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Monday, September 12, 2011

The Ratchet Effect

...occurs when two or more competitors are frequently matched against one another.

When one develops an advantage, the others develop counter moves. The overall result is that the whole group becomes continuously better.

Continue this through several generations of improvement and the whole group has a marked advantage over others who started at the same baseline and didn’t get better.

When I was younger, the ratchet effect was a key component of sports excellence. Now I see it working in technical and social skills development.

Improvement seldom occurs in isolation.

SalesLabs Rainmaker series returns to the Capital Technology Management Hub, Tuesday, September 13th with 300 seconds of Mark Your Territory. The featured CTMH speaker will be Professor Steve Gladis, author of The Agile Leader. Come join us!

1 comment:

Jack Gates said...

Dick:

Competition is healthy in the way you describe. A lack of competition can stifle innovation or even responsiveness.

When I was in Captioning, I would advise large clients to always have two captioning firms working with them (with my firm getting the majority of the work, of course). The purpose was two-fold: first for safety in being sure all captioning would be done regardless of any mishaps; second to keep our firm at the top of our game - clearly the positive impact of the ratchet effect for both of us.

Just think about monopolies (one player, no competition) - where's the innovation? Is a monopoly self sustaining without government or military protection? Can you name one (even a little one)?

In tennis you always try to play up (playing a higher ranked player) to improve. The same is true with business competition, but we don't need to hop over the net.