is evident when the relevant facts of various arguments are the basis for an unbiased decision, such that all learn that competition is valid only within that framework. Yes, in the real world my measure is too idealistic. Think of the consequences, however, when we allow the unfair or dishonest to ascend to power. They make quality, judgment and compensation errors, that hurt the company or whatever organization they happen to control.

At this point you might think I am firmly against competition. Nothing could be further from the truth. I stated one of the fundamental benefits of capitalism early in this article Ö and it had to do with competition. What we have failed to understand as a culture, however, is that great and costly advertising of repackaged hohum products has resulted in a form of competition that leads to no progress whatever. We do not spend our money in the right places. Real competition of beneficial nature was seen when the Japanese penetrated our market for automobiles in the late 1970ís and 1980ís. What they did was produce vastly superior automobiles and introduce them at a price that made our USA based companies look greedy and stupid. So they were. So they will be again if real competition is allowed to diminish in the automobile industry.

Finally, it is important to consider international competition between nations, and I am not talking about the Olympics. I am talking about military adventures and economic threats that place various countries in a life or death competitive position. We remember the Cold War with the Soviets, donít we? I will venture that almost none of us have any idea how much money was wasted in that competition by both sides. The funding of military expansion bled off trillions of dollars that could have been used to improve national infrastructure, education and health programs.

Is competition good or bad? Think carefully before answering that question as it is all encompassing in importance while being too narrow in scope. Too many conditional external considerations apply to individual situations. And we have proven that many of the circumstances of our past betray our stupidity and thus undermine potentially good aspects of competition. Alas, we donít even have healthy competition where we need it in business, for lack of fairness and long-term vision.