What is global competition really about?

Competition is a natural human tendency. I personally love to compete. As a former tennis player, I know that playing against a wall, without a flesh-and-blood opponent is boring. Competition is truly a magical word that does not drive only athletes but also companies, individuals and even entire countries to better and better performance. For over 15 years, I have worked for a man who many consider to be the greatest capitalist of all time and I can assure you that Bill Gates likes competition, too. At the same time, he offers us a wonderful example how success and profit in business can go hand in hand with charity and philanthropy.

Competition is exciting but requires many skills. This is true both in sports and in business. The imperative is to be better, faster, bigger, have higher revenues and faster growth. But sometimes, things do not work out. Yet moments like this might be the most valuable of all as they force us to consider what we have done wrong. Have we underestimated preparations, overshot our strength or chosen a bad competition discipline? At the same time, we must keep in mind that competition and competitiveness are of a long-term nature. It is only through long-term experience that we are able to learn from our mistakes and failures.

Competitive discipline for the new millennium

In business, achieving success is fundamentally related to the company’s economic power and its position within the global economy. With countries, economic power is perhaps best expressed by this formula: economic power = wealth x size. Wealth consists of the value the country or the region is capable of producing and accumulating. Size refers to territory, population and natural resources. This simple equation provides an indication of what competition is likely to look like in the 21st century. The Czech Republic as well as the whole of Europe whose size and resources are relatively limited must look for other new ways of accumulating wealth. Take a look at oil exporting countries. The price of crude oil has already reached USD 140 a barrel and is not likely to fall soon. Up until now, oil was bought for the needs of around a billion people but the number of consumers is increasing every day. This development has allowed the creation of the now widely discussed sovereign funds that prove that raw materials will not determine global economic growth forever. Countries that have created immense financial reserves from the production and sale of crude oil are now investing in companies and countries driven by the new millennium’s competitive discipline. Biotechnologies, nanotechnologies, modern information technologies, research and development of all types and the brainpower fuelling all these industries – this is what it’s all about and what we all should be looking into.

Logic, creativity and innovations

So, how can countries without large populations or rich natural resources accumulate wealth? The solution lies in creativity and innovations and the technologies built on them. I can easily imagine that within some eight years, new technologies will replace all the work that now requires manual labor. Technology will thus become a commodity and the main difference between people will be the brain. If you want to learn more about these ideas I recommend Daniel H. Pink’s interesting book A Whole New Mind that describes the current transition from an information age to a conceptual age of creative and emphatic people capable of identifying patterns and investing things with meaning. And this is precisely the difference between people and computers. Already today, it is no longer important where things are manufactured but where they are devised. While the logic of technology and economy is still necessary it is no longer enough. The hypothetical superstructure that will allow economies to stand out is creativity and innovation.

For other inspiring ideas see Richard Florida’s book Who’s Your City? Once you have read it you will begin to have doubts whether technology gives the same chances to everybody and whether the world is really as flat and offers the same opportunities as some might believe. If you look at the world in terms of the number of patents and researchers you will see several “peaks” – areas where the bulk of human potential is concentrated. These spots are to be found around leading universities, places like the Silicon Valley and progressive Asian countries. On the other hand, Europe offers quite a sad picture with a single peak of any significance in the U.K. From this particular perspective, Florida concludes that a city’s or a country’s future competitive power depends and will depend on its ability to attract people. He argues that the future hinges of three T’s: Talent, Technology and Tolerance. Applying this to countries, it means their future prosperity depends on their ability to attract and keep talent, build the necessary technology infrastructure and develop a society that supports equal opportunities for all its individual members.

Europe without barriers

Information, knowledge, skills and creativity are the oil, coal, steal and gold of our time. These are the areas where we will have to compete and should do our best to succeed. These are the virtues and qualities that we should nurture and that we should come together to develop. Are Europe and the Czech Republic ready? Sadly, I do not think so. Europe continues to distribute resources like it did in the 18th century. It supports traditional industries such as agriculture but fails in areas that are the most likely to secure its future wealth such as creativity.

When I look at the Czech Republic, I expect things to go on well enough for the next three or four years if we continue to profit from the cheap local labor and our attractive geographic position. However, if things do not change within five years, if we do not learn to truly use modern technologies and keep top experts in this country we will see our situation rapidly deteriorating. The Czech Republic as well as European countries in general have too many people with inadequate qualification and too few people with top qualification. Those at the bottom are paid too little and those at the top are overpaid. It may be interesting to consider the "skills pyramid" and how it might change in time. At the pinnacle of this triangle, you will see professionals such as researchers and developers while the base is formed by manual labor. However, technical progress may lead to significant changes to the pyramid’s structure within seven years with very few jobs available at the lowest levels. Unskilled people currently working in menial jobs will have to move up a level or two or become unemployed. In this light, we should be really concerned about the fact that as much as 40% of Europeans cannot use modern technologies. Realistic estimates predict that within five years we will see a drastic decrease in the number of jobs not requiring the use of computers and related technologies. A simple example could be the car industry where modern vehicles are already manufactured by software. The software budget of car companies is much higher than their hardware budgets and a niche is opening for value-added and competitive opportunities. Just as athletes must practice hard every day in order to improve and reach higher and higher levels of performance so we should work hard and develop our industries, too. Concepts such as knowledge economy were not invented for nothing. They are here to make us aware that knowledge, information and skills are the true foundation that we should build on and that we should strive to extend.

The world is now competing in terms of innovative thinking and ideas that might secure success and victory in a global knowledge economy. I am sure that Czech companies and the Czech Republic have a good chance of succeeding in these new areas of competition. But we must know what to do and not let ourselves get discouraged by obstacles and initial failures. We must not be afraid of new ideas that could help us develop interesting business opportunities, create new jobs and safeguard the growth of our national economy.

The key is to realize and try to take full advantage of our own human potential.