Towards A Competitive Malaysia #15

Chapter 4 On Being Competitive

The concept of competitiveness conjures many images. I begin by using the term in its ordinary context, as it is generally understood, and then develop its more specialized meaning.

I am a surgeon practicing in Silicon Valley, California, one of the most competitive healthcare environments. There are more surgeons in the area, both in absolute numbers as well as relative to the population, than in most countries, even those with a far greater population. In addition, there are three excellent tertiary-level hospitals including the world famous Stanford Medical Center within an hour’s drive away.

To be successful, a physician has to be competitive; he or she has to do something well to attract a sufficient number of patients. Stating this obvious fact is not very enlightening, its definition is essentially circular: If you are successful then you are competitive; if you are not successful, then you are not competitive. That is no revelation, nor does it help one in becoming competitive. We have to clarify the term better so others can learn to make themselves competitive.

The American Medical Association has its 3As for a successful private practice: Ability, Affability, and Availability. Ability is obvious; it is the prerequisite. Without that you would not get your license or hospital privileges. Ability alone is not enough as all the doctors who come here have that. Affability, or your ability to be “nice” and accommodating to your patients, comes next. This can be in the form of your personal demeanor as well as having an attractive office with warm pleasant personnel to greet your patients. As for availability, I made sure that all potential referring physicians know my home and pager numbers, and that they can call me at any time. In the phone book my office phone is clearly marked as a 24-hour number, and I have an answering service so that calls at any time will always be answered by a warm human voice, not a voice mail. I also instruct my answering service on how and when to get hold of me.

Every doctor knows these facts, yet some are not successful. To be successful, you must distinguish yourself on at least one, or possibly two or better yet, all three. To let my colleagues know of my ability, I joined some of the prestigious surgical societies and obtained my fellowship. I also gave seminars and lectures, and listed my professional publications. To increase my profile in the community, I was active in my children’s schools and joined a number of local civic organizations. As for the affability factor, I selected my office in a garden-like professional complex in an established, prosperous middle-class residential area with convenient parking so patients do not have to walk far. This is important, especially for those who had recent surgery. As my town has a significant Hispanic population, I made sure that at least one of my staff speaks Spanish.

I may not be able to compete with those surgeons at Stanford on the number of papers published, but my patients sure do not complain of difficulty finding a parking spot or getting hold of me. To succeed, I do not have to be the “best” in all three or even one, rather I should distinguish myself in some ways so that enough patients would see me. In my limited sphere of private practice, that is the meaning of being competitive.

Looking At Competitiveness

More broadly, the concept of competitiveness can be looked at three different levels. First is the level of the individual; next where individuals come together for a common purpose (team, company, organization); and lastly, as a society.

An individual is competitive when he or she is better than most at a certain activity. A competitive swimmer is one who has won competitions. Competitiveness is defined as one’s performance in relationship to others. This implies ranking, which some may find abhorrent as it connotes an animalistic image of us clawing against each other to be ahead. This is the image the world has of Americans, and justifiably so, of individuals aggressively pitting against each other, the very antithesis of cooperation.

This concept of competitiveness brings to mind the story of the two hunters chased by a hungry bear. As the animal was fast catching up, one hunter turned to the other and said, “There is no way we can outrun the beast. Let’s think on how to frighten it away.” His companion retorted, “I am not trying to outrun the bear, I just need to be ahead of you!”

There are two problems with looking at competitiveness in this light. First, someone has to lose in order for another to win—a zero-sum exercise. Inevitably there will be many more losers than winners. One way of increasing the number of potential winners is to have many competitions at various levels. In sports, we have the Olympics where only a select few could be winners, but by having regional meets like the Asian Games, we substantially increase the number of winners. Then we could have competition at the national, state, district or even kampong level. You may be only a kampong champion this year, but with hard work and persistent practice, you may make it to the district level next year, and then the national or even international. These various levels of competition serve not only to increase the number of winners but more importantly to stimulate excellence.

Second, beyond a certain level there is little value in competing against one another; instead we measure ourselves by our own standards. While you are at the assistant or associate professor level, you may be competing against one another for the limited slots of tenured positions. Once you are tenured, you no longer compete with one another, instead against your own individual yardstick. Some would aspire for membership at higher professional bodies, others at scholarly writings, yet others at serving the government or businesses. At such lofty levels, it is not meaningful to match individuals against each other. “He is your average Nobel Laureate,” sounds silly!

