The secret to always being able to outcompete your competitors is to set the rules of the game in your favour. And yes you can do this, here’s how.

 

Active Knowledge Questions:

What are the competitive rules the players in your industry follow? You know, the common elements against which everyone compares each other’s offerings?

 

The Rules Of The Game

Every industry has a set of rules that guide the basis of competition. Someone, somewhere, at some time, decided what the competitive offering was to be and then everyone else who came into that industry chose to compete on the same basis. In Australia, we would say that is ‘sheep following sheep’. Everyone just falls into line and follows the person ahead.

But from a competitive viewpoint, that is not very smart because you play the game by someone else’s rules. And you can be pretty sure they are rules that favour them. Of course, technology has reminded us all that the rules can be changed, and Amazon, Airbnb and Uber are examples of businesses that have changed the rules of their game.

In any industry, the rules of the game are open to being changed. Many of you would have read about Blue Ocean strategy and finding a competitive space that is less competitive and to your advantage.  Blue Ocean is simply changing the rules of the game, as did Amazon and other companies noted above.

 

Your Competitive Landscape

The start to understanding the rules which exist in your industry is to clearly identify the market that you have chosen to compete it. Once you have established the boundaries of your chosen market, you can then see who else is competing in this landscape.

The competitive landscape represents everyone who seeks to directly or indirectly meet the same customer needs that you target. Note the key words, ‘meet the same customer needs’.

From a competitive position, you must understand who is playing in your marketplace and the game they are playing. How are they seeking to deliver value to your targeted customers, and, importantly, does it represent greater value than yours?

You actually want to know as much as you can about these competitors ranging from ownership and leadership, through to margins, stock levels and customer likes and dislikes. As much knowledge as you can, but you do not want to be obsessed with your competitors and you certainly do not want to follow their lead. The more you can understand them, the easier it will be for you to outcompete them. Regretfully, most businesses know very little about their competitors.

 

The Accepted Game

In most industries, businesses compete on a similar basis where each seeks to gain an advantage on one or several bases of competing.

What do you think is the basis of competition in your industry? List them out now.

Here is a typical list:

• Price.
• Product range.
• Product availability.
• Location.
• Ease of buying.
• Credit terms.
• Brand and reputation.
• Friendliness and knowledge of staff.
• Follow up service and support.

For your business, your price may not be the cheapest, but your location is great and you have really knowledgeable sales staff. It is against these strengths, for example, that you have been able to fend off cheaper imported products.

It is a worthwhile exercise to develop a list of competitive traits for your industry and score, say out of 10, your business and each of your key competitors against each of these traits. This will give you a quick snapshot of where your competitive strengths and weaknesses lie against those of your competitors.

But understanding these strengths and weaknesses, and how your industry has chosen to compete is only the beginning of being able to change the rules of the game and always winning.

 

Focus On Customer Need

Businesses often look and assess the value of their competitive offering through their eyes. This is a fatal mistake. You may believe you have the greatest product on earth, but it is what your customers think and believe that is far more important.

The same rule applies to the way an industry has chosen to compete. For example, an industry may have decided that breadth of product range is the most important competitive trait. Think large hardware stores, for example. But if the new generation of customers are time-poor and are tired of wandering up and down aisles to find the item they want, then the rules may be ready to be changed. And those hardware stores with a large warehouse platform with long-term leases and high stock holdings may be in for a surprise. In this respect, even the likes of department stores and Amazon.

The questions you want to be asking are: If I were a customer, what would l look for when choosing who I buy from? Who would provide the greatest value in meeting my needs?

In asking these questions, you are seeking to build your competitive traits from the customer perspective. What is it – as a business in this industry – should we really be focusing on? And are these the traits we should really be competing against?

So don’t follow the industry’s lead on how to compete, instead follow the customers’ lead. 

If you’re not sure how to pick up on your customers’ leads, then this earlier article will assist, ‘Recreating Your Business In Our Changing World’.

In defining your chosen marketplace (see above), you must also identify those agents which are impacting your market and the needs of your customers. In simple words, you actually want to be tracking ahead of the game and not only understand your customers’ needs of today but where they will be tomorrow.

 

Winning

If you wish to win in your chosen marketplace then there are six basic steps you should take:

• Draw the boundaries of your chosen marketplace.
• Understand how the competitive game is played in that marketplace.
• Know your competitors well and what game they play.
• More importantly, understand your customers’ needs of today and tomorrow.
• Design your competitive offering to match your customers’ needs and don’t follow the industry.
• Design your competitive offering to lift your strengths to the surface to deliver the greatest value you can against your customers’ needs.

If you want to be successful in your market, you cannot afford just to follow the accepted wisdom and do what everyone else is doing.

You must follow your customers’ lead and, in fact, lead your customers to a value far greater than any competitor is offering. This is how you win.

 

 

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We’re here to Compete.

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All the best in the success of your business,

Richard Shrapnel