“This is a crowded market. Who, then, do you see as your biggest competition?” I asked, getting my notebook out. The CEO I was interviewing paused for a moment, and then triumphantly declared, “Well, I don’t think we have any competition, really. We’re not big enough to be competing with the big guys, and we’re not small enough to worry about the lower-end of the market. We’re in a funny protected space in the middle.”
I looked up, a little puzzled, and asked, “Regardless of your size, though, aren’t you still competing for the same clients as the bigger and smaller companies in this sector?” To which he replied, “Well, I suppose so. I hadn’t really thought of it like that.”
Competition and the challenges it brings are the essence of the free enterprise economy. Fair trade on an open playing field is the ideal we strive for in a perfect world. Whether or not the playing field is fair is a topic for another article. Regardless of your ideology of capitalism, if you are in business today, you will always have competition. If you think you don’t, you could be in trouble.
No competition is a lie, or, at the very least, a bad sign!
It is a counter-intuitive position to think of a healthy company as one with strong competitors. In any entrepreneurial dream, there is a desire to create something where no competition exists and, thus, own a limitless opportunity to dominate the demand. My challenge to this view is that without competition, the business has little or no chance of survival. Any business leader who claims to own the entire demand for a product or service is either lying, misguided or doing something illegal. For we all know what happens when you build a monopoly in a free economy. In the many years that I have been interviewing CEOs, entrepreneurs and executives, I have heard, “We have no competition.” far too many times. It is an illusion of grandeur that no leader need boast about, nor believe. For starters, having no competition could very well mean that there is a poor demand for the product or service in question.
Competition provides validation
The good news about competition, is that it provides validation for your ideas. The more players that step forward to take a piece of your sector’s proverbial pie, the more confirmation there is that this space is a worthwhile place to make money. Bud Stoddard, CEO of Amerivault, a leader in the electronic backup market, says, “I love to compete with the 800-pound gorillas. If we are a world-class business, then the competition will see us as an opportunity, its great validation that we are doing the right thing.”
Competition provides opportunities
With Bud Stoddard’s words in mind, it’s apparent that the opportunity he’s alluding to is acquisition. By making his business a serious competitor, he knows he will attract the attention of the big players, creating a perfect exit strategy for himself.
In my own experience, the opportunities provided by competition have been in the area of learning. Speaking with my competitors has been very instrumental in my understanding of the market challenges. Whenever I say this, most people ask me what competitor would actually sit down and discuss their business with me? It’s not as far-fetched an idea as you think. Writing articles, for one, is a clever way to get people to tell you about themselves and their businesses. But, in fact, it is rather surprising that many business leaders, even competitors, will be open to a mutual exchange of ideas. True development through conversation is, after all, a reciprocal exchange.
All successful executives know that the only thing more expensive than a good education, is ignorance. If you are in a position to educate your clients, partners, vendors, or even your competition, do it, albeit with some thought as to the consequences. Educating your industry segment, which will no doubt include your competition, can be a very favorable strategy if you are in an industry that is new and is trying to gain credibility. By growing the industry, you grow the market. The spin-off is that if you lead the way, you will become known as an innovator.
Running workshops, training courses, publishing guides, and hosting web conferences are simple and inexpensive ways of extending your knowledge to your constituent markets. Every year, there are dozens of new services and products released to the market, but very few people actually know how to use them to make their businesses run more efficiently. The companies that succeed in getting their clients on-board, are very often the companies hosting free workshops and training for potential clients. This, of course, means competitors can visit your workshops, but, in a bizarre way, this can actually work in your favor.
Competition urges you to innovate
Living in a comfort zone can be a dangerous place. I used to work with an accomplished CEO who often paraphrased the common adage, “If you are feeling comfortable, you should be a little scared.” Positive attitudes are good, but there is nothing wrong with looking over your shoulder once in a while. “It’s the responsibility of every good leader to be doing their homework on the competition,” says, Alyssa Dver, Vice President and Chief Marketing Officer of Sedona Corporation, a software developer. “I interview up to forty people for a single article. It’s important for me to stay in touch with what’s going on.” Dver, who also writes for Newsweek, believes that the fundamental law of business is that you have to know what motivates people. “If you want to get people to do something, you have to know what will motivate them to do that thing,” she says. Understanding the competition and what motivates your customers to buy from them, rather than from you, is an essential part of that understanding.
Competitive markets are the essential formula for success in any biological system, whether they are human or otherwise. Taking the advice of the leaders interviewed, it seems embracing your competitive environment is a vital step toward keeping yourself ahead of the curve. Maybe the best way to look ahead, is to keep your eyes looking left and right.