Punchinello’s Chronicles

October 21, 2008

Outsourcing and Competition

Remember that Shakespeare quote that begins with, “All the world’s a stage?” We’re each actors in life, playing many parts. There’s another bit of business wisdom that we all are in sales. When we meet a romantic partner, we want to sell that person on the idea that we’re perfect for them. In school, we’re selling the idea that we’re “cool,” in with the right crowd, or that we actually did read the assigned book.

Everywhere you look, all of life is in competition. Plants and insects are the most cutthroat competitors, but all living things compete. Interestingly enough, the concept of “natural selection” didn’t originate with Mr. Darwin and his theories of evolution. It came from an economist, and refers to how well a business can survive in the marketplace.

Competition is a natural process. No matter how many ill-advised liberal educators wish they could remove competition, it’ll never happen. All they manage to accomplish is to wipe out the skills children need to survive in the world. And that brings up self-esteem: What is it?

When we successfully do something, we feel thrilled. We learn that we’re competent at that task. Of course, being barely competent is just the starting point. Active competition then means we have to excel, to be better than competent, and to stand out. But being competent (capable of compete) is a good starting point. We prove that we can do a task.

After we prove we’re competent, we look around us at anyone who might be watching. All of us remember our childhood, and all us have heard children everywhere, on every playground shouting the same things: “Mommy, Daddy! Look at Me! See what I can do!”

Our esteem is an evaluation we make in terms of external watchers and judges. (Let’s remove judgmental people, too.) When we tie our own shoes, we’re proud and happy. We judge ourselves competent. Then we want proof so we go to a judge. When the judge agrees that we’re competent, we feel good about ourselves. That feeling is self-esteem. It’s a form of respect, being self-respect.

How in all the world would we ever develop self-respect and self-esteem when there never are any contests and nobody is ever judgemental?

What if someone tied our shoes all the time, or ran a race for us, or did our homework? What if someone else learned to read for us, or talked for us, or ate for us? It’s totally impossible to build self-esteem or esteem of any kind without competition, tasks that must be accomplished, and judges.

Everywhere in life we’re competing. Sometimes it’s for attention, other times for a job. Sometimes it’s for romance, other times for a hard-to-get item. Psychologists proclaim that gambling is an addiction and disease, but without competition would there be gambling? Should we say that competition is the cause of gambling? Is that why we need to eradicate competition from all of life; to help the poor gamblers?

So how will you compete? Are you losing your job to outsourcing? Are you complaining that foreign countries are just too cheap to compete with? Will you compete on price? There only are a few ways to compete (maybe a few more, but these are the basics):

  • Price — Make or do something cheaper and cheaper, always cheaper than anyone else.
  • Speed — Make it or do it faster and faster and faster than anyone else, always staying ahead.
  • Quality — Always make or do something better, lasting longer, more perfectly.
  • Difficulty — Make or do something so difficult that the average and above-average can’t do it.
  • Rarity — Make, do, or sell something so rare that nobody else has it. That means you have to control the source though.

When we compete on price, we’re in a reductive process. No matter where we stand, we do everything else more and more in order to sell it cheaper and cheaper. Fine: So what happens when we do everything and sell it for nothing?

Same thing with speed, where we eventually do everything at the speed of light. Then aliens come along and do it faster.

When it comes to difficulty, quality, and rarity though, we’ve got some interesting dynamics. What if you create things from raw materials? You’re basically making things out of thin air. Without you, that thing doesn’t exist. So for anyone to buy it, they have to go through you. The problem there is how to make sure you’re the only one who can make the thing, and that introduces intellectual property rights (patents, copyrights).

Another option is to do something much better than someone else. The more you learn, the more you improve. In order for someone to compete, they first have to even know how to make or do what you’re doing. Then, on top of that, they have to figure out how to do it better. Ah…but that’s what happened with the American steel industry.

The problem with doing very difficult things (not dangerous, difficult) is that in many cases nobody knows what you’re doing. If people can’t perceive a market, they don’t perceive a value. If what you’re doing is so difficult people don’t even know it’s work, why would they want it for themselves?

Just as our schools try to eliminate competition, making life all about feeling good, trade sanctions and tariffs do the same thing. If the government makes up for falling prices in the steel industry, why would that industry try to make better steel? If someone pays off all your credit debt, why would you care about making more money or saving more money?

Human nature includes pain and pleasure. An incentive gives us pleasure or removes pain. A penalty gives us pain or removes pleasure. All of us will move toward pleasure and away from pain. Even pathological cases are such that a person confuses pain with pleasure and moves toward what they perceive as pleasure.

When you lose your job to outsourcing and downsizing, you’re an effect of competition. You may have thought you were competing in a job market, but the bottom line is your company is also competing. The real question is whether or not America as a nation, and ALL of us as individuals are competing successfully in world markets.

What are you doing, personally and specifically to compete? Are you creating new things, inventing new products, developing new services? Have you created any art or helped develop a new process? Are you teaching anyone? How well are you competing in life, as opposed to competing with just a narrow group of friends or neighbors?

Competition isn’t about being “the best.” It’s about survival. Survival rests on resources and interest. When we run out of resources, that’s the end of the competition in that context. In a saturated market, nobody has any interest in buying anymore.

And always, the solution is the same: New! Find a new thing to make or do. Find a new resource and make soemthing of it. Develop a new way to generate interest in people. Whatever it is, it must be new and different.

Want to start an online business? Think all you have to do is find something someone else makes cheaper, then sell it for more than you paid? Think again. Nobody cares. Competing on price, selling cheap goods has been done to death. There’s nothing new about lower prices, other than for about 5 minutes worth of news.


1 Comment »

  1. Very interesting article and very true.
    You said: “Want to start an online business? Think all you have to do is find something someone else makes cheaper, then sell it for more than you paid? Think again. Nobody cares. Competing on price, selling cheap goods has been done to death. There’s nothing new about lower prices, other than for about 5 minutes worth of news.”

    There are so many business out there that think that this is the answer and that cheap is better. What they don’t understand is when the product falls apart on them after a very short time. Then they justify it by saying “Oh well, it didn’t cost me much so I’ll just get another one”. What they don’t realize is that in the long run they are paying more then if they had just found a quality item in the first place and never had to replace it.

    Competition is a good thing and a job well done is your own satisfaction when you ship your product proud of what you have accomplished.

    Comment by IB Designs,USA — October 21, 2008 @ 11:40 am | Reply

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