Why do you conduct competitive analysis? Is it merely to see which features of competitors’ products are technically superior? Or is the goal to gain the insight that is needed to create products and services that get a job done better and/or more cheaply than competing solutions? We argue that the latter should be the goal. That being the case, comparing feature sets—“speeds and feeds”—of competing products is a waste of time. It’s an outdated approach that provides irrelevant information.
As part of the Outcome-Driven Innovation process, we conduct competitive analysis by having customers quantitatively evaluate competing offerings against a complete set of desired outcome statements. That process reveals precisely which offerings get the job done better and which get it done worse. These customer insights help along two fronts: (1) they pinpoint precisely what desired outcomes to address to offset the strengths of competing offerings, and (2) they reveal what underserved desired outcomes exist in the market as a whole, thus offering a path for leapfrogging all competitors and establishing a unique and valued competitive position.
To conduct an ODI-based competitive analysis, the organization must take these steps:
- Define the market: who is the customer, and what is the customer’s job-to-be-done?
- Define the desired outcomes: these are specialized statements that describe how customers measure success when getting the job done.
- Survey a statistically valid sample of the population to determine the importance of each desired outcome and the level of satisfaction users have with the leading products (the competitive product set).
These steps have been discussed individually in previous blog posts.
Once this work is completed, an evaluation of competing products can begin. This can best be understood through the example of Bosch’s ODI-based competitive analysis of the highly competitive North American circular-saw market. First, Bosch defined its market: tradesmen whose job-to-be-done is “cut wood in a straight line.” Then it captured 75 desired-outcome statements through customer interviews. Next, it surveyed 270 users of circular saws, including users of the two best-selling brands, DeWalt and Makita. It asked the users of those brands to rate the importance of each of the 75 outcomes and their level of satisfaction with the circular saw they used.
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Table 1 shows the results of that survey for eight of the outcome statements. It lists the outcome statement, the average importance of the outcome, the average satisfaction with the outcome, the opportunity score calculation, and the satisfaction scores of DeWalt and Makita circular-saw users.
With this type of quantitative data on each of the 75 outcome statements, Bosch was able to draw some solid conclusions:
- Bosch could determine which of the 75 desired outcomes were “table stakes,” desired outcomes that were very important and very satisfied, but could not be ignored by a new Bosch entrant into the market.
- Bosch could see which outcomes were better satisfied by DeWalt and which were better satisfied by Makita. This not only revealed the strengths and weaknesses of each competitor, but enabled Bosch to determine the technical reasons for their success, thus setting the direction for ideation.
- Because 14 of the 75 outcomes had an opportunity score greater than 10, Bosch could safely conclude that these 14 outcomes were underserved outcomes (unmet needs). Eight of these 14 outcomes are shown in Table 1.
- Bosch knew that satisfying the 14 unmet outcomes significantly better than DeWalt and Makita would enable Bosch to occupy a unique and valued competitive position: it would be satisfying unmet needs that no other competitor had been able to satisfy. This is the essence of strategy and the reason for competitive analysis.
- Bosch could see whether and where DeWalt or Makita had strengths that were adding cost but not value, as represented by outcomes with strong satisfaction values, but low importance scores. With this insight, Bosch was able to avoid adding features that were unnecessary and costly.
ODI-based competitive analysis reveals customer insights that are not ordinarily available to an organization. Knowing how customers measure value and how competing offerings are rated enables an organization to create products and services that get the job done better and/or more cheaply, which is the ultimate goal of the innovation process.