Competition - the three sided coin
There are different camps when it comes to how business owners think of competition. I’m very firmly in one - competition is good for business, in fact, it’s great.
Most people see competition as one side of a coin or another. The first view is that any competition is bad, you need to be different in some way, and that it isn’t possible to be equal terms with someone else and work to come out on top. This is typically found in small retail and some trades, where the notion is anyone else in the same field is a negative and the entire market should belong to one business.
The other side of the coin is that there is no direct competition, but there are some alternatives to what you offer, but you’re unique within a broad field. This is often found in consulting and professional services. The typical line from people in this camp is something like “you could go to someone else, but only we can do x, y and z for you”.
Besides anything else I dislike these because both of them offer a position with an easy way out. It’s possible to sit back, to remove a business from looking forward and continuing to innovate - because you’re either behind or in front of everyone else.
I would argue that the majority of the successful businesses in any industry, from technology, to automotive, airlines, banking, even consultants and legal and accounting, have been born simply from becoming better than their competitors than what they do best.
You might say that’s obvious, but many businesses avoid what their competitors are best at and offer customers something similar, but not the same. My competitors coin has three sides - competition is bad, there isn't direct competition and the third, that there are others who do the same things and offer the same results, but we do it in a better way.
It’s the third side which I think is the most powerful and offers the best return, especially for a new business. The key is the established market. The other two options rely on creating a new market, or diverging an existing one to create customers who want what you’re offering. Both of these options are expensive, in terms of cash, time or both.
They also mean it is difficult to determine the cash value and potential of the market you will be selling to. There are plenty of examples of “new” products being introduced, but if you break down the product and the people it is being sold to, the features, solutions and real market value are all already there.
The third side of the coin also provides useful information when it comes to product development. If you are entering an area where there are commonly accepted features and expectations you have a benchmark to design to and deliver on. If you know where the goalposts are, it’s much less difficult to get to them.
There is a risk to innovation associated with entering an existing market. If a product (or service) is successful and continues to do well a business is unlikely to continue to develop and incur extra cost. This means there is a reliance on new parties entering that market to drive innovation.
The positive side of this is the power of the market itself, the collective consumer, to begin to dictate the future direction businesses go. It creates an environment where expectations are constantly evolving, which means there is constant demand within it.
At the end of the day, the difference (and why I like side three) is in being able to conduct your business on the basis that your success is based on you doing something, many things or everything better than your competition. It doesn’t mean looking like a shinier version of them, in fact if you’re really doing it properly you should appear very different.
It means the market, consumers and your competitors, know what you do and the results you give. It is the approach that has worked in the automotive and consumer technology industries for decades. It remains as relevant today.
Be unique and outstanding in the results your customers walk away with, not the way you see your business against others. If you get the customer side right, they’ll take care of the rest for you.