By Mike Shook of Accelerence
My work with several Southeastern-based tech entrepreneurs has surfaced a common thread: pesky competitors are blocking their path to success. Each entrepreneur has developed a very credible solution (B2B) and achieved enough market penetration to be cash flow positive, yet their growth has flat lined. Their leadership teams are capable and committed, yet they are still scratching their heads on how to achieve breakthrough sales velocity.
Each has examined their respective set of competitors, and each has sought paths to resolution that has proved unhealthy for their business. One looked at adding extensions to their product. But, as soon as they see a competitor doing the same, they say, “it’s been done already.” Another’s competitive discussion comes up regularly but lasts about 7 minutes before it’s tabled for other topics – ostensibly the effort must exceed the reward. The last I’ll mention seems to never see a competitive capability they don’t like – and too often end up pursuing a “me too” strategy.
KNOW THY COMPETITION
While all of these are competitive responses, none of them is a competitive strategy. If the first mantra of an entrepreneur is to “Know Thy Customer,” then the second should be “Know Thy Competition.” Market strategy without competitive strategy isn’t strategy at all. Strategy is about choices: what you do, who you do it for, how to serve them better than the alternatives. You can’t do this without a meaningful assessment and understanding of the competitive landscape.
A competitive assessment does not have to be a bloodletting exercise. We view it as a team sport in which each executive and perhaps several of their direct reports, are assigned a competitor to assess and then present their findings in a competitive strategy session. This way, the weight of the effort is shouldered by many. They start with a rough template and answer several questions about their competitor:
• Markets they serve/don’t serve
• How they compete – price, segmenting, service, features and sales & marketing
• Market position including penetration, revenue and industry reviews
• Key offerings to include distinctive capabilities
• How we can beat them in the market
This approach is designed to avoid a strictly feature-by-feature comparison, to get the leadership teams’ competitive juices flowing since their assessments will be weighed vs. their peers, and to get fresh, non-group opinions on the table. It provides a forum for the team to collectively group competitors into a handful of groups against which you can position. It also serves as way to shine a light on under-served segments of the market.
BEAT THEIR STRATEGY, NOT THEM
Great Generals avoid full frontal attacks in almost all situations. It is only used as a strategy if they have overwhelming superiority. If you’re reading this article you probably don’t have overwhelming superiority. The key to competitive positioning & strategy is not to beat your competitor, but to beat their strategy. If you are a student of World War II you might be familiar with the Maginot Line built by the French prior to the war to protect their border with Germany. It was a massive array of hardened fortifications, artillery, and troops. One the Germans simply couldn’t mass enough firepower to beat. So they went around it. They beat the French strategy of static lines with speed by sweeping through the Ardennes forest.
Entrepreneurs need to beat their competitors’ strategy by creating battles that leverage their strengths as well. Don’t fight features wars – that’s a battle of attrition. Find the ways that your competitor’s strategy leaves segments of the market under-served. If they compete on features, you might compete on price. If they compete on price, you might win customers by emphasizing customer service.
Understanding your competitors’ strategy exposes under-served markets and under-served needs. When your team shares a common vision of the rips in the competitive fabric, you can exploit them. Truly successful entrepreneurs take the handful of competitive levers they’ve identified and create a distinctive point of view about the market, how it operates and why customers are left poorly served. It becomes the basis for messaging to customers about how downtrodden the current market has left them and as the basis for honing and strengthening each competitive lever throughout their organization. It becomes the theme for how they beat the competition and extend their lead over time.
Will Shook is managing partner and co-founder of Accelerence, a high-tech entrepreneurial executive firm with a proven ability to fuel rapid, profitable business growth and create enduring companies.