Our unhealthy fixation with emulating #1

Most sporting contests culminate in a single-elimination tournament, meaning that after each match the winner continues and the loser goes home:

Single elimination

At the end, only one contender will be undefeated, which makes it seem logical to crown them the undisputed champion.

But this isn’t as clear and fair a process as it seems (as any NCAA football fan will agree). Being “undefeated” is actually just a result of the system itself, not necessarily proof that they are in fact better than other top contenders.

To see why, consider this extreme variant: The “sporting contest” is actually just a coin flip. The tournament will work the same, with half the teams losing in the first round, half of the remaining leaving in the second, and so forth until the final match where one team will necessarily remain undefeated.

Of course the team earning the title of “number one” is random because the contest is random, but the distribution how many teams made it to each stage and the fact that exactly one went undefeated is dictated by the tournament system.

2108The outcome of most sporting events are a combination of skill and luck in unknowable proportions. In fact much of why sports are exciting and suspenseful is because on any given day a lesser-skilled underdog can win (by might or luck). You could mitigate the luck factor by replaying a match a number of times and declare win/lose or tie based on statistical significance at a predetermined confidence level, but of course this is neither fun nor practical.

Business is also a combination of skill and luck in unknowable proportions, and it’s also clear that the system itself has a hand in the distribution of results. The very fact that “long tail distributions” are common in almost every industry and service type indicates that there’s systematic effects outside of the usual “luck versus skill” debate about company success.

We tend to fixate on whoever is #1, in business as with sports, tacitly assuming that the contest is mostly skill and therefore the tournament has selected the rightful leader. But I’m not so sure we know that skill/luck proportion. I’m not so sure we can assume the contest (marketing, sales, product) and tournament (the marketplace) picks #1 based on repeatable, codify-able skill-set. Same with #2 or anyone else.

Does the winner of a pitch contest have a better shot at their business than #7 who learned from the experience and is now redoubling his efforts?

Does McDonald’s have all the answers or does the #12 largest fast-food chain in the world also have something to teach us?

Is the #4253 largest company in the world not still a success story, perhaps with new lessons and perspectives?

If we don’t compare the behavior of #1 with that of their failed competitors, how do we know which decisions were important, which actually contributed to its success?

4018Alright, so what? When does this matter?

When someone insists you need to be “more like Google,” consider that perhaps it’s the only thing they know to compare to.

When someone insists you need to be “more like 37signals,” consider that almost no successful companies are like 37signals.

When someone insists you need to be “more like Apple,” consider that they probably have no idea what really goes on inside Apple.

More interesting is when someone suggests that you remind them of this other little company you’ve never heard of, but when you visit their website and try their stuff you realize it’s resonating with you, that this feels like a finer, more mature version of yourself, that you’re getting reinvigorated about your own business not because of their top-line revenue or celebrity status but because they’re inspiring you to become a better version of what you already are.

It’s fine to muse about #1, but let’s not all strive to become just like #1.

What do you think? Is the winner-take-all mentality actually healthy? More sides to this story in the comments.

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  • http://twitter.com/Stray__Cat Stray__Cat

    “We tend to fixate on whoever is #1, in business as with sports, tacitly assuming that the contest is mostly skill and therefore the tournament has selected the rightful leader. ”

    The business IT world is full of companies which prosper not on the basis that they’re the best at something but because they’re a defensible choice in front of a failure.

    Everybody used to buy IBM PCs because they were the “market standard”

    Nobody has ever been fired for buying Oracle because it’s the first and most “professional” database.

    Everybody buys SAP because it’s the choice of the world’s top corporations

    and so on …

    • BillSeitz

      Well, that actually starts out as a good question, essentially asking, “how do we become that default choice?” But of course, it’s pretty impossible to accurately answer that question.

  • http://ralphhaygood.com/ Ralph Haygood

    I like the post. I’ll just add that the whole concept of #1 is a painful oversimplification of most human endeavors. Few if any of the people and companies whose work I value most are #1 in volume of output or sales, profits, or any other conventional metric. They’re a diverse group, but one thing they all have in common is that they aren’t trying to please anywhere near everybody.

  • Kerry

    Glad you’re posting more often. :)

    • sinemafilmi.net

      you’re right :D

  • http://profiles.google.com/cernymichael Michal Cerny

    It is a tricky question. Of course I would like to have a company like Zappos, 37signals or Amazon. So I am trying to read about them and see what are they doing and try to match with my world-view. But in the end of the day I am completely different and I like to do things my own way.

    Also it is hard sometimes to decide who is really number #1. Is Seth’s Godin blog number #1 or is it A smart bear? I actually enjoy A smart bear much more :)

    I wonder what company Google or 37 Signals were following as #1?

    If they did follow someone we would have just slightly better Altavista or Microsoft.

    P.S. I am sure there are many great companies I have never heard of.

  • http://ontechies.com Ricardo

    I think most of us are followers and not leaders. Hence the need to seek out a leader, a winner and try to do the same they did so we can too achieve the same success, and this usually doesn’t work.

    Luck plays an important part, however it is a small part of the overall success of most companies. You still need skill and timing, which I think it is more important than just luck.

    Something that I’ve noticed is that most successful companies say they started achieving success when they actually started doing what they thought it was important to them and what they enjoyed the most.

    When a company tries to be “more like 37 signals” or “more like Google”, they usually think they need to do something different and so they force their little company to be more like the successful ones… wrong. This is wrong because by doing so they loose the opportunity to be themselves and to create an identity of their own.

    I agree with you about looking at a #1 to find out f we can apply any of their processes, marketing, etc… perhaps, it might be better to just go with our gut and see what happens… and if it doesn’t work then you go back and try something else.

  • Me

    Winner take all is a big concern for B2C, but not nearly as important for B2B. As popular as they are, I’d wager 37 Signals has less than 25% of the market for all online collaboration products.

  • http://jvdveen.blogspot.com Jonathan van de Veen

    This also asumes you have the same goals as that #1 company. I know many entrepeneurs who do not even want to become the biggest in their general area of business. Other goals can be much more inspiring and also, goals should be (and seem) achievable within a reasonable amount of time, in order to keep you motivated.

  • Carrie

    I think the biggest problem with #1 as a business designation is that it can only take into account a small number of metrics and those may or may not be the ones that are important to you as a founder or as an employee or as a customer. If you look only at income devoid of expenses, the picture is very different. #1 is just such a subjective thing and that is where it becomes an issue.

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  • http://profiles.google.com/wandel123 Carola Janssen

    Just a funny coincidence. I read your post and than saw this post: http://reflectionof.me/the-motivation-behind-tech-innovation# by Clementine.

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