It takes all the running you can do to keep in the same place," says the Red Queen in Lewis Carroll's Through the Looking-Glass, a fitting metaphor for this book about organisational competition, about exploring the long-held belief that "competition makes you strong". William Barnett examines this euphemism using an in-depth analysis of two highly competitive industries: computer manufacturing and commercial banking.
He explores the question "why are some organisations more competitive than others?" and suggests, naturally enough, that competitiveness varies between sectors and between organisations. He highlights what it takes to win in competitive terms, and then how organisations learn the "logic of competition" by competing - a bit of a tautology.
He defines the "logic of competition" as "a system of principles in a given context that determines who can compete, how they compete, on what criteria they succeed or fail, and what the consequences of success and failure are". This is central to his underlying theory model, which he applies to the two industrial sectors. The underlying assumptions about how competitiveness among organisations develops are that "logics of competition vary over time and across contexts", "organisations sometimes follow a logic of predation" and "organisations sample their context's logic of competition by competing".
These general principles are explored in some detail. One chapter empirically models competitiveness in different ways, with sections on modelling a pure-selection process, the implications of predation, organisational founding and organisational survival. Barnett also highlights other ecological models of organisations in what proves to be one of the book's most interesting chapters, because it provides a number of conceptual schemata that provide the bedrock for conceptual thinking in organisational competitiveness.
The book changes dramatically in later chapters, where the theoretical models of the previous chapters are applied to commercial banks and computer manufacturers. The fundamental "logics of competition" and models elucidated earlier now come alive and assist in understanding the dynamics at work in two significant and competitive sectors of most Western economies. The book concludes with a chapter on the implications of Red Queen Competition, in terms of the managerial and research implications.
For example, in practice many organisations think that "strategic alliances" are a good thing because they ostensibly help companies learn from the experiences and practices of other organisations.
One of the conclusions raised in this book is that this may in fact inhibit organisational learning by taking time away from internal learning and reducing the competition so that neither is risk-taking enough. Competition itself may be harmful because it can create, as the author suggests, "disequilibrium and ongoing change" rather than competitive equilibrium.
There are dozens of myths and questions that the author raises about the messages that are frequently extolled about competition creating more effective organisations, and his case studies illustrate these and help us to reconsider where and when competitiveness provides added value.
In the end, this book questions Alice's comments to the Red Queen in which she says: "Well, in our country, you'd generally get to somewhere else - if you ran very fast for a long time as we've been doing."
The Red Queen Among Organizations represents outstanding scholarship in the organisational theory field but is sufficiently rooted in the "real world" to be of benefit to business strategists and particularly to MBA and doctoral students in the field of corporate strategy.
It is not a DIY-type management book; it is a serious attempt to understand organisational behaviour, and it does it exceptionally well.
The Red Queen Among Organizations: How Competitiveness Evolves
By William P. Barnett
Princeton University Press
Published 1 March 2008