Respect the competition

In business it’s easy to over-focus on the competition.  Knowing the competitive landscape is indispensable; your product has to be differentiated and ideally you are building defensible assets.  But your primary focus must be on the customer or user and the value you create for them.

I was reminded of this today when I read a post by Garry Tan quoting an article on Netscape and how they over-focused on Microsoft.  Garry says that “having an enemy can focus you in intense ways, but might focus you on the wrong things” (and adds that for a startup, “your competitor is the back button”).  I agree.

I’d go further:  It’s wrong to think of competitors as enemies at all.  Business is not war.  You shouldn’t aim primarily to fight your competitors or to hurt them.  The right model is a sport or game: we’re all aiming to be the best in the same field, we play fair according to established rules (law and contract), and at the end of the day, we shake hands and congratulate each other on a match well played.

You should be glad to have competitors: together you form a market that attracts and retains customers.  You should be glad to have competitors who have gone before you: they educated the market on your product category (creating a new product category is extremely difficult).  You should be glad to have good competitors: bad competitors give your product category a bad name.

When you discuss competitors internally, don’t trash them.  Respect them.  Be sportsmanlike.  Don’t be afraid to praise them for what they do right.  Make sure you know what you do better and where you are uniquely positioned to create differentiated value.  Find your confidence in that, rather than in putting down competitors.

Externally, it’s probably best not to discuss competitors at all.  Amazon has a long-standing policy of not commenting on the competition publicly.  It certainly seems like a no-win situation:  If you praise them, you promote them.  If you criticize them, you open yourself to rebuttal.  Either way, you give competitors publicity you could reserve for yourself.  So maybe it’s best to keep your mouth shut.

So go forth and compete, don’t fight—and may the best man win.

  • http://www.aaronklein.com/ AaronKlein

    Very true. Great post.

  • http://twitter.com/morrisor Rick Morrison

    There are a lot of situations where people would benefit by not viewing it as a zero-sum game. Your example of a new industry, where competitors are market building, is a great example. Another clear example, although not business-related, are child-custody and divorce cases.

  • vladkornea

    An example of this error from delivery.com, who, seeking to market by selling branded plastic bags to restaurants, had to decide on the price to charge. The boss wanted to set the price of our bags below the price charged by our competitor, seamlessweb.com. My suggestion was to charge an amount that would lose us no money instead, on the basis that we are not fighting seamlessweb but ignorance, and benefit more from being able to afford an infinite campaign than by persuading restaurants that already buy our competitors' bags to switch to us. The competitive thinking won out though.

  • cain297

    Great Post. Always felt that business needed more sportsmanship and less one-upmanship. Thanks for sharing.

  • http://www.astronixresearch.com/ Jon Prescott

    Aside from the market issues, it's nearly impossible to do your best in business without effective competitors. You can do very well, but you will not reach your full capabilities – it just won't happen. In actual practice, without well executing, active competition the incentives to take your own efforts to the utmost simply aren't sufficient. Growing a business takes real effort and a consistent, passionately dedicated focus on essentials. In the face of all the competing demands on your time and mental capacity, you won't be able to put in the extra amount required without the help of those “bastards across the street” who will get to the brass ring first if you don't. Competitors make you better.

    I don't care about being sportsmanlike or overtly benevolent — in fact I find it energizing to be vociferously passionate and intense about them internally — talk the smack. You may be able to maintain a reserved benevolence and still beat the crap out of them, but most of your employees won't.

    Externally, if you can get away with not addressing competitive offerings directly with customers, you're not actually in all that competitive a market. Be complimentary of them as individuals and as clearly and dispassionately critical — on substantive issues — of their products — as rationally and thoroughly as possible. Have a great story of why you're better. Price isn't nearly enough in most start-up situations.

    • http://jasoncrawford.org jasoncrawford

      Love the point about competition pushing you to do your best. Just another reminder that business is not war.

      Good point also about needing to directly address your competitive advantage with customers. When I said “externally”, I was thinking more in interviews and other PR. I tend to think about things from the standpoint of consumer software, where you don't exactly have sales meetings. In a B2B context I think you do need to take the competition head-on.

      Re how benevolent you are–I suppose that's a matter of personal style. More important is to be totally honest with yourself about acknowledging their strengths, while still maintaining complete confidence in your ability to compete on your own merits.

  • mikedartt

    Agreed on all counts. I particularly like the sports analogy: it's much more appropriate than the perennial comparison to war. (I suspect that latter one grows out of the Marxist view that “wealth is limited” and all the associated premises.) One thing I try to point out to people is that, in war, you can directly harm the enemy–blow up his buildings, kill his men, etc.–and there's no analogy to that in business. Barring government favors, the only legal way to beat the competition is to *improve yourself*. You can use force in a war; you can't use it in business.

    In regard to competitors and the market, I'd add that competitors not only create a market, but are indicative of one. If your product or service is something that's valuable to more than a handful of people, you're going to have competitors. If you don't have competitors, you'd either be a) *really* novel–a completely new product category, like the first car–or b) worried about your long-term prospects.

    Also, to build on what Jon says below, competitors can be a great source of ideas. You only have so many resources for improving your business, so it pays to put your competitors' mental energy to work for you by seeing what they do, what works and what doesn't, and then using that for your own purposes. (One might argue that Microsoft has basically just used this approach to create and improve its best-known products–along with intelligent decisions that the others miss.)

    I do have a couple of concerns about “talking the smack” about one's competitors internally, at least on any sort of regular basis. First, if employees see that it's an okay thing to do and get in the habit of it, it's a lot more likely that they'll slip up and do it in front of a customer, which reflects really badly on the company. Also, I've seen a lot of people, teams, and companies lose focus on and/or minimize the need for improvement because they think the competition sucks. “What do we have to worry about?” Even if none of the existing competitors pose a significant threat, that doesn't mean that someone else couldn't come along, or that it's not worthwhile to continue to try to improve, to grow the market and one's market share, etc. As in life, so in business: in the long run, there's no standing still–you either progress or you stagnate and regress.

    Thanks for the posts, Jason!