What are Competition & Technology?
rules, knife fights, technology & cultural evolution, with a reading list in the links
BOOK DEFINITIONS OF COMPETITION
There are a number of excellent books on competitive strategy, as well as studies. Everything from Peter Thiel’s Zero to One on competing by finding a place without competition, to Charles Ferguson’s classic High Stakes No Prisoners from the times when the internet was new, on discovering that the best competitive strategy for most small businesses with large target markets is to sell.
In the more academic literature, one has Competition Demystified by Bruce Greenwald or Herman Simon’s Hidden Champions of the 21st Century. Both these works and the works of both these men are worth spending some time on. No one quite understands scale as well as Greenwald, and no one quite understandings pricing as well as Simon. Since price and volume seem to matter in business and also competition — these two are the ones I pull out for this summary.
All of these and other books not named contain useful perspectives and stories. I learn a lot from stories because that is where competitive dynamics are set in motion. A competitive advantage isn’t a thing, its an action or the ability to act.
Coming at competition through stories takes one squarely into the literary tradition of John Brooks Business Adventures or Once in Golconda. — on how you get away from competition, one can also add Matthew McCleary’s Exit Strategy as a delightful read that extends the Shipping Man series and also appropriately plays with “green financing” - building on McCleary’s decades as editor of Marine Money. and Axelrod’s classic the Complexity of Cooperation — or any of his books. Axelrod explains how competition and social norms interact, opening a doorway from business analysis to culture and anthropology.
Axelrod saw what competition actually is when you chase it through a gauntlet of whys. With Axelrod we put competition in motion and also drill down on root causes or driving forces — and its important to do both.
COMPETITION DRIVES CULTURE
Axelrod found that competition ends up being a mechanism that drives greater and greater cooperation over time — or competition drives the creation and evolution of social norms to increase cooperation within groups, enabling larger more cooperative groups to out compete smaller less cooperative groups. Axelrod showed competition driving culture.
When we talk about competition in economics and in business, we are always talking about competition between groups, generally organized as companies. Competition between companies drives cultural group selection in modern market economies. Competition between companies drives cultural evolution.
Following Axelrod and following the link between competition and culture takes us on to Jon Henrich’s Secret of Our Success and a particular understanding of cultural evolution.
WHAT THE TECHNO-OPTIMIST MEANT TO SAY
This is important because in order to be a techno-optimist, one needs to do more than quote historians and anthropologists, and make bold declarative statements in short sentences Hemingway would have admired, “damn fine lion” style.
The rational optimist has asked why enough times to get to the root cause of technology - to get to evolution. And specifically the only type of evolution which happens quickly enough for us to observe it as it is happening around us, cultural evolution.
(Note: One of Henrich’s “speculative” points is that the evolutionary reason for the plasticity of the neocortex is to accommodate the variation and rapid change in culture. And then cultures enable collaboration at mass scale through shared beliefs and language, etc.)
The work any rational optimist does is the work to understand the root forces driving whatever they are optimistic about. Matthew Ridley’s reason for optimism was basically that an evolutionary process is sitting underneath all these aspects of our economy. So the rational techno-optimist would want to be meticulous about understanding how evolutionary processes drive technology. This is complex and doesn’t fit into short declarative sentences.
TECHNOLOGY IS AN ARTIFACT OF CULTURE
When we talk about technology, we are talking about cultural evolution. To feel that technology is threatened by anything is like thinking that one can somehow control or manage cultural evolution. Our technologies are part of our cultural evolution. One cannot stop or control cultural evolution any more than one can stop or control time.
My guess is that many technologists and many who think of themselves as techno-optimists are actually immersed in technology to the extent that see technology as water, ala David Foster Wallace — and don’t actually see it at all.
Most of us are blind to all of our cultural assumptions and adaptations almost all of the time. To see them requires deliberate action and thought and is always seen as being weird because you end up talking about something that is just everywhere for those around you in your culture — like water for Wallace’s fish.
Accurate attribution in a scientific manner is very hard because of our blind spots, which include the cultural ones. Mistakes in attribution common. This is why scientific thinking takes practice and discipline. This is why evolution and other processes are difficult to understand. A process never sits still for you like a thing - it is always adapting and responding and you only see it in the interactions of things.
