You won’t win today’s wars with yesterday’s weapons. The winners are always the innovators. Show me the man who has improved the most on yesterday’s technology and I will show you tomorrow’s winner.

In evolutionary terms, it’s called the Red Queen's hypothesis. It states that there exists a constant arms race in every area of your life. Simply put, we live in a competitive world and if we do not evolve and improve faster than our competition, we will lose. The misconception that most people share is that if they simply "get better" at something, they are on the right path to success. This is not true. It is possible to get better at a game and still lose that game. In fact, the tendency is that every participant in any given game gets better, yet still there is only one winner. The reason for this is that everyone playing will get better simply by playing. This process is built into each and every human being. The longer anyone does anything, the better they will get at it. This is the very thing that creates the Red Queen effect. You need to realize that everyone in the game is getting better at it as they play. You must put energy into your improvement just to keep up with everyone else. To win, you not only need to improve, you must do it faster than everyone else in the game you are competing against.

Let’s look at this from the perspective of two men who decide to have a running race. Jim and Karl are both 35 years old. One night while remembering their glory years in high school, they make a competitive bet. They agree to race each other in a one mile running race. The race is set three months from the time of the bet. Jim gets a personal trainer, and hires a nutritionist that came highly recommended by an ex-hockey player who lives next door to him. Within 10 weeks, Jim is running the mile faster than he was in high school. On the 12th week, he loses the race against Karl. How? Not because he didn’t improve, but because he didn’t improve more that Karl had. So how did Karl train? That’s the million dollar question. If Jim would have had those answers while he was training and could have improved on that technology, he would have won the race.

I see this in the business world time and time again and it seems that no one can figure out what is happening. The President of Acme Widget Company will sit down with his VPs completely confused at how month after month his sales people get more training, his costs of doing business get lower, and his product defect rate lessens, yet they lose market share every month. The answer is that they are sinking simply because all of their competition is swimming faster than they are.

When you understand how the Red Queen works, you come to understand the hidden economic factors of the Nth Step. You are about to understand the one thing that most of your competition will never discover on their own. In most cases, putting 90% of your energy into a project is wasting 90% of your energy. I know of no better way to waste resources than to put 90% into something. Never will you rob yourself of more than if you give it 90%. Sadly, this is how most of the world operates.

Sam owns a software design company. Sam is looking for new contracts and finds a request for proposal posted on the internet. Sam has no idea who his competition will be, how many other proposals the client will receive, or what the contents of the other proposals will be. The only thing Sam knows for sure is that there will be one proposal that will win the contract, and every other proposal will fail. This is a classic example of second place being nothing more than the first loser. Only by winning will Sam be able to recoup the costs of writing the proposal.

Sam pulls out his calculator and figures out how much this proposal is going to cost him to generate. His team will spend approximately 90 man hours to complete the proposal. He bases this off of his experience generating proposals similar to it. Sam pays his staff of all sub-contractors $150.00 per hour. Sam will spend about $13,500.00 to generate this proposal. Sam calculates the estimated profit, if he gets the deal, to be between $325,000.00 and $340,000.00. In the past, Sam has closed the deal 1 in 5 times in similar situations. This is because he is in a specific niche market and his team is well known in that market. Sam then calculates the estimated profit (at the low end) of $325,000.00 against the theoretical cost of needing to write 4 more proposals like this ($54,000.00) before he will land a contract. The numbers tell him that if he plays and stays in this game, he will make about $271,000.00 - This is where most business people stop and put the calculator away.

Sam isn’t done with his calculator yet. Sam understands the economics of the Nth step and wants to figure out what it would cost him to do something that he is sure his competitors will not have the resources to do. Sam has already figured out that a proposal will cost him $13,500 to generate. Sam has also just figured out that it would only cost him 10% more to deliver a software demo CD-ROM with his proposal that would serve as a proof-of-concept. Because Sam has written software like what’s requested in this proposal before, he has already written 70% of the code needed for this project. For an additional $1,500.00 he can pay his staff to organize the already written code into a demo CD-ROM that will literally "show" his client what they can expect. The $1,500.00 represents the cost of the Nth step and he would be a fool to not invest it. Sam adds in the additional 10% to his proposal costs that his competitor’s proposals will not include.

Sam won the contract. Sam played smart and played to win.

In the example above, the losers would have been better off to have only invested 15% into their proposal as they would have still lost, but they would have only lost 15% rather than the 90% they did lose. Realize however that even at a 15% loss, after 7 proposals, they will burn through 105% of their budget and they would do this for nothing as they are guaranteed to lose all seven proposals with an investment of only 15%.

The moral of the story isn’t in holding resources back. The moral of the story is to find a game you can compete in and give it 100%. Ask yourself if you are prepared to lose $90,000.00 because you wouldn’t put in another $10,000.00? Are you prepared to work 9 hours for zero results because you wouldn’t put in that extra hour it would have taken to assure winning? Are you willing to risk your bet because you didn’t do everything you could to assure you would win? How often have you set yourself up at the 90% mark and suffered the consequences?

Unfortunately, it doesn’t stop there. Not only do you need to constantly be putting more energy into advancement than your competition simply to survive but you need to acknowledge that the rules of the game are continuously changing as you play. This is the other reason why the winners are always the innovators. They are the only ones that can keep up with the changes in the terrain as they run the race.

At one point in the history of auto racing, all of the tires were the same. One day, someone got the bright idea that if it rained, they should put tires on the car specifically designed for maximum performance in rain. One day it rained, one race car had rain tires, and it won the race. You can imagine that it wasn’t too long after that day that every racing team had a set of special rain tires ready to go for the next time the course got wet. And so the cycle continued as racing teams looked for other ways to temporarily get a leg up on the competition. This is the evolution of the race car.

Make no mistake, history repeats itself. The inner workings of the human brain have not changed in over 40,000 years. This is why history repeats. It makes me laugh when world tragedy hits and everyone cries about how they wish they could have seen it coming. If you want to make better predictions than a psychic on how the United States of America will either evolve or fall apart, start reading about the fall of the other great nations in history. The parallels are so close that it’s comical in a tragic way. People evolve slowly but technology evolves faster and faster by the day. People today behave the same way towards each other as they did 40,000 years ago. They just use different tools and technology to do the same things to each other today. The basic rule is that human nature repeats over and over again as technology evolves faster and faster to better carry out that human nature.

This is a very important concept to keep in mind when you are getting advice from people "who have been there before you." When it comes to them telling you about human nature, pay close attention. When they start talking about how you should go about doing things, question everything they say. They ran the race years ago and the rules have changed because the technology has changed. The person who sits in the corner office got there 15 years ago. The rules for getting there today are totally different and in most cases, they have no idea what those rules are.

So where does that leave you? Feeling a little uneasy because you don’t have the roadmap to success that you thought you had? You were simply going to follow what everyone else did to succeed? It should actually make you feel better. Why? Because like no time ever before in history, the playing field is level. With the help of the internet, we have seen large corporations destroyed by groups of people at home, with a computer, while in their underwear.

Welcome to the 21st century! You want to win? The winners are the ones who are constantly improving and they are doing it while the competition sleeps. The winners are testing everything, finding new ways to win tomorrow’s game, and they rewrite the rules as they do it. You must learn how to learn and invest enough to win or you will not survive.