The above quote illustrates how often competitors’ actions can cause surprise and astonishment, leading to anything from partial response to complete surrender. In my years of working with organisations in assisting with their strategic planning process, competitor analysis is one activity that seems pretty weak in the sense that what is captured is very descriptive (only). There is a breakdown of who they are, where they are, what they do, some product description and some financials. These can be obtained after a quick look at a company’s website and, in my view, do not constitute proper competitor analysis.
True competitor analysis, in addition to the above, is about having the ability to answer the following with absolute certainty and clarity:
– What is their vision?
– What is their sense of direction?
– What is their strategy and can you articulate it?
– What is their source of competitive advantage?
– How does it compare to yours?
– How do their capabilities compare to yours?
– How has the competitive landscape changed?
– What have been the drivers behind that change?
– Who has reacted quickest to any change; them or you?
– Where do you see them five years from now?
– What will the industry’s competitive landscape look like in five years time?
– Who will the main players be?
– Who will be the new entrants?
– Where will they come from?
If you have answered these questions to your full and complete satisfaction stop here and well done. If not…..
What is the process that you have for tracking your competitors’ actions and who is involved in that process? We often recommend to our clients that on their intranet they add a “Have you heard?” section about what competitors may be up to and encourage anybody to contribute. This keeps the conversation alive if nothing else.
Joint suppliers and customers can be a very valuable source of information as well. Use them.
Bruce Henderson, founder of The Boston Consulting Group once remarked that “Your most dangerous competitors are the ones just like you!” The more alike you are to your competitors the more limiting your options to compete become. If at all possible the aim is to differentiate yourself in the minds of customers. Having said that, new competitors often come from very different industries. Executives at Sony must be livid at the success of Apple. How dare a technology company steal such a march in the music and entertainment industry? At the time of writing, there was a discussion on a radio programme entitled “Is any industry Tesco proof?” In some sectors, nowadays, industry boundaries count for nothing and, far too often, discussions on competitors are focussed on the current industry incumbents to the exclusion of potential new entrants. When I run in-company facilitation exercises on strategic planning, I try to forbid the following preface to any statement”…But in our industry!…” This is too limiting.
Try the following next time you have a strategic discussion, away day etc…
– Customers buy from us because…..
– Customers buy from our competitors because…..
– The craziest thing our competitors could do is…..
And get people to complete the sentence!
As I have begun with a cinematographic quote I will finish with one;
“Never hate your enemy, it clouds your judgement! This is business!” (Michael Corleone dispensing advice in The Godfather 3).
Good Luck!