How to Out-Behave Your Business Competitors

Fast-forward a few hundred years to the birth of the industrial revolution. The invention of machines, powered mainly by the steam engine, brought a host of innovative ways to make things. The rate and scale of manufacturing increased exponentially. A savvy entrepreneur could suddenly mass-produce goods efficiently and bring them to market at lower prices than his craft-guild cousin. Machines created a systematic way to get rich relatively quickly. One no longer needed a lifetime to amass wealth or had to risk a dangerous voyage in search of treasure. Anyone with money to invest could identify cutting-edge inventions, build an efficient factory to make them (or make with them), and take market share from his old-world rivals. Initiative and innovation became wealth, and old gave way to new, all powered by a new investor class able to make money with money. In 1776, Adam Smith wrote "The Wealth of Nations," and capitalism was born.3 The word capital, by the way, comes from the Latin word capitalis, meaning head. Under capitalism, you could use your head to get ahead.

As we shifted from land to capital as the engine of wealth, however, the zero-sum mentality of feudal times remained. Capital, too, is finite, and the more capital I had the less you had. With more, I could innovate, expand, and do things that you could not. Capitalists developed habits of power, certain rules of thumb about how to succeed in the new economy. When we had stuff, we hoarded it; we did not share. We did not give it away; we meted it out and only for high returns. We extracted interest. For hundreds of years, assets meant power, and to succeed we controlled them zealously. Generally, we built a fortress around our holdings and defended them against all invaders. We dominated markets, protected trade secrets, and made sure everything we did received a patent or copyright. We could also control information flow to the market, and so developed a host of one-way communication habits to control how it viewed us. We invented the press release, perfected the arts of messaging and spin, and learned to divide and conquer, telling one thing to Customer A in one market and something different to Customer B in another. Company structures mirrored these impulses with command-and-control structures and top-down hierarchies. The habits of fortress capitalism soon permeated every facet of enterprise.


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