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Competition / Competitive Analysis

Although everyone in the organization should have some perspective on who is the competition and what makes them strong, the product manager is the one who should be obsessed with it. Understanding competitors is a key motivation to succeed, it helps shape direction, drives how you arm the sales people to pitch properly and much more. Competition provides a benchmark through which you, and the industry, measure the status of your Company. Without competition, you are adrift in your own world -- there are no rules of engagement, therefore no reference to present your message.

On the other hand, you can easily drown in doing too much competitive analysis. It's not uncommon to spend time (and money) analyzing dozens of companies, really a waste of time, as there is little you can practically do to address the specifics of what many, many competitors are doing. In reality, only a few matter (if any at all). Once your business team understands this perspective, it makes the task of competitive analysis tractable.

The product manager leads the charge. Input comes from all possible sources, the best are often within your own organization. We'll look at the details of handling competition, the analysis required to help your company succeed, what is produced for consumption and what you might do with the information found (if anything). If you have a sound strategy and you are paying attention to the market you are addressing, the competition will take care of itself. This section largely explores how to do more with less.


Young companies are proud to say they have little or no competition – wrong! Young companies start out trying to define ‘new markets’ – not! Markets evolve through many phases of maturity; creation of truly new markets without any competition does not happen very often and requires almost a global movement given today’s technological reach. Instead, most go to market teams focus on how they fit into the expanding edges of existing markets where familiarity can be taken advantage of but still benefit from the differentiation innovation provides. New markets are mostly created out of existing markets, so you often are best served by evolving out of an existing market -- at least in terms of how you present yourself to the prospective buyer.

Would you be the first to try a self-navigating car, or are you going to wait to see a few of them parked on your street? Customers don’t want to be an experiment, bet their jobs on unproven solutions or suppliers, be the first to try something, get burned (again) on promises that never get delivered - perhaps all of IT can be viewed this way.

Of importance to most entrepreneurs, is the investor’s perspective. The place where the money comes to realize your dreams. Investors know that competitors bring concreteness to a business opportunity. If only a few small companies are participating in a market segment, it tends to indicate the opportunity (for financial gain) is small or yet to emerge (the latter can be positive for some if the risk is in their appetite). If big companies are participating in a market or likely to, it must be large (or fast growing) to warrant their interest, time and investment. It's a happening place -- a place you want to be with your disruptive solution or service.

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 or services 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 is real and will keep you in pursuit of leadership - a race.

Preparing for the Competition

Given we want competition to exist, how do we successfully deal with it? You should not shy away from a market opportunity even one filled with competitors. There are so many factors that drive success beyond just the technology; there is almost always a handful of differentiators you can focus on to win. Let's look at the following three cornerstones of success as we prepare for the competition:

  1. Choosing irrefutable points of differentiation
  2. Preparing responses to customer questions about competition
  3. Assembling a team committed to execution excellence

Choosing irrefutable points of differentiation

The "Silver Bullets" of competitive analysis -- things you can say about your product that no one can debunk (by telling the truth anyway). A simple but strong example is the location of your Company -- a competitor from Canada can say "I'm Canadian" as a differentiators, an American competitor can't say that. You can also develop a list of "Silver Bullets" that work the opposite way -- designed to slay the competitors message. An example might be - "they can't scale past 50 users".

You need to know your core competition well in order to develop key points of differentiation. If you just "make stuff up", they will be too easily over turned by the competitor making you irrelevant to the customer. "My product is the fastest" is a weak point of differentiation as there is often few ways to prove it unambiguously. Everyone can claim speed as a point of differentiation so it becomes irrelevant to the customer -- they just assume everyone is fast -- or fast enough. If speed is THE key important factor for your product (e.g. a race car), you may want to put it all on the line and set up independent benchmarks (e.g. a race). The output data can then become helpful to establish speed as a point of differentiation. Just be careful to make sure you are much faster and the competitors can't easily catch up -- differentiators that disappear too quickly can become more harmful overall than ones you never had to start with. Another often used example is "I am cheaper". The problem with that one is the sales guy for the competitor can often make up a new price cheaper than yours -- or at least imply they can be cheaper. Your point of differentiation becomes irrelevant.

If you are first to market and have no definable competitors, your reference point for differentiation is the established standard for your market space. As an example, rate of speed is a cyclic irrefutable point in the wireless communication space as each new generation of technology is released. The first to market has an irrefutable point of differentiation that the market understands. Over time though, it becomes a common ground feature, so it is short lived but still useful nonetheless.

A good exercise is a classic brain storming session with an equal-sized cross-section of customer facing and internally facing staff. Identify all the unique qualities of your product, its possible positioning in the market, key strengths and weaknesses of competitors, etc. Don't spend time disqualifying, just jot down anything and everything that comes up. Then go through the list and cross out the ones you could easily debunk. The remaining list (assuming you still have some left) are the ones to hone into a go-to-market communication plan highlighted by the silver bullets. You should have three to five points minimum as you need more than one bullet to slay the customer opportunity.

Preparing responses to customer questions about competition

This is an area where many companies are poorly equipped. The customer appears to know your competitor better than you do, putting the sales person on the defensive right from the start of a sales call. You say the product can do "this", the customer says the competitor can also do "this" and they can do "that", you have no possible recourse except to say "we can do that too -- but in the next release". Your rep may try to convince the customer "that" is not needed, but then you are working against the human tendency to hide weakness. If you start making your customer look unknowledgeable, they won't view you as an ally. You can help them solve problems and become a trusted source of knowledge and vision without making the customer feel like they are being stupid asking for "that".

The solution goes to the heart of your overall sales strategy and what type of sales team you want to build:

Assembling a team committed to execution excellence

"Do what you say, say what you do" -- this can only come from a team that can deliver what the business needs. If you need to make forward looking commitments to win an important deal, make sure the team is committed to delivery AND the team is committed to stay on track to deliver it. Companies that are too sales or marketing led, often switch their priorities regularly which makes it hard to manage multiple customer expectations. Innovation takes time and sometimes time seems too long when you live the need day in and day out. Your time scales work differently than the customers -- you need to understand their time scale and build a team that can operate at the appropriate pace. A common example:

The goal is to make the customer a winner in the eyes of their own organization. The team you assemble has to identify the path to this achievement and be committed to staying on it (e.g. to see it through). Organizations that "Do What They Say" especially "When They Say It Will Be Done" are so rare, if you can be one of those organizations you will overcome many competitive obstacles.

Competitive Analysis

I favor limiting how much in-depth competitive analysis you do. In early stage markets, the requirements come from your strategic vision for the new market opportunity. You really only compete with someone who has established themselves in the market -- someone who can deliver "what they say", which is often one or two companies. In a more mature market, there are often many competitors, but usually only a few that are active in your chosen market space. This should also lead to limited competitive analysis. A technique I find that often works well is to ask your team (or yourself) "So What" when you find out something about a competitor. What will you do with this information -- how will it benefit your organization to know it -- if you can't come up with a compelling answer that would cause you to meet with your Board of Directors and say "I need to change our operating plan for the year" -- don't bother, don't worry about it. Shutdown the curious george who is spending time finding out knowledge that you will effectively do nothing with.

There is a flip side though -- if your market contains competitors that provide lots of silver bullet opportunities, you might want to have a detailed functional comparative chart the sales and marketing people can use. Even then, "So What" should rule the day -- why does the customer need to know your feature does "this" or "that". If you can make the customer say "Wow, that's valuable to me", it's a good comparative criteria to highlight. The competitive chart really only needs 5-10 points on it, not three pages of multi-column comparative moon diagrams or partial check marks.

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