The cost required to surpass the competition

I’ve said before that I’m a fan of NASCAR and I’ve observed an interesting aspect of racing that provides some insight into running your business.

Throughout the race, the cars string out in a line and the faster and more competitive cars end up at the front while the slower, less competitive cars end up at the back.

Now let’s say that you have a fast car and in the middle of the race something goes really wrong. You pull into the pits, the pit crew makes the changes it needs to make, and you get back out on the track. Unfortunately, you’re way at the back of the line.

But you have a fast car so you start passing cars to work your way to the front.

The closer you get to the front of the field, the harder it gets to pass cars. That’s because the cars at the front of the field are faster and more competitive than the cars at the back.

So it doesn’t take a 1x effort to pass each car. Rather, it takes a 1x effort to pass the very last car in the field… And a 2x effort to pass the second last car in the field and a 3x effort to pass the third last car in the field and a 4x effort to pass the fourth last car in the field, etc.

See my point? The higher you ascend, the harder it becomes.

The same holds true for businesses. Brand new entrepreneurs view competitiveness as a 1x effort: That is, they think that they can pass each and every competitor with 1x effort. But that’s not true. They pass the bottom tier with 1x effort to get into the next tier. Then they need 2x effort to pass that tier of competitors and get into the next tier. Then they need 3x effort to get out of that tier and into the next tier. (How many tiers are there? Well that depends on the industry). Ultimately, it’s going to take WAY more effort to get to the top than to get out of the bottom.

This effort is a cost (not always financial — sometimes it’s financial but it’s also time and other resources; and sometimes it’s a matter of what you are willing to do).

So here’s what this means for your business:

  1. If you want to be more competitive than you are currently, you’ll need to invest more of something (time, money, etc.) to get higher. You can’t get away from this fact.
  2. Your business is only as competitive as you want it to be. At some point you will achieve an amount of competitiveness that you are comfortable with and you won’t rise anymore because you don’t want to. That’s okay.
  3. If you have dreams of rising to the very top of your field, you need to stop thinking about using the same old strategies to compete… you’re going to have to look at what the top tier is doing and you’ll need to do more than they are doing. This is probably the hardest and costliest effort of competitiveness. (Case in point: Many companies that want to rank high in search engines adopt the cheapest-possible strategies that are comparable to what their current competitors are doing rather than discovering and surpassing the strategies of those that are ranked higher.)
  4. Many of your competitors are doing the same thing, which tends to drive the cost of competition even higher.

There is a cost required to surpass the competition and it’s not always a 1x cost. How high you want to ascend on the ladder of competition depends on how much effort and cost you are willing to invest to be more competitive.

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