Tuesday, September 07, 2004

Resistance is Futile! (so why compete?)

It's axiomatic: when criticising a point of view, go for the assumptions. The trick is to identify the assumptions that are being made, and these can be so universally accepted that most people have a blind spot about them.

Now, it's popular to take and apply natural behaviour to a business setting. The most fundamental thing about businesses that you will hear is that they compete. They jostle each other at the free market trough and strive, by any means, to maximise their share. This is good, you hear, because the evolutionary forces select for efficiency.

The assumption here being that it's the only way to select for efficiency

I have no doubt that competition does, indeed, select for leanness (meanness, too, but I'm not going there today...I think)

And yet...

Maybe I'm missing something, but it seems to me that all this fighting and competition can be an awfully inefficient way of ensuring efficiency!

Let me give you an example. Some years ago, when the Australian Telecommunications industry was being opened up. Optus was being set up to compete with the incumbent government body: now known as Telstra. Vast sums of money were lavished on advertising campaigns to woo customers. All for one fundamental choice: which carrier to use when making international calls. To this day, Optus has 'Yes' embedded in just about every advert they make!

OK! OK! I know! It was a stunning example of how free markets don't operate: Telstra was set up like a papingo and, as I recall, Optus still weren't able to make much of a dent.

What struck me at the time was the amount of energy companies are willing to spend just neutralising each other. (Hmm! A more obvious example: US and USSR up to a decade ago)

What a waste. Wouldn't it be better if they could somehow agree to disagree and get on with doing something productive?

Ah! but what about efficiency? And anyway, it's the way of the world, isn't it: winner takes all?

Yes... and no. Consider your typical alpha males that beat the crap out of each other for mounting rights. In fact, they don't. Full-on fights are fairly rare in nature: all of the effort really goes into display and bluff. This 'anything you can do...' approach allows the maxim 'live and let live' to flourish (... but just think twice if you want to start something, buster!). What happens is an agreement, not to compete to the fullest extent, and results in two fairly intact beasties in their prime rather than one dead and one as good as.

The trick being applied here is an efficient means of demonstrating fitness: a stag's horns are a relatively small investment compared to the protein behind it. (Nonetheless, it can still get out of control: think Irish Elk!)

I've already made the point I wanted to make:

competition is an inefficient way of being efficient

What other ways are there?

Well... open source projects seem to demonstrate a model of cooperative strategy. The point being that, without a concept of ownership, anyone is free to contribute to an existing endeavour. So, if you want to build a better mousetrap, you can start by helping to make the existing mousetraps better.


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