Competition / Competitive Analysis
Young companies are proud to say they have little or no competition – wrong! Young companies start out trying to define ‘new markets’ – not!
What is quickly learned is that customers don’t want to be an experiment, bet jobs on unproven solutions, be the first to try something, get burned (again) on promises that never deliver (perhaps all of IT can be viewed this way J). Markets evolve through many phases of maturity; creation of truly new markets does not happen very often and requires almost a global movement given today’s technological reach. Instead, most go to market teams who focus on how they fit into the expanding edges of existing markets where familiarity can be taken advantage of but still benefit from differentiation innovation provides.
Of importance to most entrepreneurs, is the investor’s perspective. Competitors bring concreteness to a business opportunity. If only small companies are participating, it tends to indicate the market opportunity is small or yet to emerge (the latter can be positive for some). If big companies are participating or likely to, it must be a large (or fast growing) market to warrant their interest, time and investment (to put you in their headlights).
Often presented as a badge of pride, a lack of competition can indicate no one thinks the market space you are addressing is worth the time and bother to build an offering for it. Even if you are early in an emerging market, there is always competition to be aware of, even if it is coming from the customers themselves, possibly building internal solutions to address a pain point you will address with high valued commercial quality software later. You do have to deliver a differentiating solution to win against the competition, but the mere existence of competitors, should provide the ammunition you need to highlight why, in a comparative fashion, your solution is better. Potential investors need this, customers need this, business partners need this, even your own team needs this – it helps build confidence that the path to follow will keep you in pursuit of leadership in a race.
Given we want competition to exist, how do we successfully deal with it? You should not shy away from a market even filled with competitors. There are so many factors that drive success; there is almost always the right handful of differentiators you can focus on to win against most any competitor. Let's look at the following cornerstones of success:
- Choosing irrefutable points of differentiation
- Responding to customer questions about competition
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