13/3/2015

Competition causes organisations to learn

Bill Barnett on what he calls the Red Queen effect of competition. Very relevant in the changing nature in some industries like digital, manufacturing, disability services, ageing, etc.

Of course, when organizations compete, they make it difficult for each other to perform well.  But this fact has led to a great misunderstanding. Many business leaders, especially those trained in business schools, infer from this fact that they should avoid competition. That conclusion is wrong.

Pressure from competition causes people to search for ways to improve their company’s performance. These improvements, in turn, make companies stronger competitors. So now these improved firms put more pressure on their rivals, who must also find a way to improve. Once those rivals improve, they now are stronger competitors, starting the whole cycle over again. So it is that competition causes organizations to learn, which in turn intensifies competition in a self-accelerating process known as the Red Queen” effect.


Humanomics


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