• by Max Kalehoff , May 1, 2012

Picture a herd of buffalo racing toward a half-empty watering hole. Each buffalo is competing to get a sip before the entire herd arrives to drink it dry.

Now consider the lone buffalo that says, “screw the rest of you,” and runs in the opposite direction where he believes there is another watering hole with no competition.

That lone buffalo takes on some risk, parts with the crowd and scores a monopoly on a new watering hole. He fully quenches his thirst and lives on prosperously.

***

That competitive herd is all of us.

For most, competition is a coveted cultural value.

It is embedded in our educational system, our sporting traditions, our consumerism, government and world politics -- and, of course, our digital marketing industry.

In business, competition is considered good. A market’s products get better. Prices come down. Product categories swell and become massive. Customers win. Markets win.

The problem with embracing competition is that competition, itself, becomes the end game. We compete just to compete -- not some other higher outcome.

That is according to storied entrepreneur and investor Peter Thiel, who expressed his belief in a startup class he’s teaching at his alma mater, Stanford University.  One of his students, Blake Masters, has been posting excellent summaries of Thiel’s lectures.

Masters summarizes Thiel’s views on competition: "But too often in the race to compete, we learn to confuse what is hard with what is valuable. Intense competition makes things hard because you just beat heads with other people. The intensity of competition becomes a proxy for value. But value is a different question entirely. And to the extent it’s not there, you’re competing just for the sake of competition.”

Competition is not only a poor proxy for value, but can be highly demoralizing. Masters reports on Thiel’s referencing elite students: “Top high school students who arrive at elite universities quickly find out that the competitive bar has been raised. But instead of questioning the existence of the bar, they tend to try to compete their way higher. That is costly...The rationalization is that it’s actually inspiring to be repeatedly beaten by all these high-caliber people. We should question whether that’s right.”

Instead, Thiel suggests disregarding competition and establishing a totally new market and owning it -- or, as he calls it, a “monopoly.” It’s about working smarter, not harder. It’s about creating your own, new playing field, with its own new rules.

Instead of blindly embracing competition, you might be better off evaluating the world based on a scale of competition versus monopoly, and deploying your resources accordingly.  In some cases, perhaps it makes more sense to compete and continually raise the standards bar. In others, a better outcome may lie in defining an entirely new category, outcome or success measure -- one that nobody else is pursuing.

The monopolistic path is a more sophisticated and contrarian one. It’s difficult to embrace because it’s counterintuitive and requires introspection, confidence, a leap of faith, as well as money, time and a host of other things.  It requires unlearning the deeply embraced notion that competition equals value, and subjecting yourself to ridicule and risk. But it also holds the highest rewards -- ones that are usually unachievable by clawing your way continually to the top.

Whether you’re in a position of leadership, or simply calculating your own professional path, it’s helpful to realize which road you’re on -- and consciously navigate.

Are you competing with the herd, or thinking freely and creating your own monopolistic outcome?