Go on, ignore competition!!!

22Jul09

Yes you heard me. I’m telling you to stop doing something that is the basis for most companies strategic planning and decision-making – obsessive competitive analysis.

Don’t get me wrong; I’m not saying observing competition is a mistake, I’m saying it should not define your strategy. If your competitors become more efficient, so should you. If your competitors enter a new market, you too should consider it, if your competitors significantly improve their product so should you, all in the name of not allowing them a competitive advantage. However, this is not the same as defining your every strategic move based on their activities.

Business is not a race where everyone runs on the same track towards the same goal (although it sure looks like it from where I’m writing).

running-race[1]

Business is a playing field where the participants, and the rules of the game, changes – your role should therefore be to facilitate and to drive this change, your role should be as a creator of something different and new. Following competition is counterproductive to this!

Not convinced? Well here are three reasons why you should ignore competition (ok so I’m exaggerating to make a point):

(1)    The blind may just be leading the blind
(2)    Little innovation comes from following (and by that rational limited growth)
(3)    Strategy should not be defined by competition

1) The blind may just be leading the blind

Do you think your company is well run? Is senior management some of the best you have ever seen? Are your decisions and strategy based on intelligent market analysis and on real understanding? Does your corporate culture encourage excellence? Does your company have a history of making the right decisions?

I guess many of you will answer no to these questions. If that is the case, do you have any reason to believe that the answers from the companies you compete with will be different?

Probably not…so I ask you…

“If you have no reason to believe they are better than you, why would you want to follow their actions, why would you want to do what they do, produce what they produce, communicate in the way they communicate, sell to the same customers – basically why would you trust them to do the right thing?”

2) Little innovation comes from following

Over emphasis on competition is a reactive game, a game that leads at best to matching your rivals’ efforts, and at worse playing the catch up game (in the case of carbonated soft drinks this means fighting for an increase of less than 0.5% in market share), or producing more of the same.

Kenichi Ohmae (1) illustrates this very well when he says “To start you have to ask the right questions and set the right kinds of strategic goals.  If your only concern is that General Electric has just brought out a percolator that brews coffee in ten minutes, you will get your engineers to design one that brews it in seven minutes.  And if you stick with that logic, market research will tell you that instant coffee is the way to go.  If the General Electric machine consumes only a little electricity, you will focus on using even less.” (Thank you Knowledge for finding my favourite article :) )

What it does not do is lead to creativity, innovation, disruption. Yes it can lead to a growth in market share, but it wont lead to real market growth. Surely you will agree that growing the pie, or creating a new one, makes more business sense than fighting to protect your slice of, or growing the existing pie marginally?

3) Strategy should not be defined by competition

Responding to competition is not strategy; defining ways of beating competition is not strategy. Strategy is being obsessed with finding new ways of satisfying needs. In this scenario following competition only has one purpose, to ensure that you don’t do what they do (the opposite of what most competitive analysis is used for today).

If competition is already doing it, then someone is satisfying the need. Sure maybe not well enough, and feel free to go ahead and improve on an existing product/service. I’m simply asking you not to make it the basis for all your strategic activities. Look for a sustainable advantage by focusing your attention on what is not already done, what is not available, what no one has thought of, but mostly on what people need, what they value. Once you understand all this, ensure your products and services deliver on it, be it through your business model, your products and services, the customers you choose to satisfy, your communication, your processes. This is how I believe you will achieve an Edge over other companies. But more about that some other time!

So you see, ignoring competition (for a while at least) may make you look at your business in a different way, which could lead to a better way of creating, hiring, managing, producing, delivering, communicating.

Somewhere in there there is a market leader waiting to be born, if you give it (instead of the competition) some attention!

1) Kenichi Ohmae (大前研一, Ōmae Kenichi, is one of the world’s leading business and corporate strategists. He is known as “Mr. Strategy” and has developed the 3C’s Model.

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Filed under: Innovation, Organisational Behaviour, THE EDGE, Thoughts   |  6 Comments

6 Responses to “Go on, ignore competition!!!”  

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  1. 1 Tim Forrest on Jul 23rd, 2009 said:

    Very well put! Your third point opens the door to a strategy based not on the competition but the customer – ‘Strategy is being obsessed with finding new ways of satisfying needs’.

    As soon as I read this i was reminded of 2 things:

    1) a quote from the Amazon founder, Jeff Bezos, talking to his staff: ‘Look. I want you to wake up every morning terrified with your sheets drenched in sweat, but don’t be afraid of our competitors, be afraid of our customers, because those are the people with whom we have a relationship.’

    2) the book by Hugh Davidson, ‘Even More Offensive Marketing’.

  2. 2 Hugh Roberts on Jul 24th, 2009 said:

    Nice article…and i agree that obsessing with the competition seems unhealthy. Sports psychologists tell us to focus on the things that we can control and to ignore the rest. We can control our attitude, our behaviour and our physical processes – we cant control the way the ball bounces when it hits the fairway, or the scores of our competitors. So dont get hung up on these distractions.
    Having said that, in my line of work (brand design) its always instructive to look at the competitor landscape and identify the visual codes at work. This often leads to insights about ways to communicate differently, about vacant positioning territories, about opportunities for improvement or innovation. In other words, look at the competitors – and do the opposite.

  3. 3 liriandersson on Jul 24th, 2009 said:

    Well put Hugh!!! This is exactly what I mean when I say Look for a sustainable advantage by focusing your attention on what is NOT already done, what is NOT available, what no one has thought of, but mostly on what people need, what they value. As always Hugh, you say it so much better than me :)

  4. 4 liriandersson on Jul 24th, 2009 said:

    Excellent comment Tim (as usual). Baring in mind that Jeff Bezos said this around 2002, I wonder what he would say today, a today where not only do we have a relationship with our customers (or trying at least), but these customers are journalists, innovators, contributors, friends, enemies, competitors, technology gurus, content producers, artists, writers,…and they are promiscuous (in the way they switch their brand loyalty) – how do you have a successful relationship with these individuals? Isn’t the answer to that the Holy Grail of Holy Grails for anyone working in the comms/advertising and branding industry today!?

  5. 5 Steve Taylor on Jul 29th, 2009 said:

    From a business strategy p.o.v. (and, Hugh,from a branding p.o.v. as well)absolutely THE most powerful thing you can do is to create an offer and positioning that definitively reposition the competition as old-school, inefficient, inadequately user-oriented, dull, un-innovative etc etc. Use your own positioning to redraw the competitive map in a way that puts your brand/company/product in a new space, where it is unquestionably number one. As Buckminster Fuller said (with apologies to anyone who has been in my office, where this quotation hangs on the wall in 96pt type); “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”

  6. 6 Rory Sutherland on Jul 31st, 2009 said:

    Damn. I was just about to write a blog post about this very subject. But anything I wanted to say and more has been said above. And thanks for the Bucky quote.

    The analogy I was going to make – an instance where people have entirely lost sight of the primary audience and instead focus on competitors – is women’s clothing. Originally conceived to attract men, the fashion industry has so lost sight of its initial target audience that it no longer employs many heterosexual males, or indeed much interests them. That is because all the effort has been displaced from the primary target and is now squandered on the secondary one – in other words fashion is now used not to appeal to men but to intimidate other women.

    Creative awards have taken this same path. It’s now about the peer group, that’s all.

    The distinction you need to make is between competing *for *something vs competing *against* other people. The first is creative, the second destructive.

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