A while back, I wrote an article about the failures of competition in the context of Singapore - where we've failed to set up the competition in a way that benefits the society. Consequently, the result of the competition becomes wasteful and often rather dismal to those involved in the race but didn't emerge anywhere close to victors. But David Brooks (author of 'The Social Animal'), points out in an article on New York Times, that we may have overlooked the 'monopoly' in the context of competition in this world.
He sets up the 'monopoly' situation as diametrically opposite of competition but the truth is that 'monopolies' are actually trying to compete as well but they see a larger and more open playing field than those who are engaged in fierce competition in one aspect. Obviously pulling ahead of competitors is not just about mirroring what they do but innovation, often setting yourself apart from them can be immensely valuable. What is forgotten, however, is being so different that you simply create a 'monopoly' altogether.
The evolutionary landscape that competition is sort of 'model' after features 'monopolies' as well. In Eric Beinhocker's Origin of Wealth (which I read quite a while back); he talks about the need for innovators that tries to jump around the landscape rather than groping around his existing location for peaks. Fierce competition, the sort described by Brooks, is characterised by incremental improvements that allows you to gain advantage over your rivals, much like a mountain climber scaling a specific peak, trying to outdo his rivals by going via the steepest path so that he can get there in the shortest time. And he does so by figuring out the direction he must head in, in order to accent the fastest (global optimization on a R-n landscape has the same sort of spirit but as usual, in mathematics we always imagine rather smooth surfaces that makes things easy - the fitness landscape is hardly smooth).
The good 'monopolist', however, is the innovator who leaves this peak in search for a higher peak or more difficult one to outdo his rivals. Or perhaps he decides he'll dive into ocean trenches instead rather than climb mountains. Opening up a new field and dominating it pays off handsomely in the long run. It also requires one to maintain the bigger picture of the situation. And that is what we observed in the case of John Paulson during the height of the Subprime Mortgage bubble. As an 'outsider' from the mainstream Wall Street, he carefully studied, monitored and analyzed the over-extension of credit in the Subprime Mortgage market before he started taking on short positions that ultimately paid off during the crisis.
Traditional competition, that Peter Thiel is arguing for people to 'avoid', distorts our perception of risks because it captures you into the system and makes you fearful of falling behind when you do something different. When everyone is reading their textbooks and preparing for exams, it would seem somewhat unwise to be reading some other popular Economics books or even the Bible. Yet as a student captured in this whole paper chase, one needs also to realise that there is little value in re-reading what one has been reading for practically the whole year. Combining the content learnt with newer, obliquely relevant knowledge improves your associative memory and can remarkable enhance the ability of questions to trigger knowledge you've already acquired previously over the term. More of this next time on ERPZ.
The key here is that one needs to master the art of being a 'good monopoly' even as one gets too caught up with competition. And this monopoly, would be an efficient one.
As businesses set out to look for the next big thing, there are plenty of stuff we already have that needs to be improved and would have a huge market out there.
For a full decade, laptop computers have been improved continuously, getting slimmer, with more processing power packed into them and lighter batteries invented to match the shrinking size of these machines - but alas, there was little improvements made to the power adapters. Beyond Apple's 'Magsafe' power adapter innovation and their attempts to shrink the size of the clunky component, the computing and engineering world appeared to have little interest in improving the peripherals of computing that were still unfriendly to users.
Which is why I'd applaud Min-Kyu Choi's three-pin plug design. Folding neatly from a standard 3-pin layout to a little slice no thicker than a MacBook Air was already quite a design feat. Even more amazing was the improved multi-plug system that makes great use of the wonderful folded design. It compacts the typical bulky design into the size of a single typical plug that we use today. This guy is a total genius.
And so is the 'A Liter of Light' project in the Philippines. The video demonstrates how a simple and elegant solution can make a huge difference to the lives of people.
Baring the occasional breakthrough that perhaps take years to be widely adopted and to start revolutionizing the economy, incremental innovations and even seemingly petty ones like latest version of Yosion's Apple Peel that turns your typical iPod Touch into a iPhone 4 are the staples that helps to keep the economy humming.