Even at lower levels it is sometimes more meaningful to compete against one’s own standards. Consider this. My son’s high school track coach was starting a new program. He knew that his team would not do well against established teams from the other bigger schools. Were he to use the win/lose statistics to motivate his students, the team would be easily demoralized. Instead, he used each sports meet to measure the athletes’ individual performances against their previous record. Have they exceeded their personal best times? If they have, then they had become more competitive, that is, better then they were before. Winning is secondary. In this way the coach was able to motivate the students and bring out their best even when the team lost. If the team wins, that would be great, an extra bonus. Using this technique it did not take long for the team to win its first competition.

The problem with seeing competitiveness in this light, that is, pitting one against the other, is that it would be seen as the antithesis of cooperation. Going back to the bear story, the pair would be better off cooperating in trying to outmaneuver their common adversary. Many of our social problems are best solved through cooperation, not competition. Later (Chapter 5) I will relate the story of a young Muhammad (pbuh) before he became a prophet successfully converting a potentially destructive competition into fruitful cooperation.

At the next level, that of the group, team or company, the concept of competitiveness gets more involved. The bulk of the literature on competitiveness (like Porter’s work) is based on studies of companies and industries. There are also studies on sports teams, but in that arena, competitiveness is measured in the win/loss dimension only, and thus has little application elsewhere.

The most readily understood meaning of competitiveness refers to how well a company’s product is selling. Coco Cola is competitive because its products are popular, the measure of competitiveness being market share. The problem with this view is that, like the win/loss statistics, it is a zero-sum game. Coca Cola can only increase its market share only if there is a corresponding drop in the market share of the other brands. And if you sell your product very cheaply in order to capture market share, you could end up bankrupting your company.

There is another limitation of looking at competitiveness in terms of market share. China’s Tick Tock Watch Company may sell many more fake Rolexes (larger market share) than the Swiss company with its genuine product, but nobody would pretend that the Chinese company is more competitive.

Another measure of competitiveness is profitability. This too has limitations. Many highly competitive companies, especially in their early stages (Yahoo and Google), do not make much profit, yet their shares are highly valued. Further, as profits are taxed, it is the job of creative accountants to “reduce” companies’ profits and thus tax liabilities. Additionally, if a company were to make a million-dollar profit but had to spent $100 million to produce that profit, then it is not as competitive as one that had to spend only $5 million to achieve similar results. To account for such variables, accountants use the more reliable figure of “return on investments” (ROI) that factors in the capital expended.

Jack Welch, the legendary former head of General Electric, assessed the competitiveness of its various units on whether they were in the top two (by market share) in their respective field.1 If they did not perform, he would dispose of those units. Even with this seemingly straightforward criterion, there can be problems. Some executives could “game” it by narrowing their field so as to maintain the top status. Thus if you cannot be the top leader in Information Technology, simply focus on being number one in the narrower field of Medical Informatics.

I am reminded of the running joke I have with my colleagues. If you cannot be the best surgeon in the country, then simply settle for being best in the state or county. Failing that, the best in town. If all else fails, you can always strive to be the best this side of Coyote Creek!

This concept of competitiveness becomes even more problematic when applied to nations. Nations, unlike individuals, do not compete against one another, at least not in the traditional sense. Their companies and citizens do, but not the sovereign states.

Nations are not like companies, economist Paul Krugman noted, for another reason. It would be difficult to define its profitability, bottom line, or market share. Nor can a country file for bankruptcy.2 China floods the world with inexpensive shoes because of its cheap labor and other costs, but that does not mean that its manufacturers are more profitable, more competitive, or even more efficient. Indeed the common sense view is that Chinese shoe companies are way less competitive and productive than Italian ones. We can readily surmise this by comparing the quality of their products and living standards of their workers.

Some governments mistakenly use this market-share concept to remain “competitive.” A common but misguided strategy is to devalue their currencies. Such “competitive devaluations” may make the country’s products more competitive (that is, cheaper) abroad, but they would make imports more expensive. The country’s citizens would be effectively getting a pay cut, with the lowering of their living standards. That is the fallacy of such competitive devaluations.3

This last observation points a way of defining a nation’s competitiveness in a more relevant and meaningful manner, by relating it to the prosperity and improved living standards of its people. Intuitively we can readily accept this definition. Switzerland is more competitive than India because the average Swiss has a higher standard of living (longer life span, better health, more education) than the average Indian.

This begs the question as to why the Swiss are more competitive than the Indians. The most direct and obvious answer would be that the Swiss are “better” at doing things than the Indians, at least in those things that are in demand by the world. The Indians may still be better than the Swiss in yoga, arguing, and snake charming, but those are not what the world wants or values.

Next: Competitiveness and Productivity