Using Competition to Drive Improvement

In his article Good managers not machines drive productivity growth*, Professor John van Reenen outlines that competition is a major factor to stimulating improvements in productivity. “This both weeds out the badly managed firms and gives strong incentives for firms to up their game.”

Auto industry refocus

For large firms, the competition is generally well-known and there’s information in the public domain about how they’re doing. Sharing some of van Reenen’s observations about the automobile industry, I recall that the reasons for the big lead in productivity of the Japanese manufacturers were often put down to differences in culture, or even sushi! Once Nissan arrived in the UK and started being recognised as the most productive plant in the industry, it was time for a long hard look in the mirror.

Combined with benchmarking on other competitors and partners, the importance of factors such as design for manufacture become really obvious. For instance, if one part of a vehicle needs five screws to hold it together and a competitor’s only needs two, when that’s multiplied up for the whole vehicle it’s no wonder the competitor is more productive.

Competitive sport

Changing context, let’s look at a really obvious area of competition – sport. I have found it to be a brilliant way to drive improvement.

From Parkrun to bike time trial to triathlon, when you see others doing better than you (especially if they’re in a similar age range and gender), for me it begs the question: If they can do it, why can’t I?

That simple shift of focus stimulated changes to my training, preparation and kit, and my performance improved.

Who’s your competition?

What are the relevant factors in your business and sector? In my experience, the competition for SMEs and start-ups can be harder to identify. There’s less publicly available information on them, and less resources to track down what is there.

Even in a worst case where you’re operating in the dark regarding competition, there are things you can do. For instance, establish a framework to measure performance of what matters in your business, especially to your customers. Things to measure include basics such as:

  • Response times to enquiries (telephone/email/web)
  • Lead times for products or services
  • Delivery reliability

The customer experience with you is key when measuring performance. So asking them to fill in a short survey or questionnaire will provide some really valuable information.

If you feel you need some help to make your business top of the game, leaps and bounds ahead of your competition, I can help. Do get in touch today for an exploratory, no obligation chat.

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