But, if you are with me that technology is an artifact of culture — then one must admit there is a unique conceit to those who believe that you can either slow or speed up technology. They would seem to be dictating the rules for the evolution of culture. To have a little fun with the logic, they seem to think that Darwin displaced the creator just to make space for them.
An easier attack though would be to say that dictating rules for evolution is logically equivalent to thinking there are rules in a knife fight. The problem is that one is mistaking a natural system driven by limits for a social one driven by social rules.
KNIFE FIGHTS
At the end of the day, one of the nice thing about evolution and computers is that both systems break down to 1’s and 0’s. For computers, its literally ones and zeros, and for evolution it is did you win/survive the competition or not, one or zero. The only rule is that its a one or a zero, you live or you die, win or lose — just like a knife fight. We may have our laws and rules, but those do not set the limits for cultural evolution — man doesn’t legislate nature, no matter how much we may want to.
So after all the academic studies, learned books and manifestos — we need to look at what’s actually happening, the ones and zeros. When we crack open the cultural process of technological advancement through group competition, it’s a continuous series of knife fights. This should sound familiar to most VC’s and business people — not the cultural processes, but the knife fights.
All any of us can do is bring some flair to the game, because you aren’t going to be able to change the rules when there are no rules.
Butch Cassidy - Rules in knife fight?
IN THE ABSENCE OF RULES
In the absence of rules, we look for limits. It’s not that there’s no way to analyze a knife fight — it’s just than analyzing knife fights is about what is possible in the particular situation. What are the capabilities of the fighters, affordances in the terrain?
Going back to Axelrod, in a raw competitive situation, the fight is what will set the rules in the future, but the actual competition between groups often happens outside the rules.
The simplest capabilities model which we think is useful is Kaufman’s Theory of the Adjacent Possible. But then if we look around we see amazing capabilities models in economics, with Amrtya Sen and also in computing, object or agent capability models are common. When we go to school, the whole point is to build our capabilities — education is driven by its own capabilities models. That’s what those tests are about verifying capabilities and then targeting new capabilities to develop through an program of classes. Capabilities models aren’t weird - they are everywhere.
Evolution itself if can and should be thought of as a capability model. Darwinian pre-adaptations are capabilities an organism has developed for one purpose or use, but which can also serve another purpose. Our skin keeps infections out, but it is also a canvas on which we can paint and which can store information or artist expression. No thing is just one thing when it exists in proximity to others.
Within business, our preferred set of capabilities models have been organized and articulated and continue to be developed and explained by Mike Rother starting with Learning to See and continuing with his work on Toyota and Katas.
The absence of rules doesn’t mean the absence of structure. The absence of rules actually results in more definitively structured situations which can be understand scientifically in the context of capabilities models like Toyota’s Katas, Sen’s theory or human development or Kauffman’s model which builds on his unparalled understanding of complexity and how life originally emerged in self-organizing chemical reactions which began billions of years ago — and which the chemical reactions giving each of us life is literally a branch of. The tree of life is a tree of a single set of self-reinforcing chemical reactions - if you look at the capabilities and structure of it. Most people don’t — but the world will look different if you “learn to see” in either Rother’s style or Feynman and Kauffman’s.
CLOSING
Competition is a knife fight. While it escapes our world of social rules, it is still constrained by the capabilities of the competitors, which can be analyzed. And the most dangerous thing in a knife fight, as Butch showed, is the ability to think on your feet. In enabling us to compete more effectively, human neuro-plasticity isn’t just an advantage in the knife fight, it also enabled the evolution of culture. And cultures, in competing, developed and keep developing technologies.
Technology comes for free with evolution, but it doesn’t notice any of us in particular or care about our opinions. A technology just needs to help more winners than losers - to help its team win, as it marches off, not listening, like all proud things.
Our job as analysts of companies — how they compete and the technologies they use, is to learn to see these complex processes all around us. To see the cultural processes which are invisible to us in our everyday lives because they are just the way we live now.
It’s helpful to be able to see technology in the context of cultural evolution, but it’s tough to make money thinking in abstract cultural evolutionary terms. You need to sharpen your focus and remember its a knife fight to analyze competition. And the way to analyze a knife fight is in terms of capabilities, not rules.