Beating the competition requires the right mix of actions.
- It starts with careful analysis of customer needs, the competitive landscape, and development of how you want to compete in the market, including the identification of your USP.
- It requires focusing your resources on the target market and what it really important to your customer. Investing endogenously or exogenously via M&A might be required to acquire the skills that are missing to you to compete effectively.
- You must also make sure that tactical measures are undertaken to increase your market share, and grow faster than the overall market.
There is an excellent account of competitive strategy in Jack Welch’s book “Winning”. This is a great book that I strongly recommend reading – its addresses many more topics that competition alone. First of all, Jack Welch reminds us how dynamic and pragmatic competitive strategy is: it should not be lived as complex, nebulous and time-consuming analyses that remains the preserve of the boardroom, but a collaborative and from the ground up exercise involving fire fighters from multiple departments and leading to actionable decisions. Jack Welch recommends focusing on what he calls the “Five Slides” that provides answers to five key questions. The five slides are as follows:
- Slide number one: “What does the playing field look like now?” This looks into your competitors, their market share, their strengths and weaknesses, and if possible benchmarks you against them.
- Slide number two: “What has the competition has been up to?” This addresses recent moves of the competition, their attempts to change the playing field, and the possible entry of new competitors.
- Slide number three: “What have you have been up to?” This explains what you have done in turn to gain a competitive edge, and reviews any competitive advantage that you might have lost.
- Slide number four: “What is around the corner?” This discusses the worst things that might happen in the coming year from a competition perspective, for instance a disruptive technology that could make your product obsolete. This part helps you not underestimate the competition, which is certainly not asleep but as active as you are and wants to win your business.
- Slide number five: “What is your winning move?” This sets out what can you do to change the competitive field and further win market share.
Get your strategy group, sales and product line management together every now and then to review the state of things, generate some lateral thinking and identify measures to improve your hit rate. The Five Slides above provide you with a guideline for structuring this event. The goal of strategy is to define how the objectives that you have assigned to your company will be reached. As you are not alone in the market, a strategy, to be successful, should include what your competitors are doing or are likely to do. Your strategy should define how you will compete, elaborate the Unique Selling Proposition that will form the core of your value proposition to your customers, and ensure that your competitive advantages are sustainable over time. This will require hard work and permanent attention to market evolution and competitive moves, as the market is constantly evolving.
Any market share forecast is only as useful as it is realistic, challenging but motivating, and aimed at reaching achievable targets. A market share estimate will help you plan your activities and resources, at least in the near term, and will have to be revisited regularly and defended over and over again. Many of your competitors’ activities are not observable so there is always potential to be surprised. Try to anticipate, remain agile, and execute your strategy fast in order to keep the upper hand. Have fun competing in the market, remain fair, and watch out!