Tuesday, December 23, 2008

Best Practices

There are many different ways a team, or enterprise, or person can compete to win. Superior God gifted talent and physical assets provide a great head start or advantage, yet rarely does the first or most gifted competitor persevere until the end. Some teams, like the Dallas Cowboys of the early 90’s, some companies, like Microsoft, and some athletes, like Michael Phelps, can simply overwhelm anyone and anything that gets in their way, but most of the time, the difference between the winners and the losers is a matter of small intangibles, not complete superiority.

Competition is the key to economic success in any free market system. In fact, a free market system with competition is the only path to widespread individual economic success. New products get invented and improved processes get developed when innovation is rewarded at an individual level. Countries, companies, and individuals stagnate when innovation is ignored or discouraged.

The current worldwide recession has renewed the old debate regarding government regulation. Those on the left claim our governments were asleep at the wheel as BIG business raped and pillaged the citizenry. Those on the right claim the mortgage crisis that initiated this recession was a result of BIG government mandates, not unfettered capitalism.

As with most difficulties in life, a symptom of our economic problems is getting all of the attention while the real problem is barely mentioned or acknowledged. Government regulation, or the lack of regulation, is not our root problem. Our increasing unwillingness as individuals to compete with each other is the root cause of our economic problems.

BIG business spends more time and makes more effort to agree with competitors on sets of industry wide “best practices” than on actually trying to be better than the competitors. BIG Unions reward conformity for employees willing give up individual rewards for group rewards. BIG government is more than willing to enable many of these best practices through rules and regulations.

Why should we be surprised when Newspapers and Automobile companies are no longer profitable when every company in their industry is just like every other company in their industry. They all build the same kind of cars the same way and they all tell the same stories the same way and they all look alike and they all sound alike and they all act alike.

Circuit City had a great business for many years by hiring experienced and knowledgeable salespeople to assist consumers wanting to buy consumer electronics. Circuit City made money, their employees made money, and their customers were happy with the great service at Circuit City. All was good at Circuit City until Best Buy started building bigger stores and hiring younger less experienced sales people at a lower wage rate. Rather than continue to do what Circuit City did best, their management decided the way to compete with Best Buy was to be more like Best Buy so Circuit City started cutting experienced staff and hiring inexperienced staff. Circuit City is now in bankruptcy court because the consumers of electronic goods didn’t need another Best Buy.

Government regulations are not necessarily and impediment to competition, but regulations do tend to place a bigger burden on smaller companies than on BIG business. We won’t break out of this recession if our government leaders enact rules that require conformity. The only way out of this or any recession is to revive the competitive spirit by allowing the nonconformists and contrarians to compete with the established companies and all of their “Best” practices.

7 comments:

Buz said...

You heretic! You are wanting things to be unfair! We must have a level playing field, and if either team gets ahead, then they must pull out a player or two until the other team catches up. That is the, um, Amer... no, that is the, um, ... well anyhow that is how we should do it. Equal outcomes.

As Tom Lerher once said about the army ... "the army has carried the American democratic ideal to its logical conclusion in the sense that not only do they prohibit discrimination on the grounds of race, creed, and color, but also on the grounds of ability."

And that, my friend is where we must go, too. People as interchangeable parts.

Buz

The Count said...

Our increasing unwillingness as individuals to compete with each other is the root cause of our economic problems.

That sentence stopped me in my tracks. Winning has become so gauche- officially at least. People are of course still cutthroats but admitting such publicly is usually not acceptable.

Happy New Year to you, David!

David M. Smith said...

Happy New Year Count,

Please keep your French off my blog this and every other year! : - )

I should have been more precise. I agree with you; people are cutthroat and do still compete, but most people work just as hard or harder trying to prevent competition and trying to not have to compete as they do actually competing.

In some ways this is really sad because nothing motivates the human spirit more than competition. My girls got a Wii for Christmas and my whole family just loves trying to get the highest scores for all of the Wii Fit activities.

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The Count said...

People also I think tend to want to hide the fact that they are competitive. I think they're actually ashamed of it.

I think that could partially explain the rise of all these competitive TV shows (american idol etc) as well as harsh talk shows and the like. Better to get your competition by proxy than not at all.

I await your next post!!

Buz said...
This comment has been removed by the author.
Buz said...

Hah ... I just read an old Dilbert that spoke to this ...

Boss: We're adopting "best practices" ... everyone in the industry is doing it

Dilbert: But if everyone is doing "best practices", isn't that just a euphemism for being mediocre.

Boss: Quit making mediocrity sound bad.

Buz