“As irrational human beings with imperfect knowledge, our
choices are affected by myriad social and psychological factors that do not
resemble a calculated cost–benefit analysis. We become who we are with and
through others and the biggest influence on our own behaviour is usually the
behaviour of our peers as well as our own previous behaviour rather than rational
analysis. And often this is for the better, saving us time and freeing us from
the burden of solving many problems from scratch.”“The econometric models underpinning competition strategy do not paint a true picture of how people behave in practice. The models on which competitive strategies are built assume we are rational satisfaction-maximisers with perfect knowledge.”
“As a metaphor, competition often leads to inappropriate goals and objectives. The idea boils down too quickly to the pursuit of being ‘the best’, which all too often translates into a race to the bottom and inevitable price wars. Replicating the offering of a rival and simply trying to offer more of the same for less is a key to destroying economic value rather than creating it.”
“Businesses today need frameworks that can help them engage with people in ways that take creative account of this fresh insight into true human decision-making and behaviour. And these may be unlikely to come from financiers.”
“A further major weakness in the evolution of competitive strategy may stem from the field having been overly dominated by financiers who are better qualified to support some types of business improvement than others.”
“Consumers don’t care about increasing shareholder value
when they make their purchase decisions. They do care about choosing products,
services and companies that they believe make a meaningful contribution to
improving their lives.”
