Exploiting the Competition
(Part one of a two-part series.)
It is very common in today’s business world to hear executives adopt a neutral position in regards to competitors. They don’t believe competition is a significant factor in the execution of their business plan. While this may make for a nice, politically correct sound bite, it is nothing short of flawed business logic. Business owners can either choose to deal with their competition—even if that means partnering with them—or opt to stand idly by and let them eat your lunch.
As a small business owner, how should you view your competition, and how do you 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 competitors, 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? Are your R&D and innovation programs focused on competition? 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?
Identify Competitive Threats
The first step in developing a competitive strategy is to identify your current and potential threats and then prioritize them 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 direct and indirect competitors.
- Future 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.
- Innovative or powerful vendors, suppliers or distributors that could 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 or legislative 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.
|
N2growth, a Portland, Ore.-based strategy and consulting firm, helps small businesses grow their talent, revenue and brand equity.
