The reading level for this article is Novice
Competition and the challenges it brings are the essence of the free enterprise economy. Fair trade on an open playing field is the ideal we strive for in a perfect economy. Whether or not the playing field is fair or not is a topic for another article. Regardless of your ideology of capitalism, if you are in business today you most definitely have competition. If you think you don’t it might come as a surprise to you that you could be in trouble.
No competition is a lie or at very least a bad sign
It is a counter intuitive position to think of a healthy company as one with good competitors. In any entrepreneurial dream is the desire to create something where no competition exists and thus offers limitless opportunity to dominate the demand. My challenge to this view is that without competition the business has little or no chance of survival. Any business leader who claims to own the entire demand for a product or service is either lying, misguided or doing something illegal. For we all know what happens when you build a monopoly in a free economy. In the many years that I have been interviewing CEO, entrepreneurs and executives I have heard those words “we have no competition” far too often. It is an illusion of grandeur that no leader need boast about or believe. For starters having no competition could very well mean there is a poor demand for the product or service in question.
Competition provides validation
The good news about others being in your space is that it provides some evidence that your ideas are good ones. The more players that step forward to take a piece of what they can the more confirmation there is that this space is a worthwhile place to make money. Bud Stoddard, CEO of Amerivault, a leader in the electronic backup market, says, “I love to compete with the 800 pound gorillas. If we are a world-class business then the competition will see us as an opportunity, its great validation that we are doing the right thing”.
Competition provides opportunities
With Bud Stoddard’s words in mind it’s apparent that the opportunity he’s alluding to is acquisition. By making his business a serious competitor he knows he will attract the attention of the big players and have created a perfect exit strategy for himself.
In my own experience the opportunities provided by competition have been in the area of learning. Speaking with my competitors has been very instrumental in my understanding of the market challenges. I hear some of you say that what competitor would sit down and discuss their business with me? It’s not as hard as you think. Writing articles for one is a clever way to get people to tell you about themselves and their businesses. But, in fact, it is rather surprising that many business leaders, even competitors will be open to a mutual exchange of ideas. True development through conversation is after all a reciprocal thing.
All successful executives know that the only thing more expensive than a good education is ignorance. If you are in a position to educate your clients, partners, vendors, or even your competition, then do it, albeit with some thought as to the consequences. Educating your industry segment, which will no doubt include your competition, can be a very favorable strategy if you are in an industry that is new and is trying to gain credibility. By growing the industry you grow the market, and the spin-off is that if you lead the way you will become known as an innovator.
Running workshops, training courses, publishing guides, and hosting web conferences are simple and cheap ways to extend your knowledge to your constituent markets. Every year there are dozens of new services and products released to the market but very few people knew how to use them to make their businesses run better. The companies that succeed in getting their clients on-board are very often the companies hosting free workshops and training for potential clients. This of course means competitors can visit your workshops but in a bizarre way this can actually work in your favor.
Competition urges you to innovate
Living in a comfort zone can be a dangerous place. I used to work with an accomplished CEO who often paraphrased a common adage, “if you are feeling comfortable, you should be a little scared”. Positive attitudes are good but there is nothing wrong with looking over your shoulder once in a while. “It’s the responsibility of every good leader to be doing their homework on the competition” says, Alyssa Dver, Vice President and Chief Marketing Officer of Sedona Corporation, a software developer. “I interview up to forty people for a single article. Its important for me to stay in touch with what’s going on”. Dver who also writes for Newsweek believes that the fundamental law of business is that you have to know what motivate people. “If you want to get people to do something you have to know what will motivate them to do that thing”, says Dver. Understanding the competition and what motivates your customers to by from them rather than from you is an essential part of that understanding.
Competitive markets are the essential formula for success in any biological system whether they are human or otherwise. Taking the advice of the leaders interviewed is seems embracing your competitive environment is a vital step towards keeping yourself ahead of the gang of competitors. Maybe the best way to look ahead is to keep your eyes looking left and right.