Over the past week I was suggested to dive into a new book. Zero to One (by Peter Thiel) talks about the opportunities that come from pure innovation in the workforce when competition is not considered a necessary factor.
The book ranges from discussions about business development and lessons about true competition using real world examples of company innovation or lack thereof due to competition.
Perfect competition is considered ideal by basic economics.
- Markets achieve equilibrium when producer supply meets market demand
- All competitors sell nearly the same things
- Market sets the price of all competitors items
In the long run, “no company makes an economic profit”
The readings caused me to alter my viewpoint about some of the perceived benefits of competitive business. The book reframed the view about the way competition drives innovation in a capitalist society.
One of the chapters (chapter three) stood out to me where there is discussion of the opportunities for innovation that are unique to a niche with zero competition. Something like a true monopoly. We often view monopolies as a dangerous corporate monster that at times can cross ethical lines. We have viewed them focused on corporate greed that can hurt those involved. Some would say that consumers are harmed when their consumption of the product or service feels forced due to pricing or lack of choices.
Peter discusses another view that, “Monopolies drive progress because of the promise of years of profits means incentive to innovate”
Imagine a monopoly that adhered to ethical bounds that due to large cash flow and profit, they are able to innovate more then others in the industry. An example would be a company like Microsoft in the early years when their innovation jumped forward with leaps and bounds.
There is a unique drive in western society to jump into highly competitive fields and view them as opportunities to make big money.
This book discussed the opportunities that can be far more fruitful if you are able to differentiate yourself.
- “If you want to create and capture long lasting value, don’t build an undifferentiated commodity business”
Imagine a company that can provide the industry with a offering that allows you to charge far more and innovate in a far more efficient manner. Imagine the innovations you could bring to light if your margins were that of a product or service company with a monopoly hold of the industry…