Business would be easy if it weren’t for your competitors.
In an ideal world, you’d have your corner of the market sewn up and would be, with little effort drawing in hordes of eager new customers.
Unfortunately, for most businesses, this is fantasy. In real life, you need to be constantly paying attention, remaining hungry and being innovative. This is even more necessary if you happen to have very disruptive or even invisible competitors.
The fact is, everyone has competition in some form, but what matters is how you deal with it. What can you do about your competition? We’ve got a few thoughts:
What does “disruptive” or “invisible” mean?
When you’re considering how to deal with competitors in your market, it helps to have a clear understanding of what you’re looking for. Here is how you can define both “disruptive” and “invisible” competitors:
The word “disruptive” tends to get used so often lately that it’s in danger of being just another corporate buzzword. This is not good though, because those who are truly disruptive represent potentially lethal competition for your business.
The term “disruptive innovation” was coined by Clayton Christensen, of Harvard Business School, in his book “The Innovator’s Dilemma”. He used the term to describe innovations that create new markets by discovering new categories of customers. They do this partly by harnessing new technologies, but also by developing new business models and exploiting old technologies in new ways.
If “video killed the radio star”, then Netflix killed the video store and other innovative companies are playing a similar role. Today we have Uber (taxis), Amazon (department stores), Whatsapp (long-distance communication) and Google (research libraries).
The thing with these disruptors is that they can often creep up on the established players, which is where we get “invisible” competition.
Photo credit: Create-Learning Team Building & Leadership
Technology has given us many new advantages, but one thing that it has helped to cloud is the identification of who your potential competitors are. Consider this, from Enrique Rubio:
“… there’s a big gap between knowing that disruption is the new normal and truly assimilating the fact that your company could potentially be disrupted or replaced. One of the elements that contribute to widening this disruption awareness gap is the difficulty and complexity in identifying who your competitors are. Competition is coming from all flanks, either disguised as potential clients, hidden or maybe even invisible in industries radically different than yours.”
What does an invisible competitor look like?
It could be a company in a completely different industry which happens to have some kind of feature or service that is similar to your own. They can almost always be characterized as “disruptive” also. Rubio gives the example of Starbucks; did you know that they have more money in savings (via their gift cards) than most US banks? The banks also face competition from the likes of Uber, who has been opening small business bank accounts for their drivers.
Center for Management and Organization Effectiveness give four areas to look out for when identifying your potential invisible competition:
- Technological innovation. Is there something that could render you obsolete?
- Outsourcing. This can lead to better cost and time-effectiveness.
- New alternatives, solutions or suppliers. What effect have new digital payment services had on banks?
- Restructuring and re-engineering. New efficiencies and “next” practices can lead to others leaving you behind.
Who are your “invisible” competitors? It’s always a good idea to keep an eye on what is going on in terms of innovation, not just in your own immediate niche but in those around you which might somehow be related.
Dealing with competition
We’d like to start out by saying that, while you should be aware of your competition, it’s never a good idea to be constantly obsessing over them – you still need to be devoting your good energy into doing the right things for your business.
That being said, it’s a very fast-paced world today and you don’t want to be left behind. The downfall of Kodak is a recent example that often strikes fear into the hearts of companies. If such a giant could fail, what could happen to everyone else?
As a Harvard Business Review article points out, Kodak’s failure wasn’t even about new technology. In fact, they had been part of creating the first digital cameras and had invested in a photo sharing site. Their downfall was that they didn’t recognize that their essential business model needed to change. Instead of the photo sharing site being used as a conduit to print photos, they needed to understand that photo sharing was the new business.
So what can your business do? How can you avoid a “Kodak moment” in the sense of an epic fail? Here are our thoughts:
This is not just from the perspective of having advanced technological innovations, but from the idea of examining your very business model too. Think about Uber as an example. They are in the transport business yet they do not own a fleet of taxis. Traditional taxi drivers are feeling the pinch because there are much higher overheads associated with cab driving. Companies pay licensing fees to cities and have to comply with local codes, right down to the color of their cabs.
By contrast, Uber simply uses the cars owned by their drivers, with some criteria put in place to ensure they are safe and clean. Their overheads are kept low.
Technology-wise, it’s equally important to embrace innovation. Traditional enterprises are finding that if they don’t get on board with technology and ensure they are “digital-ready”, they get left behind by the disruptors, or even traditional competitors who have been quicker to adopt new ideas.
Keep on top of trends
You’ve simply got to know what’s happening, in your own market, in related markets and with technology in general. Are there innovations happening which, while they aren’t being used in your market right now, could be in the future? Sometimes you need to think laterally – did anyone initially think that drones might be used to deliver packages?
This could be something that you do as a regular part of your business, involving all team members. Do you meet and discuss trends and innovations?
Be agile and open-minded
“Nimble” and “flexible” are other adjectives that come to mind. This is not just how you operate, but it’s an attitude you adopt. When Kodak failed, it showed that, while they were open-minded to new technologies, their attitude was still steeped in how those technologies might help them with their old ways of doing business (printing photos). Sometimes it’s your actual business model that needs to change along with technological updates.
Being agile doesn’t necessarily mean you have to make sweeping changes all at once. In fact, if you look at Agile from a development sense, it means creating things in stages and working to have them done well at each stage. An agile organization is ready to try out new ideas and quickly pivot if necessary.
Promote diversity and collaboration
Diversity makes us smarter. According to Scientific American, being around people who are different from ourselves makes us more creative, more diligent and more hard-working.
“This is not only because people with different backgrounds bring new information. Simply interacting with individuals who are different forces group members to prepare better, to anticipate alternative viewpoints and to expect that reaching consensus will take effort.”
If everyone in your team is alike, there’s a danger of succumbing to confirmation bias and completely missing the point when it comes to innovation. You need to be collaborating with different views of the world and levels of experience. One of those different views might be the next disruptor…
Guess what? It doesn’t matter who you are, you will have disruptive competitors out there. At this point, some of them may even be invisible to you, especially if they are a Starbucks gift card to your bank.
The most successful companies are getting on board with digital and promoting agile, innovative thinking. Sometimes that’s about more than the new technology available, but may even be about your very business model.
If you want to avoid a Kodak-like consequence, then keeping on top of new innovations across your own industry and others is key. That new development which looks inconsequential to you today may be your biggest competitor tomorrow.
At Koombea, we are innovative developers of apps for companies. Talk to us today about how we can help you.