Alex (Alexandros) Osana
Technical Specialist – Modern Workplace at Microsoft | IEEE Region 8 Humanitarian Activities Subcommittee
There might have been an era when managers commanded and monitored employees and their outcomes, in a role-playing show with a sharp distinction of hierarchy.
Since our first business article ever, we are all introduced to business topics and mechanisms, from Strategy to Operations, as if there is an ongoing war with competitors, or rather a cold war within legal boundaries with non-physically violent actions and reactions amongst firms. In the first strategy class I attended, the starting slides were introducing an analogy between the famous work of Sun Tzu “The Art of War” and the way business is conducted, adapting the martial vocabulary to that of business. Today, we speak about salesforce, headhunters, hostile takeovers, price wars, market dominance, and a plethora of words indicating an ongoing rivalry. This wording may sound exciting at the beginning -difficult to argue with that – but only because it sounds distant. Of course, the idea of hard competition and head-to-head clashes of products, services, or even entire companies is only interesting when you are not on the losing side.
[…] this terminology inhabits the entrepreneurial and operational mentality of managers who more often try to “attack and defend”, rather than improve, innovate and create.
However, as the years pass, this terminology inhabits the entrepreneurial and operational mentality of managers who more often try to “attack and defend”, rather than improve, innovate and create. The objectives of the company start to revolve around the ever-growing “aggression” against competitors, to the point that companies become consumed by the battle and forget the original destination. Another effect of this mentality is that it justifies all means towards profit-seeking, weakening ethical frontiers and placing respect for the environment and the society off the map. In an even more immediate level, the human element starts being perceived as nothing more but a substitutable instrument with an expiry date. In the end, people change too as a result of that competitive mindset, which transcends the organizational level. It becomes a personality trait of the employees, who also start to compete among themselves within the organization, setting and pursuing personal objectives that may not necessarily align with those of the firm. In a sense, to wage war against competitors, a silent civil war among employees takes place. Everything revolves around rivalries.
There are two dimensions to this problematic conception. The first has to do with rationality and the level in which this belief of war among firms corresponds to what successful companies do, especially in the modern era. This war-business analogy might have been well-standing a few decades ago, in an age of limited technology, scarce information, moderate specialization, and lesser internationalization of markets. This context gave birth to most of the traditional theories on the various functions of a business, upon which we often establish the firms of today. But has this “competition-oriented” approach led to the large successful monopolies of today? Quite the contrary, one may observe; All the top-of-mind famous brands of the past couple of decades, such as Microsoft, Google, Amazon, Apple, Facebook, and so on, they all found themselves on top as a result of escaping competition and bringing forth something unique. They have innovated and operated as monopolies very often in their history, even if that didn’t last forever. Nowadays, we can hardly find a manager who refuses the importance of innovation in creating and securing competitive advantage. Surprisingly though, most of them are consumed by mimicking or battling competitors, dedicating ridiculous amounts of resources that could have been invested in becoming different, rather than better in the same old game.
The second and most urgent implication of the rivalry-oriented mindset is the disastrous impact on society and the environment. Economic profit indeed constitutes the holy grail of businesses, the Alpha and the Omega. Whatever generates more or additional economic profit is good and justifiable, so long as it remains within the context of legality to avoid costly implications. For businesses that perceive themselves at continuous war with competitors, things appear to be even grimmer since leadership is often willing to sacrifice every single function or activity that is not directly value-added, as to achieve a more lean cost structure and gain the associated advantages. But while companies are focused on cost-cutting marathons and use any means necessary to achieve that, social problems are bursting all over the world and our living ecosystems, including oxygen generating plants, animals and ourselves, are facing the greatest decline rate ever, without promising any likelihood of change anytime soon, since business-as-usual appears to be the last thing humanity wants to sacrifice. Rationality dictates that we adapt the way we conduct business before we go extinct, yet the threat of losing the competition seems always greater.
But how does conducting business actually differ from war and why we need to consider restocking our business language?
