«You’ve got to be more competitive!» This mantra is drilled into us from all the business schools and universities and institutes related to doing business, to the point where we just repeat it like parrots.
The simplest form of competitiveness is to displace somebody who does the same thing as you somewhere nearby. Essentially, it’s saying “Take off, buddy, this is my turf now.” Price is almost always the only argument. It’s true that in order to be competitive we can do things more efficiently, more cheaply and offer a lower price than the next link in the chain. But is competitiveness with another similar business always a good strategic tool?
Before going any further, we should define a couple of points:
1. Who we are referring to as competition.
2. How we can detect when being competitive is not useful, and what alternative strategies we have.
Regarding who our competition could be, there are several viewpoints:
- A product vision. Competition is referenced to the specific product I make which somebody else also makes. This is usually the most obsessive competition in our minds. If I produce oranges, my competition is another company that produces oranges. It’s that easy.
- A geographic vision. Competition is referenced to geography as well as product. Companies in my town who compete for local reputation, or companies outside my area who do something distinctive, or companies from other countries with their own language and culture. If I produce oranges in Valencia, my competition is another orange producer in Valencia, or indeed in South Africa or Morocco. But the one in Valencia is my greatest competition because I feel his proximity more than the others.
- A value vision. Looks at specific attributes such as healthy products vs. unhealthy ones, sustainables or non-sustainables, companies with social consciousness vs. investor-owned companies. If I produce oranges in a cooperative in Valencia, my competition is an investment company producing ultra-processed products like industrial pastries.
- A holistic vision. We are all in competition 24/7/365. If I produce oranges, my competition is any food product whatsoever that competes to be put in the mouth of the final consumer.
- A nihilistic vision. Nobody competes with anybody. If I produce oranges, my own production capacity is my only limit.
Each of these visions can be applied or not; each of them can combine or evolve with the others, depending on our strategy for utilizing them in one way or another.
Along with these viewpoints of our competitors, however, there are other much more dangerous ones. Can you guess? What could be more dangerous than a company in my town that does the same as me? It sounds impossible but there it is, the Competition with a capital C is the UNFAIR company, the one that has no respect for the rules of the game that you follow, the parasite that uses the system to unscrupulously extract its own advantage. These are companies, for example, in the agro-foods sector, that utilize immense lobbying and marketing machines to perform their green washing, healthy washingor social washing. In other words, they are companies who adorn themselves with what they are not: green-, healthy- or social- conscientious, so as to distract consumers and the legislators from their patently undesirable attributes. They take many forms of distraction and traps, lies and subterfuge; when the tools of competition are laid out clearly, it is worth putting these more dangerous ones in our direct line of sight.
The second point is to when being competitive is NOT a good idea. Here are two clear scenarios:
- Amidst changing or disruptive circumstances such as we have now, being competitive can be a death sentence. Can you possibly imagine that the Titanic in her very first voyage wanted so badly to break the time record for crossing the Atlantic that they pushed her 29 efficient boilers to the limit, even when they knew there would be icebergs, and knew they had saved money by skimping on lifeboats? Something terrible was bound to happen. It’s just not a good idea to be competitive, efficient, and stingy while doing something you shouldn’t.
- Another senseless act of competitiveness with a similar company is when their challenge is clearly beyond your resources on an individual level. For example, companies bring foreign products across borders and don’t pay taxes like you do, nor do they comply with all the laws that you do, nor are they as safety minded as you are, but of course they are much cheaper. What can you do alone, facing up against a national or international government bureaucracy, or facing down the final consumer? Are you going to do the lobbying yourself? Are you going to mount a marketing campaign on your own? In this case being in competition with your neighbor in the same situation will only sink the both of you quicker and thus leave the way clear for those outside competitors who are greedily rubbing their hands together and saying, “Now we don’t have to do anything about these lot; they’ve cooked their own goose!”
OK then. What better strategies are there for survival and profitability, besides competitiveness?
There are basically three rather powerful strategies to consider:
- Cooperation. That’s right, cooperate with those who are as overpowered individually as you, with your close competitors who do the same things you do, with those who usually don’t say more than a forced hello at the local Rotary Club meetings. They have the same problems and interests as you do. They are potential partners if for instance you have to lobby government officials or mount a marketing campaign to promote the products you are both selling, or to embrace the digital age by combining data and resources. Competitive scenarios can co-exist alongside plans for fair cooperation that reinforce value in your sector. You might even go so far as to consider a merger to form a larger company with more influence.
- Focus on value instead of costs. Cutting back on toilet paper or squeezing providers till they break will not help you amidst changing or disruptive circumstances such as we have today. It could improve your accounts and balance sheet in the short term and maybe gain you a little time, but nothing more. Besides, your head cannot be in two places at once: either you create value or you reduce costs. So name a team of cost-cutters while you launch into value.
- Creativity. Stop focusing on the competition and comparing yourself to other companies as your key strategic plan. Make opportunity your key, your big blue sea to unleash the imagination and re-invent your company as much as you dare to dream and fulfill. Remember what Albert Einstein once said, “In moments of crisis only the imagination is more important than knowledge.”
Competitiveness is not a sacrosanct mantra. It is one more strategic tool and not just the only one; it isn’t right for all scenarios. Poorly used and blindly implemented, competition might lower the price you pass on to the next link in the chain, but it comes at its own steep price, converting products of value and quality into low-cost poor-quality commodities and further fragmenting the supply chain, time after time after time.
Competitiveness clearly has a place when confronting unfair competition. Here without doubt you must push with all the strength you can muster. With fair competition you must be strong even while respecting the rules of the game within the clear boundaries of your specific business sector, so as not to destroy by excessive competition the common good of all. Leaving those two fields to competitiveness, the more useful strategies for survival in these tumultuous times are cooperation, value creation and creativity. What really counts is to keep a healthy connection with the mind of the person who has the power to buy from us or not.