Most businesses spend time doing competitor analysis but often they only consider their direct competitors and while this is needed you need to look wider that that. Often, it’s a change that comes from left field that totally sideswipes a business. Something they weren’t expecting because they weren’t looking there for it. There are many cases of this happening in the market today for example apps like Uber and AirBNB that totally took existing Taxi and Accommodation providers by surprise, disrupting a long-established market. Indeed, entrepreneurs often look for industries that haven’t changed for years as places where they can innovate. So, it’s necessary to take a wider view of where competition will come from.
As a starting point you need to understand where change can come from. There are a number of possibilities so let’s consider a few of them in a little more detail:
Outdated business models
We mentioned Uber and AirBNB above and indeed they are good examples but, what Apple did to the music industry was massive. The advent of MP3 players (a technological change in itself) put the music industry in a tailspin because it destroyed an outdated business model, suddenly mass piracy was possible. The music industry’s response was to try to lock-up the content using encryption and aggressively pursuing legal means to shut pirates down, all to no avail. Then Apple said, “what if we could provide a legal way to allow people to download music content?” and the whole business model changed. Physical media and its distribution, for so long the record company’s strength, was no longer needed.
A technological or regulatory change occurs
As mentioned above, MP3 players were a technological change that forced a negative change in the music business that then created a complete rethinking of the business model. We can look at another examples, picture editing software on PC. Before we had digital cameras there was no need for this so, one change created an opportunity for the other. Banking has been impacted by the “open banking” legislation that has made possible all manner of new products to help people manage and consolidate their banking in one place.
Successful businesses in other sectors or geographies
There are many examples of products with minor change being repurposed from one sector or geography to another but one of the best examples is Autotrader. Founder John Madejski was told by a friend, returning from a recent holiday to the US, about a great magazine he’d seen for selling second-hand cars. John had a printing business at the time so he thought I could do that in the UK. He proceeded to start Thames Valley Autotrader and the rest, as they say, is history.
A change in the customer’s business
Here we need to look at how our customer’s business might change or be affected by competition, forcing them to change direction. If we can anticipate that change it maybe a chance to gain market share, as it moves the goalposts, wrong footing incumbents and providing the chance for us to grow. An example would the airline business. The move to low cost air travel meant that airlines needed smaller, more fuel-efficient aircraft at a time when long-haul was king. This created a chance for Air Bus to challenge Boeing’s dominance of that market.
Of course, the best way to avoid being taken by surprise by competition is to do it first. Anticipate change and adjust your business accordingly. It’s what I call “Making your competitors irrelevant!”.