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Last week I talked about the depressing race to the bottom. That’s a strategy of focusing on reducing prices over all other considerations.

When several companies do this at the same time, it destroys profit for everyone and can even kill an industry. We see this all the time.

Fortunately, there’s a different strategy you can embrace. It’s not any easier, but it sure can be more rewarding.

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I’ve heard several reports recently which talk about companies doing everything they can to drive profit. And of course the quickest variables to fiddle with are cutting quality and cutting employees.

Cut expenses, then you can reduce prices, so you’ll gain market share and win more profit. Here’s the problem with that logic. In a competitive market with multiple companies doing the same strategy, you don’t gain market share (or profit) at all when you reduce prices. Not unless you can do that faster than the competition for some reason – but that destroys your profit.

Unless you have a magic wand, of course. Most people out here in the real world don’t have one. You just have a bunch of companies all racing to the bottom, where NOBODY is eking out any kind of profit.

Fortunately, that’s not the only way to play the game.

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I’ve seen a growing number of conversations recently about certain industries which tend to be collaborative. Here in northern Colorado, one of the most popular is the micro-breweries, who tend to be open, sharing, and generous. 

That might seem odd because there’s a high concentration of these businesses here, but it’s still the mindset of how they work. It’s attractive, energetic, and creative.

Others have noticed that our community of startups seems to be MUCH more collaborative here than in, say, the San Francisco Bay Area. When people travel there, they notice that the environment seems much more competitive and protective.

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THERE WAS AN INTERESTING QUESTION on Quora recently, posed by an entrepreneur who is feeling the pressure of competition from large multi-national corporations. It’s very worrisome for him, and he’s struggling to figure out how to compete against those with more resources and shady tactics.

But every advantage has a weakness built in.

When I worked for a huge Fortune 50 company, I saw this exact situation – but from the inside. I was working for a team that was chartered to find new products and services to invest in.

But it was an almost impossible situation.

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OVER THIRTY YEARS AGO, I ran across a striking company that thought differently than mine did.

They didn’t worry about the competition.  Really.

And not because they were ignorant or egotistical.  It’s because they realized that if they and all their competitors grew, it would create a whole new market.

Out of nothing.

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ACOUPLE OF WEEKS AGO I talked about expanding the way you look at employee satisfactionCar washIt turns out that similar concepts can be applied to your relationship with your customers and competition.

You can really get wrapped up in worrying about your competition.  You sell hamburgers, I sell hamburgers, there’s five other places down the street who sell hamburgers.  There’s only a limited number of people who want to BUY hamburgers on any particular day, so your mission is to steal those customers away from the competition.

I propose that this is the wrong way to look at it.

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