I’m sure you’ve been in meetings where everyone worries about competition more than they worry about customers. It is a fact that for traditionally run businesses, any talk about strategy quickly shifts to competition. It’s unavoidable and it pisses me off. Traditional business practice is based on beating the competition, which assumes that there is competition that looks and plays just like you if you are starting a business.
What ensues is a predictable playbook of using strength against weakness, optimizing operations and cost cutting for value; the recipe for more of the same.
The argument most academics and MBA’s make about competition is that it is good for everyone, not just the customer. By competing, the logic goes, businesses become better. Yes, competition makes us better, but only when we are caught by surprise.
Because the vast majority of people and organizations are followers who simply adopt practices that work for leaders. So if the leader gets caught by surprise, an innovator from out of nowhere, so will the followers. Also, there is only so much you can optimize about your operation.
Widen your view, your competition is not who you think
Innovators, on the other hand, aim to change the game by changing the business model, redefining the concept or creating something entirely new. Innovators don’t look at competition in the traditional way MBA’s do, they see competition from a wider lens. One that includes non-competitors in adjacent industries, or even ones in completely different lines of business.
For the last decade or so, information technology has created all sorts of issues for all industries. People’s expectations have shifted, yet within board rooms the talk about competition continues; which usually means the good old fashioned benchmarking. Frankly, benchmarking is stupid if you are not looking far and wide.
Take banking, an industry in flux. Many bankers still see their firms as competing against other banks. But is that really true? Nope. If you look at banking from the view of data, banks have more data about people’s preferences. Yet, what are banks doing about that? Producing more of the same services they’ve always offered.
Who also has data about people’s preferences? Apple, Google, Facebook, Amazon…the list goes on. These organizations are not “banks”, but they can offer products and services that shift the traditional banking value proposition.
The way I look at competition is this way: We compete against anyone who has the ability to raise people’s expectations.
Think about it, wouldn’t you like Apple to be your bank? How about Disney? All of us interact with different brands throughout or daily lives for various needs we may have. We all have developed certain expectations from these interactions; and we all have a favorite that we wish could take over all of our lives.
This is the lens Virgin uses. They deliberately enter boring industries in need of a facelift, where they can easily raise people’s expectations because the other guys are busy fighting each other for market share.
This is how innovators think about competition: Not as going head to head against other businesses, but about delivering better value to customers in a completely different way. This approach requires empathy for people, and understanding of what their expectations are; not balls to go head to head with competitors.
Bottom line: Empathy is the ultimate competitive advantage. To widen your view of competition, benchmark against organizations from all types industries and domains that are great at raising people’s expectations; not the ones you directly compete against. When you do that, a world of possibilities will open up.