Competition is only to be feared if not understood. If understood, competition is not only healthy, but it can also be very prosperous. If you really want to understand a leader’s perspective on the market, ask them about their competition. A leader’s view on competition will not only reveal a lot about their beliefs on current and future market trends, but also on innovation, branding, talent management, supply chain issues, constituency management, capital markets, and customer facing. Whether you want to admit it or not, competition is part of your world, and likely a bigger part than you’d care to admit. In today’s post I’ll share my thoughts on how to identify competitive threats as well as competitive opportunities…
Every leader has an approach to dealing with competition. Some leaders completely ignore the topic of competition as if it doesn’t exist, others view competition as a minor nuisance, some executives see the competitive landscape as a battlefield where war is waged on a daily basis, and others view competition as untapped opportunities for collaboration and innovation. Smart leaders are fluid in their approach and understand that competition can breed significant opportunity.
Many people view the topic of competition as almost sophomoric. These captains of their own destiny share the perspectve that competition is not a significant factor in the execution of their business plan – they’re in control and competition is irrelevant. While this may make for a nice sound bite, I don’t buy it, and if they’re truly honest with themselves, neither do they. In business you can either choose to deal with your competition (even if that means partnering with them), or you can opt to stand idly by and let the competition eat your lunch.
While some companies talk a good game with regard to competitive strategy, in my experience very few businesses actually address the issue in adequate fashion. I suppose much of my perspective on competition was formed during my days as a soldier and athlete. In the military we valued actionable intelligence, studied our enemy’s strengths and weaknesses, developed a battle plan around a solid strategy, and executed our tactical mission as if our lives depended on it – because they did. Similarly, in my days as an athlete, our game plan each week was refined based upon the strengths and weaknesses of the team we were playing next. If we didn’t study films and scouting reports, develop plays that would exploit match-ups, and execute our game plan we would lose…it was as simple as that. Dealing with competition in the business world is really no different than dealing with enemies on the battlefield or competitors on the athletic field…you either win or lose based upon your state of preparedness, perspective, interpretation and execution. In the following paragraph I share my views on competition so that you can understand how I personally navigate this issue.
There is arguably no more competitive space than what exists in the professional services arena. While I tend to view my competition as peers and colleagues, it is not lost on me that my clients have a choice. The client is in control. Not me, nor my competitor – the client. I know who my competition is, and I know where and when I’m a better choice. I have a very strong understanding of where I can create the most value for my clients. Where I’m not the best fit, I refer my peers or in some cases I partner with them, but I attempt to ensure the client receives the best solution whether or not said solution includes me or my firm. Put simply, I deal with competition by attempting to create the best solution for my clients. Sometimes this includes my colleagues, and sometimes it excludes them. One final thought here…the competition I’m most concerned about is not the competition that I know, but the competition that I don’t. I’m always on the lookout for new practitioners entering the market where we have practice areas, disruptive technology, or changes in the landscape that could disintermediate certain aspects of the market. I worry much more about the unknown than the known…
Now it’s your turn – how well do you know your competition? No really…not how well do you think you know your competition, but how well do you really understand them? I’ve often found executives when asked about their competition tend to talk about the organization that most closely resembles their own. That’s nice, but how much time do you spend evaluating people, entities or technology that might not be competition presently, but that could be down the road? Do you have a business intelligence platform? When was the last time you conducted a formal competitive study? Do your R&D and innovation programs evaluate the competitive landscape? Do your marketing, PR and branding initiatives satisfactorily address the competition? Do you stack-up as well as you think, or have you just adopted a position out of convenience?
The first step in developing a competitive strategy is to identify your current and potential threats, and then to prioritize said threats based upon perceived risk/reward and cost/benefit scenarios. The following list is clearly not exhaustive, but it is representative of the main competitive threats to a business. As the following list indicates, competition can come in the form of any one or combination of the following potential threats:
- Existing or potential direct and indirect competitors.
- Existing clients or end-users that could either become competition or strengthen your competitors if they have a change in loyalty.
- Current or former employees who could become competition.
- Vendors, suppliers or distributors that could become competition, or provide an edge to your competition.
- Competitive innovations in process, management, talent, pricing, efficiency, etc. that can cause disruption in the market.
- Strong changes in brand perception via news, PR, branding, litigation etc. can create changes in the competitive landscape.
- Competitive technology innovations that could adversely impact your business.
- Competitive mergers, acquisitions and roll-ups that could adversely impact your business.
- Political, legislative, regulatory, or compliance actions that could create a competitive imbalance in the market.
- Changes in general market dynamics that could create competitive changes in the market.
Once all areas of competitive risk have been identified and prioritized it will be much easier to develop a strategy for stacking the odds in your favor regardless of when, where, or how you encounter the competition. The key to successfully exploiting competition over the long haul is linking your competitive strategy to the discipline of innovation and the mindset of being externally focused with regard to the market. While customer centricity is important, don’t forget to look for new customers/markets as well. Maintaining your existing revenue base is important, but deepening and expanding relationships is even more important. A sustainable competitive advantage is not found by creating minor advantages in product features. Long-term advantage is created by innovating around the needs of the market with a focus on long-term value creation.