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The Competitive Downfall and The Importance of People

About Me

As this is my first article i figure i should tell you a little bit about myself, because, why should you waste your precious time reading something from me when there are far more recognised authors out there?

This is just a brief overview of some information about myself i deem relevant for this publication.

I have a BSc in Genetics and Molecular Biology and an MSc in Logistics and Supply chain management and i’m a certified qualified member of a chartered institute in the procurement and supply chain industry. I’m 28 and spent 7 years in South Africa from the age of 12 – 19 and the rest of my life (before and after) i have resided in London in the UK.

I worked many years (from 15 – 24) in retail for around minimum wage primarily in the restaurant industry, although i had a year in a well known computer retailer as a technician/salesman. Throughout this time my hours varied from 16 hours to 70 hours a week, all whilst completing my studies and maintaining a social life (perhaps overly). During the final half of my masters degree i managed to get a job as a management consultant supply chain analyst for a primarily London based consultancy, my first commission was working on one of the largest tunnelling infrastructure projects in europe.

The Problem

We have grown largely in a world built on the foundation of competition. This has done well to get us to the stage of physical and technological development and evolution of our economies and our societies.

Increasingly we are seeing the negative effects of this competition in all aspects of our lives, from social media, to work and even now, with crypto currencies projecting an alternative, our money. This competition creates volatility and uncertainty and it is more akin to a death match than sparring.

If we explore the social aspect, what seems to be happening is that we are competing with each other for likes and views, this turns some against others by creating a dichotomy; #TeamElon or #TeamGates… It’s seemingly becoming like we have to pick sides rather than value each for their own merits.

This may seem somewhat trivial at this level but it goes deeper, like the apple vs android debate, or xbox vs playstation. There have been and continue to be some toxic environments created based on these differences and it can drive strangers apart even more. It’s not likely you’ll lose a friend over choosing a different gaming platform or mobile operating system however it may cause you to judge harsher those you don’t know who oppose your choice.

This actually filters up (or is filtered down) from a larger economic perspective. I will use some real world examples based on my own experience.

The Premise

During my first commission i got a very quick and intense introduction to the construction and infrastructure sector. I have had the benefit of working with some of the most successful commercial supply chain consultants and managers in the industry, many of whom pioneered the great success story of the 2012 London olympics. The first of, what is growing to be more commonplace, the mega projects. These are relatively short term projects valued at more than ~£1 billion. The reason why this one in particular set the standard was because it was managed and delivered throughout the 2008–2011 massive global recession – on budget and on time. The treacherous financial landscape made for tight co-operation and good communication as any errors would could be catastrophic.

My personal observations begin in 2017, approaching a decade later, on a project which was projected to be worth 4–5 times as much.

My role as an analyst was to assess the risk associated with the building contractors who were carrying out the work by monitoring their company performance day in and day out and produce monthly reports to the COO.

I worked on behalf of the client entity, which was set up to be as co-operative and as inclusive as possible and it was a great success and a wonderful work environment. People from all different areas from finance to design, environmental and digital all worked in unison in a single client office space.

Needless to say, a construction project this size can’t be delivered by a single building contractor, in fact it takes thousands of generalists and specialists to pull it off. The usual method for this is to employ a few large contractors as primes and then allow them to manage their supply chains – effectively making their supply chain our supply chain – at least in theory.

The Observation

Right away i observed (through my daily monitoring of over 1000 companies) is that the construction industry is in a financially poor position overall. Also i had the task of amalgamating the most relevant construction news to distribute throughout the project, i gained tremendous insight into this sector in doing so and is by far the most valuable thing I’ve done as part of a job role. It made it even more glaringly obvious how bad this sector was. To put this in context, a company with £1 billion worth of turnover will be lucky to turn over 1% profit, this pales in comparison to coca cola which can turn a profit upwards of 25%.

A particular company during my time estimated a profit for the upcoming financial year of 3% and it was looked at as an industry Bigfoot; merely speculation and a myth, and everyone waited eagerly to see proof. In the end they did have a good year, but not 3% profit good.

I began to ask myself why this was happening because clearly it wasn’t sustainable. In this role (which i stayed in for 16 months) it became more clear that competition and poor co-operation and lack of transparency were to blame. There was too much secrecy and companies not sharing insight, even to the client.

Even though the client offices were open and operating very well, the main contractors of which there were 8 companies which formed 3 joint ventures that were pegged as delivery sectors spread across the region, did not show the same sentiment. In their view, the sub-contractors they employed were out of the clients reach. Even though contractually they were the clients just as much as the main contractors were.

As the supply chain analyst managing this supply chain, my whopping team of two (myself and my manager) were spread thin but we coped. I primarily handled the data, my manger the meetings.From my perspective it was a single project with a single supply chain with a single purpose; to build a massive tunnel.

In reality it was a single entity (the client) paying 8 different companies with 8 different operating models and 8 different (yet overlapping) supply chains to build one tunnel that is actually, hundreds if not thousands of mini projects.

