abundance vs. scarcity by robert kiyosaki

Abundance vs. Scarcity: Which Mindset Do You Have?

Only those with an abundance mindset will come out of this crisis positioned to thrive

A while back, I wrote about the financial genius of Amazon.com. In that article, I talked about how Amazon’s habit of spending their operating income on investments was the blueprint for how to get rich. Savers are losers; spenders are winners.

I wrote that article as Amazon’s acquisition of Whole Foods dominated the financial headlines. But if you were following that story at the time, you might have missed an interesting side story.

In a move that almost nobody could have predicted back in the mid-90s when Amazon was just starting up as an online bookseller, the acquisition of Whole Foods makes them one of Walmart’s biggest and most dangerous competitors.

Amazon’s abundance mindset: investing in a big (data) advantage

As Kevin Maney wrote for Newsweek, the combination of user data and operational efficiencies that Amazon has put into place make them much more likely to dominate Walmart in the retail space than Walmart’s acquisitions of companies like online clothing retailer Bonobos will make them able to go toe to toe with Amazon.

While it is true that Walmart currently has a much larger retail footprint and quite a bit more revenue, they are nonetheless scared of the threat that Amazon presents.

“The century-long interplay between technology and retail suggests Walmart is screwed,” writes Maney. “Its efforts to morph into an online retailer by buying Bonobos and Jet.com will end up making the company seem like Michael Jordan playing baseball—what made it great at one thing doesn’t translate to another.”

Amazon’s pick up of Whole Foods, on the other hand, will only enhance their business, according to Maney, “Either Whole Foods will help Amazon learn about a kale-munching customer sector it doesn’t yet own or Amazon’s AI will help it make each Whole Foods store irresistible to everyone in its neighborhood. Or both.” 

This is an abundance mindset. Amazon is looking forward and finding opportunities for the taking ahead of competition. They are not on their heels but instead seeing what others don’t.

Since the acquisition, Amazon has done a lot of innovation to integrate Whole Foods into their online shopping model, including allowing you to shop for Whole Foods groceries on the Amazon site and free, same-day delivery for its Prime members. In a new world where coronavirus has everyone staying home as much as possible, these will only serve to help Amazon continue to chip away at what once looked like an invincible market share that Walmart held.

Walmart’s scarcity mindset: squeezing suppliers

In the face of Amazon’s mounting competition, Walmart made an interesting move at the time of the Whole Foods acquisition. They told partners and suppliers that they couldn’t do business if they ran software on Amazon’s AWS cloud servers. Instead, they were told to move their software to Microsoft’s Azure cloud.

As Fortune reported, an Amazon spokesman said this was Walmart bullying its suppliers. And it was and is.

As a result, many suppliers are standing up to Walmart. After all, it’s no small thing to move your technology onto a new cloud system, and it’s a disruption to business that could be very costly.

In the days when Walmart was a powerhouse that seemed unstoppable in the retail business, they could get away with these kinds of tactics. But today, Walmart doesn’t have as much power as they used to, and they will continue to lose market share in the coming years.

I have no doubt that Walmart will not only continue these types of tactics, but they will also probably double down on them. Why? Because they are afraid.

And when people and businesses are afraid, they work from a scarcity mindset. In this case, rather than look for opportunities to leverage a competitive advantage of a much more robust supply chain to serve a massive physical footprint, Walmart looked to squeeze that competitive advantage and coerce loyalty rather than reward it.

Abundance vs. scarcity: two kinds of mindset

And all of this is indicative of two kinds of mindset at play: the mindset of abundance vs. the mindset of scarcity.

My rich dad said, “There are two kinds of money problems. Not enough money, and too much money. Which type of money problem do you want?”

In the world of business, this can also be modified to say, “There are two kinds of business problems: not enough opportunity and too much opportunity.”

Amazon saw a world of abundance. Because of this they made proactive moves that strengthened their business and opened up new partnerships and possibilities.

Walmart saw a world of scarcity. Because of this they cracked down on vendors and partners with an irrational fear around Amazon’s cloud servers. 

Amazon is advancing; Walmart is building walls.

What will you see?

In a hard time such as the one we’re facing with a global pandemic and a potentially long and painful recession, this battle between Amazon and Walmart provides an important lesson to learn for you and for me. The fundamental question you must ask is, in the face of fear will you be a person who sees abundance or will you see only scarcity? Will you find where you can advance or will you build your own version of a wall?

If you chose scarcity—and that is almost everyone’s default—you will never be truly successful. As I wrote a few years ago in a post called “The Two Views of Money”:

Rich dad connected what he saw as some of the causes of scarcity to the effect it has on people’s attitudes. The interesting thing was the very values that people thought would help them actually, and paradoxically, created scarcity in their life.

Rich dad would say:

  • The more security you need in your life the more scarcity there is in your life. That is why people pass up on opportunities to make their money work for them through investments and business. They are too afraid to take a risk.
  • The more competitive you are the more scarcity there is in your life. That is why people compete for jobs and promotions at work and compete for grades in school.

And today’s world makes it even harder not to crave security and look at everyone as a competitor.

Rich dad’s words and wisdom ring true today for you and me, as they did for Walmart and other companies like them. The drive for security and the misdirected competitive spirit will only serve to make you lose ground, not expand your business and your wealth.

But if you have a mindset of abundance vs. scarcity, you will see opportunity in this crisis that others will miss. The amazing thing is it will not seem risky to move on the opportunities once you see them. In fact, it will seem risky not too. And because you see opportunity wherever you look, you won’t be afraid of competition. Rather, you’ll invite people to come along with you.

Abundance is a daily choice

The thing is Walmart has proven it can be innovative and successful. They have seen the world of abundance. But recent history shows they can also easily slip into operating in a scarcity mindset. And this is a good reminder that you must choose your mindset daily. There is never a time when you reach the end of your mindset journey.

You don’t wake up one day and say, “I’ve done it. I’m now a person who sees abundance. What’s next?” Instead, you must wake up each morning and say, “Today, I’m choosing to see the world as one of opportunity and I’m going to act accordingly.”

So, what are you going to choose today?

Original publish date: June 26, 2017