Your toughest competition isn't always what you think!
For years, our CEO had forged an obsession over our most direct competitor, creating a culture focused on a two-horse race that wasn’t. It appeared we did not see other competitors coming. We did not realize newcomers and adjacent players would soon displace us. They were playing by different rules, and we ended up losing relevance. Soon enough, we had to consider selling part of the business and re-focus on our absolute core.
Sounds familiar? I know many businesses fall victim to competitive myopia. They spend cycles analyzing in-depth their most direct competitors when, in fact, they’re about to be disrupted by emerging alternatives. I recently joined a Sprint Course on Product Strategy from Section 4 (Prof. G’s latest venture). It’s a very well done and engaging online course and I highly recommend it. One of my key take aways ended up being on how to better assess your competitive environment and it helped me crystallize what had been on my mind for years.
So, before you sharpen your pencils and jump into another competitive analysis framework, here are a few tips on how to properly identify your toughest competition in the first place.
Go beyond the feature-set
When you think of your competitive landscape, you naturally look at businesses that offer a similar product or service to a similar audience. That’s the low hanging fruit. The good news is that you’re likely already quite familiar with these competitors and share a lot in common.
But, your comparison tends to gravitate around features and benefits when you study this class of competition. It quickly turns into a long list, but you can easily miss the core psychological reasons why customers choose you (or them) in the first place. Take Ferrari vs. Volvo, for instance: they’re both car manufacturers and offer similar products in nature.
The core reason people choose Ferrari is prestige and status, while Volvo’s adopters will think safety first.
Understanding these key behavior drivers is essential to stand out vs. any alternative, close or distant, but it isn’t necessarily easy. Here are some ways you can better spot what’s on your customers’ minds:
Consider approaches like Jobs-To-Be-Done
The JTBD theory (Jobs-To-Be-Done) has been around for some time and was made famous by Clayton Christensen’s book “The Innovator’s Solution.” While many experts are leveraging this theory, it can prove to be complicated and hard to implement. So we’ll focus on its fundamental principles here, as they can help you tremendously with identifying your toughest competition:
Just consider that customers “hire” your products to do a particular job. You purchase a car to handle the transportation job, for instance. To better understand that job, you need to retrieve your customers’ context, the problems they face, their goals, and their desired outcomes. To illustrate this, let’s take the example of the target customer for sports headphones:
When I want to exercise (context)
But I cannot listen to my preferred music because headphones are falling off during vigorous movements (problem)
Please help me keep my motivation up (goal)
So that I can stay healthy (outcome).
Understanding the goal and the desired outcome in your customer’s mind is invaluable. In the example above, it helps product teams ensure the solution will not fall off during vigorous exercise. But, it also offers a better view of what the best alternatives might be—more on this in the next section.
Expand into adjacent alternatives
Once you have captured the psychological reasons behind your customer’s motivations, you should ask yourself what other solutions can meet the desired outcome your customers want to reach. As we progress with our “staying or becoming healthy” motivation example, we realize that the most robust alternative solutions to sports headphones are healthy diet programs. They don’t require you to go heavy on exercise (other than your typical 10,000 steps-a-day), yet help you reach the same desired outcome! It might sound extreme, but by better understanding which competing alternatives are in your customer’s mind, you can build and position a more substantial offering.
The best illustration of this is the famous quote from Reed Hastings, CEO of Netflix, in The Guardian. He claimed that their biggest rivals are not Amazon, YouTube, or traditional broadcasters. It is sleep!
“You know, think about it, when you watch a show from Netflix, and you get addicted to it, you stay up late at night… We’re competing with sleep, on the margin. And so, it’s a very large pool of time.”
Your next steps
Truly understanding your toughest competition requires a different altitude than just focusing on your most direct look-alike competitors. It requires digging into their psyche to unveil their real goals and desired outcomes. From there, you can assess what alternatives make sense and better respond to these.
Please take a moment to reflect on your competitive landscape, and make sure you reach out to select customers with the right questions (check out our playbook on this). If you feel you are getting to a point where you get stuck and need more guidance, reach out to us. We’ll be delighted to be your guide.