Real competitive analysis is about learning to love your competitor
Chris Butler rightly points out that Competitive Analysis work is often something we just check off, with the results destined for the “depths of your Google Drive dungeon”. If you are instead intent on allowing your work to properly inform strategy, he lists many tools available to you.
Many will argue that simply creating a product that solves a great problem will ensure success. But as Mark Suster once pointed out, “there’s more to winning than just product”. So quotes John Peltier who details the purpose of Competitive Analysis at the company and product level. The risk of Competitive Analysis that he highlights is the emergence of ‘feature creep’ as a result of product teams just building features that they see their competitors offering.
It’s becoming increasingly clear that a company’s ability to collaborate is just as important as its ability to compete. Today, “success is not driven by the resources you control, but those you can access.” So says Greg Satell, who underlines the emphasis on empathy, design, and interconnectedness in modern business.
In a 1966 article, Theodore Levitt reflected on how companies tend to dismiss the potential of new products introduced by competitors. At first, the team will assume that the product will be a failure. Then over time, the team will become increasingly convinced that they should be developing an imitation product. Levitt believed that this “attitude of doubt and tentativeness can and should be translated into sound business practice“. And so he proposed a quantitative system that can be put in place to hedge the risk. In this system, a percentage of the perceived overall cost of developing an imitation product is invested in R&D each time period, proportional to a ‘Success Probability Estimate’.
If you find yourself in an underserved market with a performing product, you’ll need a sound strategy to maintain leadership. As Des Traynor reminds us, “47% of first-movers fail, compared with only 8% of fast followers”. He describes three ways that you can maintain your first mover advantage — Technological, Defensive and Customer. He then further explores the factors that dictate how valuable your first-mover advantage is in the first place.
Take on your competition with these lessons from Google Maps
It’s a common perception that a new product must be 10x better than the incumbent to be truly disruptive. But this doesn’t always pan out, with users oftentimes failing to see exactly why the product is better. Bret Taylor, during his time building Google Maps, discovered something — “you have to make your users a little uncomfortable to make “better” matter.”