For success, obsess over your customer instead of competition
“If you are competitor focused, you have to wait until there is a competitor doing something. Being customer-focused allows you to be more pioneering.” – Jeff Bezos
I love browsing product pages on web sites! I especially enjoy looking at how some companies are positioning their products against the competition. You know, these well-crafted competitive analysis matrices that magically show the company’s solutions in their best light, always crushing the competition.
What a waste of time and credibility!
In most cases, such analysis is showing a somewhat distorted reality. It doesn’t even consider that the “puck” keeps moving and the competitive landscape changing.
So, should you ignore your competition altogether and follow some more radical advice like the one above from Jeff Bezos? He provides solid wisdom here, but how do you effectively let go of your obsession over the competition? How do you balance between solving your customers’ problems and faring well when the question about your competitive positioning unavoidably comes?
Reflecting on my own experience driving product and business teams, here are a few principles I’ve seen work that can help you assess how big (or small) of a role competition should play.
Disruptor or Disrupted? Know where you stand!
The lens you apply to the competition will differ significantly, whether you are the disruptor or the potential disrupted. It’s essential not to fall victim to competitive myopia. History shows ample examples of disrupted companies because their main focus was on same-class competitors (who also got disrupted eventually).
Clayton Christensen’s books about disruptive innovation provide much ammunition there. Let me quickly explain what is really different:
A successful disruptive company will first target specific customer segments overlooked by the competition. They might provide an inferior yet more adapted alternative. Eventually, they move upmarket, keeping their tailored, competitive advantage and now directly challenging established companies on mainstream offerings.
A famous example of a disrupted business is the US video store and movie rental chain, BlockBusters. The company grew its business nationwide in the ’80s, turning into the #1 destination for VHS and then DVD rentals. Their focus was mostly on the same-class competition: Movie Gallery, Hollywood Video, or Erol’s. None of these names ring a bell these days because they all disappeared! BlockBusters acquired a few, others just died.
The bottom line is that Blockbusters did not see the disruptor (i.e.Netflix) coming. Please note that Netflix didn’t go after Blockbuster’s customers at the start. They did not focus on the newest releases. They only appealed to customers bothered by the inconvenience of getting to a physical store and having to pay to late return fees. But then, Netflix moved more mainstream, delivering the newest releases, and mastering digital delivery. No one needed BlockBusters anymore…
So, your competitive lens clearly differs whether you are the one to be disrupted or the one to disrupt, but always keep in mind the potential disruptors hiding in adjacent categories. They’re by far the most insidious competitors.
Get to know your competition, the right way
I will not advocate for you to completely forget about the competition. There’s real value in studying the alternatives to your solutions and where they get traction. It’s not a reason to fully expose your customers to such analysis, though. You might be the one who cares about competition, but your customers care first about seeing their problems solved.
If you want to conduct proper competitive analysis, here are a couple of principles to keep in mind.
First, stop obsessing over feature-to-feature comparison. Instead, focus on understanding WHY your competition is progressing or failing. Many reports and analysts will point you to the outcome or the symptoms. But I’ve never seen a more efficient way to understand the WHY than ask your customers directly. So, go and conduct win-loss analysis interviews on your most recent activities. Be sure you’re interacting with the decision-makers and focus on asking open-ended, yet probing questions.
Second, you should focus on where the puck is going. Comparing your solutions with your competitors’ current offering is dangerously limiting. Gather all the intelligence you can on your competitors and build “What if” scenarios. One powerful (and entertaining) way to do it is to gather team members from different functions (product, sales, marketing…). Let them do some roleplay, putting themselves in your competitors’ shoes, and articulating what their strategy most likely is. Such scenarios help you assess risk and put a relative weight to it. Nothing can replace proper leadership judgment on risk assessment, but getting into it eyes wide open goes a long way.
Find the right balance!
Even when it’s done right, I must admit a significant challenge with my previous companies was still the disproportionate amount of time spent on competitive analysis. No matter how much we said we should not obsess over the competition, we spent way too much energy over-analyzing them.
Simply enough, the solution is to keep relentlessly focusing on your customer.
I always keep in mind this quote from Reed Hastings (yes, Netflix again!), when he was asked who the company’s biggest competitor was, he said “sleep.”
No mention of Apple, Amazon, Youtube, or Hollywood. Just that relentless focus on pleasing their customer and finding enough time to build the right experiences!
Eventually, no competitive analysis will rival the passion or even obsession for solving your customers’ problems. Staying laser-sharp focused on your customer is how you can craft your own path and destiny as a business. Successful companies understand these nuances and equip their sales teams with the right tools. Go and address your customers’ biggest problems instead of obsessing over displacing a specific competitor. No business strategy should be based on what your competition is up to.
In conclusion
There’s no doubt you need to genuinely understand your competitive landscape and correctly anticipate the moves from potential disruptors. Just don’t obsess over it and focus your passion on solving your customers’ most significant problems. It might not prevent you from being disrupted (we all get disrupted eventually). Yet, the foundation you build will help you for the next time you need to pivot. If you couple customer-centricity with enough agility, it will go a long way in helping you adapt to ever-changing market conditions.
I’ll leave with a thought on two giants in the photography worlds from the 20th century: Kodak and FujiFilm. Kodak lost most of its relevance, got disrupted by digital photography, and never reinvented itself. Fujifilm, on the other hand, faced the very same struggles with their film business. They also got disrupted but pivoted and diversified early enough to still be around and relevant these days, albeit in different categories now.
I’m genuinely interested in getting your feedback on this topic! How successful have you been with your own competitive analysis efforts? Which other considerations worked for you? Just comment on this blog or drop me a note on The Product Sherpa site!