I've written about this a bit in the past with regard to sales tactics, but I'd like to discuss this topic from a broader perspective. Here are some thoughts on competition:
- When a company starts or a product launches, you'll often hear talk about how they're "better than the competition." This is a bad approach. It minimizes the product's unique value.
- With the exception of super mature, commodity-based industries, there is no such thing as competition. Each company has built their product in their own unique way and others have built their products in their own unique way. If there is real competition then the product isn't unique.
- Companies should be bold about what their product doesn't do or does do poorly. It's not good at doing X because the company hasn't prioritized X. And that a good thing. What a company decides to prioritize and deprioritize is what places them in a non-competitive space.
- For the most part, companies shouldn't stress out about keeping secrets from the competition or trying to figure out what their competitor will do next. They should watch what others are doing so that they are experts on their own space and they should look out for new ideas but the vast majority of energy should go back into their own product and story.
- Andy Grove said "only the paranoid survive" but this shouldn't be translated to mean that companies should be paranoid about their competition. They should be paranoid that their product isn't unique and that if it is unique that customers aren't interested in that uniqueness. Companies should obsess about their own product and their product's story.
- Basic economics tells us that the market is trying to get prices down to zero marginal profit. Companies that are in competitive industries quickly get to zero profit.
- Companies should be bold that if a buyer is looking for X-feature and their company doesn't prioritize X-feature, then the buyer shouldn't buy from them. And if the company knows someone else that does X-feature well, they should recommend that company.
- When I worked in e-commerce, people would ask me about our competition. My answer would always be that we have no competition. There is no other company addressing the problem that we solve in the way that we solved it. Of course, if you're asking if there are other places to shop online then there are tons of other companies. But none of them are competitors. They're solving a different problem in a different way. Great companies compete in an industry of one.
I heard that Peter Thiel talks extensively on this topic in his new book, Zero to One. I haven't read it yet but plan to in the coming weeks.