In my first year at university, I studied economics. And the very first lecture I attended, introduced us to the concept of scarcity. It’s a very useful concept to keep in mind, but it has some nasty side effects, when applied too generally.
The principle of scarcity very simply states that there is an infinite amount of needs, and a finite amount of resources to meet those needs. This is not a static concept. It grows. When you first start working, you want a place to stay. And when you have a place to stay, you want some music in there, so you buy a CD player. And then you buy CD’s. Then you realize that just listening to music is not enough, you also want to sit and read, so you buy a book-shelf, and start buying books. And then you need a comfortable place to sit and read, so you buy a comfortable chair. Then your apartment gets too small, and you want a bigger one. Then that one looks too empty so you get more furniture. And so it goes on and on. Every need or want we fulfil, seems to give birth to more needs and wants.
When you run business with a scarcity concept, it becomes what is called a “zero sum game.” The concept of a zero sum game says that there is a certain amount of resources, a certain size of market, a certain amount of money that we are all competing for. It means that if the business across the road succeeds, then it must have a negative impact on my business, because some of the money the consumers could have spent with me is now being spent there.
Another common approach to business success is to compare it to sport – where there are winners and losers. Each company is like a sports team, and everyone else are the competition. Survival in this mind-set is based on winning.
A building mind-set changes all of this. When you build, you find that resources are not finite, but infinite. They are not a static concept, but something you create as you build. As you identify needs, you begin to identify strategies for building what you need to be able to meet those needs. And once you’ve built that, you begin to realize that new opportunities have opened up to you because of your greater capability and improved facilities. So you start engaging in these opportunities, and find more needs around them arising – which requires that you build some more, to be able to also meet those. So the infinite nature of the needs around you, become the very source of your infinite potential for growth.
The winner-loser concept that we get from the sports mind set, is also no longer an issue when we have a building mind-set. It is not about competing with those around you, but about building what you are best at, and in the process using some of the resources from what people around you have built, and making what you are building available, to those around you – and so you build an economic community of interdependent businesses. Now the success of the business across the road is not at your expense. They are busy growing the resources that are available to you, and that business and its employees is part of a growing market you can potentially serve. And your growth is doing the same for them.
When there are a few hunters in the same field, they start hunting the same game. There are only so many big animals around. And once the biggest Eland has been taken down, the next one is smaller. So it continues, and if the balance between the number of hunters and animals tips to the wrong side, then sooner or later the hunters have to start killing each other to get to those last, very precious heads of game. And when those are gone, they all kill each other, and then the last one starves to death, or becomes a leaf eater.
But when the builder notices that stones are becoming scarce, he looks for something else. He starts planting trees, and a few years later he has wood, with which to build. Or he finds some clay and water, and starts making bricks.
Let me draw this right through to a modern analogy that everyone can identify with. If you are reading this, chances are you are reading it on a screen, not on paper. You have some form of computer in front of you – maybe a tablet, laptop, desktop, or maybe a smart-phone.
What was the market for computers, about forty years ago? It was very small. Only the biggest businesses and governments bought computers. And how many businesses were in the computer industry? How many people did you know that used a computer daily? But there were some visionary builders out there. And they kept building the computing concept. And with it they built a market. And as it grew, they built businesses that provided jobs for people, and provided contracts to smaller businesses. And more and more of these businesses started buying computers, so the market grew. Soon personal computing and cell phones began to come into the picture, and new industries were built around that.
The amount of value that changed hands in the information technology industry over the past four decades is probably thousands of times what was available to this industry forty years ago. It was generated through the process of building products, services, and markets.
Which of course reminds us of the fact that successful builders don’t build alone. But that’s a story for another post.