Everything You Thought You Knew about Competition is wrong

Every now and then we wonder, who do we really compete with? Currently Frontier doesn’t really have a counterpart in the exact work we do, but that doesn’t mean this will always be the case. When we look at competition we look at our clients’ share of mind. All clients have limits in budgets and resources, and it is these resources we compete for. Our job is to create enough value so that our clients still feel justified to work with us.

That being said, we are strong believers in innovation, and continuous paradigm shifts that not only tries to beat the competition, but also to go where no competition exists. Peter Thiel recently called this habit an instance of being a monopoly. And we fully agree. Monopolies are traditionally cast in the mold of cronyist economic bullies, but Thiel’s definition adds a refreshing new perspective to the word; true monopolies are companies that keep transcending the reach of traditional markets through continuous innovation.

“Vertical progress is harder to imagine because it requires doing something nobody else has ever done. If you take one typewriter and build 100, you have made horizontal progress. If you have a typewriter and build a word processor, you have made vertical progress.”

“Most of us are busy making horizontal progress. We are competing—trying to better or make incremental improvements to what already exists. Certainly there is a value in this, but it leads to the creation of commodity businesses. Thiel recommends: avoid competition as much as possible. Instead, be a monopoly. Monopolies occur when some is doing something no one else is doing. “Monopolies deserve their bad reputation—but only in a world where nothing changes….Creative monopolists give customers more choices by adding entirely new categories of abundance to the world.”

To make a finer point, Thiel writes: “Every business is successful exactly to the extent that it does something others cannot. Monopoly is the condition of every successful business.”

So why are economists obsessed with competition as an ideal state? It is a relic of history. Economists copied their mathematics from the work of 19th-century physicists: They see individuals and businesses as interchangeable atoms, not as unique creators. Their theories describe an equilibrium state of perfect competition because that is what’s easy to model, not because it represents the best of business.

Read more of this excellent article here

Like Peter Thiel we like to ask ourselves the question; ‘what valuable products/services are not being offered?’. This is the strategic ethic that has driven us since our inception, and as the market changed around us, we have so far been able to keep expanding into new areas, and hope to keep doing so.

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