All businesses strive to grow and improve profits, but there is almost always at least one more company competing for market share. One philosophy is to try and put the competition out of business – in other words defeat the competition. It’s an approach that is usually difficult to do and in fact, can turn out to be counterproductive. A better approach is to create a strategy that leverages the competition.
Strategies generally fall into two categories – those which address a problem (e.g. – high cost, low sales, poor quality, etc.) and those which secure an advantage (e.g. – greater market share, faster growth, higher retention, etc.). A well-crafted strategy to overcome a problem or fulfill a vision always produces superior results, but an ill-conceived strategy generally yields weak results.
Here are three strategic concepts for securing an advantage over the competition by leveraging the competition.
1. Copy, then Innovate
Having healthy competition can be an asset rather than a detriment. If two companies are similar in their offerings, each one can use the other as a catalyst to develop new ideas, products, and services. In contrast, a monopoly has limited incentive to improve and/or address the needs of the marketplace.
If a company has a competitor, rather than look upon it as a business to defeat, it should first emulate and then exceed their offerings. Kaihan Krippendorff does a great job illustrating this principle in his book, “The Art of the Advantage”. In it, he discusses the benefit of Coca-Cola and Pepsi having one another as a competitor. As soon as one comes up with a new idea, the other first matches it, then develops a new offering to differentiate itself. The consequence is that each company becomes better and better, resulting in each having a significant share of the market. Plus, their consumers get a better product.
2. Every Strength Has a Weakness
Every business has one or more strengths. It may be their size. It may be their systems. It may be their creativity. In other words, it could be any number of things. But with each strength comes an inherent weakness.
A large company may – and often does – feel impersonal to its customers, and therefore creates the opportunity for a smaller company to build a stronger, more personal connection to its customers, which in turn, grows its market share, lessens the market share of its competitor, and creates greater customer loyalty.
A large company with well-developed systems may run really well, but those systems can also make flexibility and innovation challenging. A smaller, more agile company can more easily change direction, quickly address the needs of the market, and be first to market.
A very creative company may excel at bringing innovative ideas to their products, but many people don’t need or want extra bells and whistles, nor do they want to pay the premium that more options often brings with it. Sometimes, less is more.
3. Address an Inherent Weakness
Pretty much every business has an inherent weakness – one that isn’t related to its strength. It may be their pricing structure, dictated by high overhead. It could be long production times, dictated by their process. It could be their channels of distribution, dictated by their history. One way or another, there’s always a weakness.
By identifying a competitor’s inherent weakness, a company can develop a strategy to exploit that weakness and gain an advantage – lower pricing, faster production, more efficient delivery.
Competition is a good thing. It can provide the catalyst and the leverage for faster growth, greater creativity, and higher profits. Once the opportunities are identified, great strategies emerge. If you’d like help developing s great strategy for your company, please give me a call. You can learn more about our strategic work here: http://www.elicitingexcellence.com/strategic-planning