by Lloyd Simmons, MBA 2019
One month into my adventure here at LBS seems like as a good a time as any to reflect on some of the things I have learned thus far.
Beyond the technical details learned in class, I think it has been an education in itself to simply observe the dynamics of the students here.
LBS attracts some of the best global talent; many of the people walking around here have 750+ GMATs and already have an eye-watering list of achievements on their CVs. Coming to the school I wasn’t sure what impact this selection-hurdle would have on the relationship dynamics. And I’ll admit I had some trepidation about whether or not it would create an individualistic and competitive environment.
However, it turns out the exact opposite is true.
It is recruiting season here for the second year MBAs and everywhere you walk on campus you will see groups of people huddled together: sharing ideas, helping each other with fit questions, and practicing for the ever daunting case interviews.
While this is awesome, it left me wondering, why is it so pervasive? Why are people with limited time so willing to not only help their friends, but to help people they barely even know? I think part of the explanation is just a spirit of generosity. But fundamentally I think people respond to incentives, and I suspect something deeper is at play here.
Having done some more thinking, I have come up with three reasons why avoiding competition is actually the optimal strategy to maximising outcomes for the individual.
- Research demonstrates that teaching others generates better outcomes for one’s self: Multiple studies examining the benefits of mentoring have found strong evidence suggesting that the mentor relationship increases job satisfaction and career progression, not only for mentees, but for mentors themselves. This is likely because research demonstrates people will actually prepare more diligently if they believe the are teaching someone else, than if they are simply revising for themselves. Furthermore, no one individual can hope to become an expert of all facets of life and reciprocation is one of the strongest phenomena in social psychology. So at some point you will need to ask for help yourself, and if you’ve helped someone in the past they are exponentially more likely to return the favour. The combination of these effects means that sharing your knowledge with others is not likely to greatly diminish your own special value, instead it is more likely to increase the depth of your understanding and expand your personal network.
- Relationships are more important than landing that next job, in the long term.It is easy to become overly fixated on the importance of the next step. While it is important to have optimistic goals, and I fully believe in the advantages of pushing one’s self to achieve a specific objective, this must not come at the expense of losing sight of the bigger picture. Trying to compete ferociously with those around you may improve your chances of ‘winning’ the next opportunity. But, what will this mean for opportunities three or four stops down the line? Ultimately, your current group of peers are the people most likely to be on a similar trajectory as you, and behaving in a manner that is likely to negatively impact your reputation can have long-term consequences. It is in this way that winning in the short term can actually mean losing in the end. Conversely, recognising the value of developing relationships with the people around you may have enormous benefits in the future and is therefore likely to be the more optimal approach.
- Growing the pie is often better than getting a larger share. Competition naturally arises when a game is zero-sum. Professional sports is often held up as the epitome of this concept, as when the siren sounds one individual or team is declared a winner. One strategy to achieve a win-win outcome, even in situations that initially appear to be zero-sum, is to redefine the parameters used to measure success. Let me give you an example close to my own heart. I am a bit of an AFL (Australian Football League) tragic, and every year I get a thrill watching my Geelong Cats play against their bitter rivals, Hawthorn. This rivalry has built up over decades of ferocious encounters between the two clubs. And while I’m certain the players and fans want to win every time, continuing the rivalry is far more important for the clubs themselves, as it means they will continue to sell out games and secure TV time. Similarly, if you are a business school student applying for a grad jobs, I would argue that you actually want your classmates to be extremely strong candidates. This signals the quality of the institution and incentivises employers to expand their hiring capacity, rather than trying to fit applicants into an every shirking number of openings. As such, helping your peers increases your slice by growing the pie – rather than increasing the share.
I believe some of these principles can apply not only to individuals, but whole organisations. So often the language of business is couched in terms like ‘winning’ or becoming the ‘market leader’ and it in turn fosters zero-sum thinking. Paradoxically, economists have known for at least the last hundred years that pure competition kills profits at an industry level. As such, I contend that companies are able to maximise their long-term profits by redefining the dimensions of competition, instead of getting sucked into a old fashioned ground war to claim share.
One might argue that the success of cost-leaders like Amazon refutes this. However, I suggest that Amazon has been successful exactly because of its ability to avoid competitive pressure. Amazon competes asymmetrically in the markets in which it is successful, that is, it exerts competitive pressure on many businesses but receives little in return. While it competes with ‘Big Box’ retailers, there are few other ‘Infinite Box’ retailers that are able to compete with it. This is precisely because Amazon has been able to define its own category, at least for the time being.
To summarise, in the words of billionaire investor Peter Thiel: ‘competition is for losers’. Instead, I believe we should be constantly exploring different angles to help us achieve our objectives, both as individuals and organisations, rather than simply competing along the same old battle lines that have been drawn in the past.