Your Competition May Not Be What You Think
Dozens of times, I’ll be talking to a CEO about potential concerns, and I’ll ask about competition. Most of the time, I’ll hear the CEO say something like, “Oh, it’s not a threat. The competition doesn’t have their act together…” Or, they will tell me they are dumb, weak, or play them down in one form or another. Sometimes they will express strong dislike for their competitors, and it’s usually for no real reason, other than they compete.
When we formed Exotics at Redmond Town Center, we had two auto services providers who wanted to participate as supporters in one form or another, however they were in a bitter fight between each other over prior badmouthing, and ultimately wouldn’t work together on anything. When you heard the details, all you could do was roll your eyes. It was stupid, childish, and completely without reason. It was the adult equivalent of, “I know you are, but what am I?” on the playground.
One company CEO had complete contempt for all competitors, acting nice to them at times, while doing everything he could to be a nasty competitor, including dirty tricks that got around. It was hard to watch. At no point did he ever want to work with or help a competitor.
As I got to know their industry, I found out that all the other competitors helped each other, and were industry friends. They had a big market and it was difficult to keep up. Years later, I was looking at the industry status and all those same competitors have grown, while the one who wouldn’t work with them has become a much smaller business. So much for the dirty tricks. While they all saw each other as fierce competitors, they worked together at times and helped each other in many situations and they were better for it, not worse. They saw themselves as industry colleagues. However, it was that one isolate competitor who was far outside the group making a major mistake.
While I agree that it is important to remain competitive, do it by building the best product and or service. Never do anything underhanded or smarmy in any way as a means of remaining competitive. In fact, I’d go the extra mile to be friends with your competitors. Some may find that to be counterintuitive but I’ll explain from experience.
It’s often the case when you think you know the status of your competitor only to get the shock of your life when they either acquire someone who makes them a super-threat, or they sell to another competitor leaving you without the chance to make a better offer and improve your own business. Then there is that awkward scenario when your competitor wants to acquire you, or you’re forced to acquire them, especially if you want to remain relevant, and now you have to walk back years of bashing that individual who will now be your co-worker. You could end up in trouble and need to sell and there is no way a competitor who hates you is going to do anything to help you. In fact, they will help shove you off a cliff.
It’s hard to acquire a competitor if they hate you. In fact, you may have to pay a premium just so they get some retribution after years of bitterness between you.
Then there is that sleepy competitor who you are convinced is no threat at all who suddenly comes roaring back with a new product and puts you out of business. Don’t think that’s a reality? Look at what Apple did to Sony with the iPod. Remember the Walkman? Look at what Apple did to virtually everyone with the iPhone and iPad. Look at what Bose did to the headphone industry. Look at what Tesla did to the auto industry electric car segment. How is that Chevy Volt doing?
Plot Twist
So far, I’m talking about like-for-like competitive threats. Sears against Target, Walmart against Costco, etc. But, there is another form of competition and it’s even more insidious if you don’t embrace and compete, and that’s based around technology advancements that impact your business. Sears’ biggest threat wasn’t the other big box stores. It was Amazon!!! Sears was the analog version of Amazon!!! Uber was the competition of the taxi cab, and not just the other cab company down the street. Who brought down Blockbuster? It wasn’t another media rental store. It was downloadable content from Amazon, AppleTV and others. But, like the examples above, they didn’t think these disrupters were a threat and certainly didn’t react and change accordingly.
Today, I was in a convenience store and saw a new kind of vending machine that could dispense any type of lottery ticket available. As I was watching someone buy a large number of small lottery tickets, I was thinking that the face of that machine could be anything that dispenses tickets, from concerts, to permits, to just about any from that requires a paper ticket for entry. Then again, their competition remains the phone and the ability to store the same proof of payment. Still, it was a solution that didn’t require human help.
Competitive threats are not just the other dry cleaners on the next block, it’s the disruptive technology that will mean your technology isn’t so important anymore. Take competition very seriously and treat it with respect. Be keenly aware of technological threats and don’t wait to react. By the time you see a downturn in business it’s probably too late to do anything. Don’t fight to destroy competition, fight to leverage it in some form.