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  • John Markson

The Solution to Imitative Competition’s Hold on HR Options

I recently read Peter Thiel’s 2014 book “Zero to One”.  It’s short, well written and contains many valuable insights about business start-ups.  One that I found particularly compelling because it captures my thinking when I started Cannae HR Solutions is what Thiel refers to as “imitative competition”. [Full disclosure: I wish I got promotional consideration for mentioning his book, but alas, I do not].

We rightly admire competition as an important driver of our prosperity. But an excessive focus on competition and competitors can lead to creative stagnation and sameness.  What is an excessive focus?  When your business model revolves around doing what the competition is doing but being better at it. Google is successful in search: Microsoft and Yahoo create their own search.  In 1998, if you were into movies about Asteroids hitting earth, you were in luck – there were at least three major releases: Armageddon, Deep Impact and Asteroid.

Imitating competitors feels safe and we justify it in both the business and personal world with a bit of self-deception: we will do it better because we are smarter.  In our educational system, parents with precocious kids all have the same resume building check list: straight A’s in AP classes, getting on a sport’s team, global travel to get a “global perspective” and start a foundation to help the less fortunate. The assumption is that my child is smarter and my parenting is superior so my child will earn a greater market share of life.  And this is certainly the tried and true path for producing the best lawyers, investment bankers and doctors in the world.

But while comfortable and a more certain path for reasonable success, imitative competition stifles innovation.  Our greatest individual trailblazers do not seem to come from the educational path described above – Sam Walmart worked odd jobs in high school and graduated from the University of Missouri on an ROTC scholarship.  Steve Jobs was what his contemporaries would call a “druggie” in high school and dropped out of college.  When Larry Page and Sergey Brin started Google in the late 1990’s they were not trying to steal market share from Altavista or Excite in the minuscule “internet search” space.  They created a new approach which has led to the current vast global market for search.

In the HR world, imitative competition rules. There’s a great need for high quality and cost-effective human resource support among small- to mid-size companies. Yet companies typically settle for one of the two tested and successful marketplace approaches:  1) use a Professional Employer Organization or PEO (PEOs work by co-employing and selling the benefits of reduced insurance costs, an HR call center and a large menu of benefit options) or 2) hire a part-time experienced HR professional/consultant.

Cannae Solutions sees this situation as an opportunity for something new.  By providing a complete outsourced human resource function at a fixed cost we are creating a new third option for companies. Cannae’s solution includes core processes like recruiting and payroll and benefits administration along with the softer aspects of HR such as business partnership and organizational improvement.  Our customers have the benefit of efficient outsourced administration teamed up with the support of an experienced HR professional.   We add value by improving and standardizing processes, integrating technology and implementing best practices.

Our customers self-select as not being bound by imitative competition: they are the subset of small- to mid-size companies that can benefit from a high-quality, full-service HR function but would prefer to spend their money on pioneering in their own industry and not on HR.

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