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1-Page Summary of The Red Queen
Competition and the Red Queen
In the classic book Through The Looking Glass, the Queen explains how her country is different from others. In this land, you have to run as fast as possible just to stay in one place. That sounds crazy because it’s a twisted version of what we think reality should be like. However, that perfectly describes corporate competition: You work hard and your competitors do too so you’re always running faster than each other for finite resources. As living creatures in an ecological system, companies compete for limited resources and thus it’s a zero-sum game where when someone wins another loses.
Some companies compete more than others. They don’t always do it the same way or against the same competitors. Instead, they compete against similar organizations in their niche. The pressure of competition forces change and adaptation among these organisms like evolution does for species in an ecosystem. Winning depends on the criteria that define success within a certain context because competition is different depending on what’s important to each niche.
Companies that try to win based on their core competencies will have trouble competing in the market. If you lose a competition, it doesn’t mean you’re a failure. It could be due to your firm’s core competency or because of the other company’s superior skills. You’ll figure this out by learning from experience – if you change your business model and succeed, then it means you learned something new about how to compete effectively. When firms are too worried about losing money, they stop trying new things and become less competitive as time goes on. More education occurs in markets where companies regularly make small deals than those who only make large deals every once in a while (like aerospace).
Competition is complex and changing. Some companies are good at multiple things, while others excel in one area. Technology can disrupt the rules of an entire industry, as seen with synthetic insulin. When it was derived from animals, labs had to be good at handling livestock or they wouldn’t succeed. Once labs could make synthetic insulin that rivaled animal-derived insulin without using live animals, the game changed completely.
Organizations compete in the market by having different strategies. The logics of competition change as organizations move through a market niche, and they can shape those changes or respond to them. For example, social networks try to shape how people use their sites; firms also work on shaping public opinion about how markets should be structured, which gives them an edge over other companies. In addition, established brands have symbolic value that new companies can borrow from when they’re first starting out.
The Red Queen Deals the Competitiveness Cards
Several factors contribute to competition. For example, a company’s level of aspiration drives its competitiveness. Aspiration levels rise over time as companies raise their performance to match industry leaders and fit into niches in the market. Over time, firms learn how to adapt well and succeed in their niche markets but if the logic of competition shifts, those that have not adapted will fail since they are unable to compete effectively with new conditions or competitors. Competition affects organizations whether they know it or not because firms often misunderstand their market contexts including the nature of their competition.
Organizations tend to reuse strategies that work for them. Therefore, they treat new problems like old ones and use the same strategy over again. This is compounded when people move on from their positions in the organization and don’t remember what happened before. Leaders also tend to base their strategies on more recent events because those are easier to remember than past events, which makes organizations less flexible and able to adapt quickly enough if something doesn’t work out as expected.
