Competition Is Good – Just Watch “The Bodyguard” To See Why

Competition sits right at the heart of effective procurement, it drives innovation, it promotes successful economies, and mitigates the risk of corruption.  It is, all in all, a wonderful thing.

This struck me the other day when we were watching The Bodyguard, the excellent BBC TV thriller currently showing on Sunday nights*. I tend to watch sport and news on TV, whereas my wife watches all sorts of rubbish – sorry, I mean a wide range of programmes.  Competing with The Bodyguard is Vanity Fair on ITV – by all accounts, another fine programme.

Indeed, it is clear we are going through a bit of a golden age for TV drama. Both the BBC and ITV are making series that are strong popular entertainment yet also have impressive production values, top actors and often carry an interesting message too. “Black Earth Rising” which started this week is a bit depressing for me but is taking on some of the most challenging issues you could imagine, including genocide in Africa.

A few years ago, it looked like terrestrial television was sinking quietly into endless reality and game shows, and factual programmes restricted to cooking, house restoration and antiques. So what has driven this resurgence in drama? Yes, you’re guessed it – competition. Netflix and then Amazon came along and disrupted the TV world. They proved that high-quality, often lengthy series that were comparable to the best movies in many ways could be commercial hits too. Series such as The Crown, Stranger Things and House of Cards proved there is an audience for big budget, intelligent, dramatic work.

And the BBC and ITV have responded with their own best drama for decades. Line of Duty, Broadchurch, Peaky Blinders, Unforgotten – the “old” channels have been pushed to raise their game by the newcomers.

In our business context, that’s what competition does. It pushes existing and incumbent suppliers to perform better, it drives innovation from old and new suppliers alike, it makes markets healthy and leads to a higher chance of satisfied buyers and customers.

So encouraging competition should be an absolutely central part of the procurement role, yet often organisations seem to forget this. They are lazy in terms of looking for new suppliers (have you signed up to Koble yet – if not, why not?), they persevere with “the devil we know”, and don’t think strategically about how to encourage competitive markets and competition for their own business.

But how does this stack up with ideas about “long term strategic partnerships”?  Of course, those can be effective. However, even then, you will find those partnerships work better when they are within dynamic, competitive markets. The threat of competition – even if you decide not to pursue it every year and stick with the “partnership” – will keep the supplier on their toes and honest. If there is no or limited competition, you are likely to see different behaviour from your “partner”, we’d suggest.

My first procurement role was at Mars Confectionery and we were obsessed with competition. Whether it was skimmed milk powered or polypropylene film, we hated monopoly and oligopoly situations and would go to great lengths to drive competition into markets. Mars could also be very loyal to good suppliers, but it was drummed into me from day one in procurement that competition was a good thing. And The Bodyguard is proving that yet again.

 * The brilliant Vincent Franklin, who played the procurement director in hilarious Olympic spoof 2012, has had a major promotion and is playing the Home Secretary in the Bodyguard, by the way! I met him once and he seemed a really nice guy so I do hope he doesn’t turn out to be the evil mastermind here…

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  1. Catherine:

    On a point of accuracy, in fact Keeley Hawes brilliantly plays the Home Secretary in Bodyguard, not Mr Franklin (who is Sec for Counter-Terrorism and so reports into Home Sec)

    Nit-picking, maybe, but I’d really rather not devalue even fictional female power, and I know you feel the same ;-P

    1. Peter Smith:

      Catherine, you are quite right, but I thought Franklin’s character became acting Home Sec after …you know what (spoiler alert…) I would of course never devalue female power, and while being careful what I say here, my admiration for Keeley Hawes knows no bounds. A brilliant actor and also … let’s just say I enjoyed “Tipping the Velvet” and leave it like that. She will be a Dame one day i suspect although Olivia Colman must be next in line for that honour.

  2. Jag Patel:

    Absolutely, competition sits right at the heart of effective procurement. Equally, the lack of competition leads to concentration.

    The dominance of just a handful of manufacturers, the Select Few, has been a distinctive feature of the defence equipment market for as long as anyone can remember.

    Unlike the market in consumer goods and services, there is only one customer for defence equipment – the government. Consequently, the purchasing decisions taken by the government has a significant bearing upon the composition and diversity of players in the defence equipment market. And because taxpayers money is used by the government to procure military equipment for the Armed Forces, the condition of the defence equipment market should be of concern to those who have an interest in the proper functioning of open and free markets, and in particular securing best value for money, as it relates to the expenditure of public funds.

    Nowhere is the market in defence goods more concentrated than in the naval shipbuilding sector, as exemplified by the number of bidders who have entered the competition to build the Type 31e general purpose frigates for the Royal Navy. It is the first time that a contract for fighting ships has been competed openly on a global basis, to identify the bidder that will construct the five Type 31e frigates. Hitherto, the contractor to receive such a single-source design and build contract has always been selected on a preferential basis (from the Select Few) – by successive generations of people in the pay of the State who have a poor understanding of how free markets work, not least, because they have not spent a single day of their lives in the private sector.

    The consequence of this misguided attempt at shaping the shipbuilding industry has been a spectacular disaster. Only two industry teams have responded to the initial announcement to submit an expression of interest for consideration by the procuring authority, the Ministry of Defence – this, after the government went out of its way to relax the demanding technical specification requirements incorporating stringent naval standards, specifically to attract commercial shipyards.

    For an island nation with a long tradition in naval shipbuilding going back centuries, such an outcome is a huge disappointment and it leads one to conclude that there is a serious lack of competitiveness in the naval shipbuilding sector. It is the number of bidders entering a competition that determines how competitive a product market is – the higher the count, the healthier and more vibrant the market, and the keener the desire on the part of contestants to win the contract.

    This dire situation has come about because successive governments, going back decades, have sought to protect domestic equipment manufacturers from being exposed to the full rigours of the free market, that is to say, shield them from ‘feeling the heat’ of competitive market forces – which has, in itself, led to this market concentration.

    The creation of the monolithic entity called BAE Systems which dominates the defence equipment market today – from the acquisition of various business units of Marconi Electronic Systems in 1999 with the tacit acquiescence of the Blair government, without referring the merger to the then Competition Commission – further reduced the number of independent participants in the market.

    BAE Systems then went on to use this dominant market position to pressurise the Brown government into signing a 15-year Terms of Business Agreement which, in effect, hands out a series of cost-plus, naval shipbuilding contracts worth £3,450 million up to 2024. In so doing, future governments have been denied freedom of manoeuvre in the management of public finances.

    What’s more, in common with concentration elsewhere in the UK economy, the defence equipment market monopolised by the usual suspects is plagued by excessive mark-ups, insignificant investment in innovation, R&D and product development and persistently low wages for the vast majority of its workers.

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