Cooperation

Economists and business consultants constantly talk about the benefits of competition.  As if there were no ills.  Where is the justification for this view?  Today, much of the justification for competition is blurred in our language.  We use the phrase “to compete” to mean our participation in almost any activity.

When a company develops and offers a product we say the company is competing in the marketplace.  Is there an alternative way of looking at it?  Yes.  A company can offer a product, and sales of the product may not detract from the sales of other companies.  A product can and should expand the market without negatively impacting on sales of its “competitors”.  In fact, the skills required for expanding the market are the core competencies of all world-class aspirants.  In India, the results of this approach are clearly manifest in the auto industry, over the past five years.

Competition may make us aware of a better alternative.  Competition may help stimulate us to perform well today, but it will not make us better tomorrow.  We have to work towards improvement each day.  To make a quantum jump to a better system, we have to learn the alternative system.  Working harder is not going to help if we are already working our hardest and the other company’s methods are superior.  This dimension is better understood when we recognize that customer needs are not stable.  They change all the time and in some cases even gallop.  Working harder on what customers don’t want cannot compete with the native “flexibility” of customer-driven systems.  Inherent in these systems is the discipline of continual quality improvement and creative innovation.  I select HDFC for the best practice on this dimension.

Unfortunately, most companies tend to make a few improvements in the pilot stage, and confuse this with the goal of “habit of improvement”.  Unfortunately, again, leaders mistake improvement activity for improvement strategy.  Improvement activity is the result of delegation; it is a bottom-up approach that is well suited for addressing motivation.  To address improvement strategy, leaders are well advised to “walk their talk” by incorporating quality as the fourth dimension in their business strategy; on par with marketing, technology and finance.  This approach requires a deep understanding of customer needs – stated, implied and latent.

The habit of continual quality improvement has enabled some organizations to come out from the red to world-class levels.  Their improvement objectives have almost always had a customer and cost focus.  Examples abound.  Of contemporary fame are Xerox and Motorola.  Select Japanese companies, in every business sector, have built their competitiveness through the habit of continual quality improvement and breakthrough thinking.  Today we accept the walkman and TV remote breakthroughs as everyday products.  These products/features have expanded the market for music and entertainment.  I clearly recall a statement made by the colossus Dr Joseph M Juran, at a Quality Leadership seminar in France, “Chase your customer.  Not your competition”.  How true. 

At one seminar of Professor W Edward Deming, someone came up from the audience during the break and told him, “A year and a half ago our company began instituting your methods.  Quality began improving immediately.  Inventory has declined by 90 percent, earnings have quadrupled, and sales are improving, with customers giving us great feedback about our product”.  Deming’s response was, “Good. Now go back and teach everyone else what you have learned.  Teach your suppliers, your customers, and your competitors”.

Why would anyone want to teach their competitors?  One reason might be that “What goes around, comes around”.  At some point your competitor might be in a position to help you.  But an even more convincing reason for this cooperation is that if you help each other, you will both be better off.  Not just the companies, but the customers as well.  In India, as elsewhere, we tend to judge how we are doing by indicators such as market share.  The implication is that companies are competing against each other.

Would cooperation lead to higher prices?  According to Adam Smith’s, The Wealth of Nations, first published in 1776, the answer is yes:
“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices”.

But if a system of cooperation leads to market expansion and lower costs for all the products, as well as, better quality, costs, and satisfaction for the customers, is that not more important than who wins or loses?  Cooperation almost always leads to lower costs, better quality, and more satisfied customers; and if that is the case, then who wins or loses is irrelevant.  Everybody wins.

Perhaps, to succeed, we should focus on co-ompetition or coopetition or qimprotition!