Pray for killer competition

It’s been a long week.  You’re tired after supporting customers, meeting investors, and rolling out that new feature that seems to have taken forever (probably because of all the customers you’ve been supporting). You’re about to close your laptop for a much needed dinner break but decide to check Twitter one last time before heading out. Bad idea. Your biggest competitor just cut their prices by 30%. And made massive improvements to their app which makes it not just cheaper than yours but better too. Bad news? No. Great news! Here’s why.

Great competition makes you better

via Wikimedia Commons

Issac Newton (among others) said

If I’ve seen further than others, it is by standing on the shoulders of giants

The idea is simple: none of us can ever create something completely new.  Innovation comes from building on the work of others.  Great competitors get a lot of things right: they find product-market fit; they nail branding; they crush it on distribution; they prove that people WILL pay more for x .

It may not always feel like it, but when your competitors do these things, it’s a gift, not a curse.  They’ve done a lot of the hard work, making it easier for you to climb up on their shoulders and jump ahead, not by copying them feature by feature, but by understanding how the market really reacts to their moves. If they’ve truly found a path that works, you can learn from it, and innovate from where they left off.

Cars, politics & phones: lessons in great competition

When Toyota launched its first car in the American market in 1951, everyone, including the big American auto manufacturers, laughed.  They didn’t laugh long, though, as Toyota and other Japanese manufactures applied lean manufacturing techniques to increase quality and decrease cost.  Hands down Americans said ‘yes’ to the Camry and ‘no’ to the Chevy Lumina (look it up, the Lumina hasn’t been made in over a decade).

via Wikimedia Commons

But GM learned from the Japanese (after many painful attempts) and, though not a guarantee, cars like the Chevy Volt may mean a turnaround for the company.   Without good competition from the Japanese, no amount of government intervention could have saved GM. The Japanese taught GM that small is beautiful, a consistent brand for a car model is indispensable and that quality pays, all lessons that seem to have finally been understood in the Volt.

As it goes in cars, so in politics.  Some historians argue that the relatively open social system that the United States enjoys today is due to competition from the USSR, not some innate American sense of justice and equality .  It was kind of hard to rail against communism full time at home while the entire African American population was discriminated against in every imaginable way.  Civil Rights legislation by JFK and Lyndon Johnson removed this most glaring contradiction in the American dream and  made it that much more difficult for the Soviets to argue that America was just a lie, and have those suffering from her worst abuses believe it.

Speaking of phones (sorry, don’t have a good segue there).  I think its hard to argue that Android would be anything without iOS, and at the same time that iOS won’t get better because of competition from Android.  Android, in combination with the big hardware manufactures like Samsung, is doing some real innovative stuff, including when it comes to design which has traditionally been Apple’s privileged domain.  But its far from clear that Android will win the battle for the smart phone market. It may turn out that Apple is the big winner in this latest competitive match, forced to get off it laurels and start innovating at the same pace as when it launched the iPod, iPhone and iPad.

Beware false competition

All competition is not created equal. There is a difference between great competition that gets you on your game, and false competition that gets you off it.  Telling the difference between the two can be difficult, but here are a few warning signs to look out for:

Competitors slashing prices

Sometimes a competitor cuts prices because they’ve achieved a breakthrough and can deliver the same or greater value for less.  Other times it means that they are just trying to be cheap to make up for a lack of quality or differentiation.  Don’t automatically respond in kind when a competitor reduces pricing. It might just mean it’s now easier for you take a different approach and capture higher margins! Many designer brands are getting more expensive as cheaper and cheaper apparel makes its way from Asia to American and Western European markets.

Competitors doing everything

via Wikimedia Commons

Is your competitor at every tradeshow, available on every platform,  partnering with every distributor, and moving into every geography?  That may mean they are executing a sophisticated multi-part marketing strategy that you need to study.  Or it could mean they aren’t focused and don’t know how to effectively target their market. Don’t let it get you distracted.  Think about what you need to do to be successful and execute, execute, execute.  Spending time and money to be just another voice in the same conversation is rarely worth it.  This is especially true when you are competing against a much larger competitor   Money is an easy replacement for brains, and many VPs of Marketing command huge budgets ($50,000 Platinum sponsorship anyone?) without having a command of the forces driving tectonic change in their industry.

Competitors constantly releasing features

No one likes to read a blog about a competitor releasing a new feature when you’ve been thinking about the same thing yourself for weeks or months.  But just because it was released, doesn’t mean it was needed!  New features mean more moving parts and usually more technical debt.  You might just find that your competitor releasing the most features becomes the competitor least able to adapt to changing market conditions. Think Microsoft Office vs. Google Apps. The city of  Boston is just the latest example of large organizations moving away for the more full featured productivity suite.  Google Apps is masterfully riding the intersection of falling public budgets, an increasingly mobile workforce and the consumerization of IT.  The fact that it has 50% of the features as Microsoft Office is irrelevant.

Who are your great competitors?

The question to ask yourself in all this is: “who are my truly great competitors and who is everyone else.” Once you can answer this question, you can start to focus on the things that really matter, and leave the rest to the imitators.  Like in art, it’s about what you leave out, and the jury of great competition is a harsh, but honest critic.  Make sure you listen to it.

  • IncrediBILL

    Great read. When I worked for Lotus our product successfully beat Microsoft which was great competition for sure. However, Lotus liked to panic every time Microsoft blinked and they were easily distracted and ultimately lost to Microsoft on all products across the board. Sad really because they had several great advantages over MS and gave it away.

    • Michael Ferranti

      Thanks for the feedback IncrediBILL. Actually, Lotus was in the back of my mind while I was writing this. Lotus/MS is one of the great case studies in how being a better product isn’t enough to win. Lotus 123 was way better than Excel, and Notes, way better than Exchange. But Microsoft nailed distribution perfectly. A shame, but I sure learned a lot from watching. I can only imagine how much you learned seeing it first hand!