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. Granted, exploiting the competition is not a novel concept. Even so, it is still very common to hear many executives adopt a competition neutral position. These executives simply don’t believe competition to be a significant factor in the execution of their business plan.
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. In today’s post I’ll share my thoughts on the proper way to view your competition and how to identify competitive threats…
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 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, desire and commitment.
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? 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 exploit 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 custom centricity. A sustainable competitive advantage is not found by creating minor advantages in product features. Long-term competitive separation is created by innovating around the needs of your customers and clients with a focus on long-term value creation.
Mike Myatt, is a Top CEO Coach, author of “Leadership Matters…The CEO Survival Manual“, and Managing Director of N2Growth.