You are not a general and the employees are not soldiers
There might have been an era when managers commanded and monitored employees and their outcomes, in a role-playing show with a sharp distinction of hierarchy. This era is clearly no more. Successful companies are not ruled in a carrot-and-stick fashion but develop a common sense of purpose. The relations between employees across the organization are those of peers and colleagues and they greatly impact the rate of success of the organizational outcomes. Rather than employee exploitation, we see talent-leveraging and thus every working individual is a gear in a machine with one mission. Furthermore, those gears, the people that constitute the organization, are not expendable soldiers, or at least not anymore. The deep specialization and the multidisciplinary knowledge many people have today make their role in the organization’s system way more important than that of a pair of hands. People generate value in two levels, one individual and one as a result of the combination of skills with colleagues (super-additivity). Dismissing a gear means downtime and search of a good substitute, which is costly for the firm.
Fighting rivals is not the only alternative
When most seek strategies to defeat the competitors, successful leaders first seek opportunities to avoid the competition. This often includes collaborating with complementary product providers or even competitors. For instance, Microsoft’s recent embracing of competitor platforms (e.g. Android, iOS/macOS, and Linux) and change of stance towards opensource has given the company a new air of modernization and “coolness” that was well received by both consumer and enterprise customers. Working with uncommon players and being able to look beyond rivalries, not only constructs a stronger brand but may also allow the firm to internalize part of the network of customers and revenues of its partners.
Continuous battles dry out the creativity tank
Healthy reserves and flows of creativity most certainly lead to innovation. While only a few companies may enjoy an abundance of financial resources to create dedicated functions, all firms need to keep a constant effort to preserve disciplined creativity and seek innovation. However, the perception of day-to-day war, enemies, battlefields, and profit “arms races” is by definition an opposite stance to that of cultivating an innovation mindset. Without a doubt, some of the functions of the firm need to focus more on competition and how to protect the competitive edge, but this moment it becomes a generalized and rooted mentality, it contributes to the reproduction of a phobic ecosystem. Fear goes all against the passion for meaningful innovation.
Opportunities often lie beyond the firm’s boundaries
Innovation in business is generated by both internal and external sources of knowledge. On top of that, the complexity of developing a new offer keeps on increasing, be it a product, a service, or a new business model. In simple words, there is no answer around the corner and when there is, it will be hard to sustain it. Therefore, openness to collaboration, disclosure, and crowdsourcing frequently constitute the only way to keep the innovation efforts going or to escape prolonged stationarity. Research alliances can keep R&D costs significantly lower, collaborations can broaden the audience for the offer and bring in complementary products, and finally, crowdsourcing can leverage the creative power of consumer and developer communities and establish a feedback loop to guarantee that the value proposition corresponds to what customers want.
Annihilating the enemy is not necessarily beneficial
In war, the end-goal is prevailing by subduing or annihilating the enemy and then annexing their resources. In business, however, there are no spoils. The failure of a competitive firm may potentially be profitable by inheriting a better market share. However, the generalized conviction that a fallen -or partially fallen- competitor guarantees success to the survivor leads to weaker economies in the long-run, eliminates small-medium businesses, compromises the purchasing power of parts of the society, and drains public resources, while in parallel the state struggles to counterbalance inequities. In some cases, such events may eventually inflict even the surviving firm itself as an indirect consequence. Instead, the economic system should be treated as a network that connects, not only corporate entities, but also the business world with society, and the environment. Therefore, every action and decision of firms affects the whole system and can create disastrous chain reactions, observable immediately (f.i. unemployment) or in the long-run (f.i. toxicity levels of seawater).
The war among firms does not exactly fit Sun Tzu’s descriptions. It is a silent rivalry, no blood is spilled publicly. It is an arms race with the ultimate goal to get the lion’s share in the common “pie” and remain profitable in the short run. Competition is hard and existing, no doubt, and it is also an unquestionable catalyst for quality services and low prices for the consumers. But when competition is equated to war, it mutates the mindset of people, and poisons the culture of organizations, it does more harm than good, while it also compromises future opportunities and resource availability.
The war-business analogy may have been useful some decades ago, but today it constitutes a prison, an obsolete perspective that confines the evolution of company culture, hinders productivity and innovation, and compromises the future of the firm, the society, and the planet at large.
All in all, the war-business analogy may have been useful some decades ago, but today it constitutes a prison, an obsolete perspective that confines the evolution of company culture, hinders productivity and innovation, and compromises the future of the firm, the society, and the planet at large. Sources of competitive advantage should be sought within and outside the boundaries of the firm and collaborative development must be integrated genuinely into the vocabulary of the modern business age.