When it comes to strategy and competition, there are two broad schools of thought. The first is that a detailed understanding of competitors is central to delivering and sustaining competitive advantage and should be at the heart of your strategy work.
The second school of thought, however, is that focusing on competitors is a distraction. Instead, you should focus on understanding and profitably serving the needs of your target customers without concerning yourself too much about your competitors.
My own view lies closer to the second school. Focusing on delighting customers and generating good returns is always a better use of time than simply trying to ‘beat’ your rivals. After all, even if you ‘beat’ a particular competitor, a new one will likely emerge to take their place. If you’re not careful, you simply end up in a kind of Wack-A-Mole game where you try to match or outdo everything your competitors are doing.
That said, it is critically important to understand from your customers how you perform on various attributes against your rivals, as well as understanding their business and financial model, so that you can determine the likely impact and potential response of your competitors to your strategic moves.
But that should come towards the end of the process. As you begin your strategy work, start with your customers, how well you’re serving them and what opportunities exist to build on what you do well to drive profitable new growth.
In other words, beating the competition should be a consequence of your strategy, not its main focus.
Off The Record: Love’s Not A Competition (But I’m Winning) by Kaiser Chiefs
I won’t be the one to disappoint you any more,
And I know I’ve said all this and that you’ve heard it all before,
The trick is getting you to think that all this was your idea,
And that this was everything you’ve ever wanted out of here,
Love’s not a competition – but I’m winning!