After my time on this project i eventually went to an even larger project, worth 10s of billions of pounds, potentially 100’s of billions, doing the exact same thing… in fact some of the exact same companies who were working on the tunnel, were also working on this project concurrently.

I didn’t have long at this project and the second half of my career, was and is (at the time of writing), also spent in infrastructure, but no longer construction, now it was defence.

Defence did a bit better than construction, although it is around 10% which is still not great for a largely manufacturing industry. My role now had changed from analysing supply chains to managing commercial contracts.

My observations here also lead me to get a deeper understanding of how this competition, co-operation and transparency issue was stifling growth and limiting profit potential and ultimately suffocating industries and making them more and more unsustainable.

In the defence sector there are also many large value projects in the hundreds of millions to low billions of pounds; again requiring large and complex supply chains to be managed through a central entity or client. Again these contractors were often at loggerheads and refused to do what was best for the project without a fight.

The Implication

The consequence of this lack of transparency, this lack of co-operation and the increase in competition is that companies don’t realise that they are killing each other. They don’t realise where their value actually lies. They hide the projects they are working on, they hide the numbers flowing through their books until its too late and they don’t bind together to service the common cause.

I understand that many of these supply chains are long standing and work on a basis of loyalty, however many of these companies did not grow in an environment which saw such large projects in existence. This led those companies to believe that their particular product or methodology to be their USP, however in my observations i have seen that this is not the case anymore.

The most valuable asset that a company can have is its people. An observation of the top companies in the sectors reveal that they are also some of the best places work, according to people surveys, this is because communities are what makes environments thrive, co-operation makes processes effective and transparency allows technology to grow.

Lets look at Amazon, i consider amazon to be incredibly co-operative and not competitive (in some ways – more than their competition) which is what has allowed them to grow so fiercely. Whether it is balanced in the returns of this co-operation is another story…

For example, Amazon has many business opportunities for large companies and individuals alike. Amazon creates exposure and allows unknown products and people to reach a wider audience than normal. You can be a merchant reseller more successfully through amazon than through your own website, a more successful logistics company through them or even a consultant or electrician simply through exposure.

In contrast to these construction and defence companies who, even when joined together for a single cause choose not to co-operate or share. This competitive nature cost money and eats away at profits.

A converse made up example to show just how unco-operativeness can have a negative affect is; BigBuild plc hires 3 companies to build a tunnel. Company ABC for may be experts in ground work, company DEF may be expert cementers and company GHI may be expert tunnellers.

Each company is in charge of 3 main sites 10 miles apart and all have to do the exact same type of work to complete the tunnel – they choose not to share resources and expertise so it costs a lot more money for company GHI to complete the groundwork than it does ABC and DEF’s tunnel takes far longer to dig than GHI’s overall these inefficiencies increase cost by 30% because they just let each other flounder in their weaknesses. In the end this causes them to all lose out on 10% profit, lost through time and correction costs even though for the purpose of this project (which actually is worth 40% of their order-book for the year and whole portfolio over the next 5 years whilst its being completed) is dependant on them all working together to produce an end product.

This is the nature of many industries – especially essential ones, which are service more service in nature (i.e where people matter most); Such as transport, construction, defence, auto-repair, hospitality and retail.

The Solution

The solution is obvious to me. Be more co-operative and transparent and value your people, not just by paying them well, but by allowing them to share their experiences with their colleagues and industry equals.

Competition has done well to get us this far, but in an age of technology, ambition and knowledge it is not sustainable.

We are operating like a civilisation who started off as a single tribe then split into the melee warriors, the tech warriors and the ballistic warriors. Then within these tribes they split into groups to hone their skills.

These warriors then became specialist masters with their own unique styles but then, they start fighting each other at group level and slowly but surely kill each other off from within and before long each sub tribe dies. When the best course of action for survival would be to reconvene groups as a tribe and share their knowledge because perhaps they could combine their knowledge to form something greater. Then maybe, just maybe after a while they can share with the other tribes too. Who knows? Maybe the technology tribe could improve ballistics or the other way round.

Just as we are seeing the decentralisation of money and applications, co-operation would be akin to decentralisation of industry knowledge for the benefit of each industry and their most prized (yet undervalued) asset. The people who work within them and the public who benefit and pay for from their creation.

Greed and control has too long dominated our landscape and it is destroying us all. Knowledge belongs to us all, as does the planet and the responsibility to ensure our own survival. It doesn’t those who came up with the idea first and it is not their responsibility alone to look after and nurture it. Just because they came up with it, it doesn’t mean they know how best to use it.

Conclusion

There are many different ways in which we can co-operate, and sharing knowledge of your expertise doesn’t automatically mean someone else now knows your secret to success so you can no longer use it. In fact, it would breed a healthy, new kind of competition. Everyone likes something different, from look to function. Apple and Samsung, Huawei and Xiaomi all make phones. Essentially same in product yet they all thrive because we all like different things and have different needs… even if they are the same in their concept.

Co-operation is the way forward because all we have is each other.

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