I asked Mary – “What is that activity you do frequently at work and wish you did more of?” There was radio silence for a few seconds. Then came the words “understand the competition…wish I did more competitor analysis..” before she went on rambling a few words about it. Mary is a Senior Product Manager at a well-known product company. We spoke in depth about competition.
This was one of many conversations I had a few months back while recruiting pre-beta testers for my upcoming online course. There were a series of questions I asked everyone who showed interest in the course, and the question about activities was one of them. In this article, I’d like to get deeper into the answer Mary gave to this question. I’d like to talk about competitor analysis.
Specifically, I’d like to point out a missing piece and how you can do it right.
The conversation between Mary and me is real, and so is the content. I just have chosen to use a different name based on the real Mary’s request.
Let’s Start With Mary’s Answer
She said “understand the competition…wish I did more competitor analysis..” and that got me curious. I wanted to instinctively ask her the question “Why?”, but I wanted to know more. I asked Mary (all of this over a Skype call) “What do you mean by understanding the competition? Can you tell me more?”. She was excited and said “..oh sure, perhaps you could help me with this problem.”
Mary went on… “..you see , I do spend 2 days every month doing competitor analysis, and 1 hour every day taking notes of what I observe about competition.” and she continued “..but the challenge is that the competitors are tricky. Just last month one competitor launched a new feature that completely caught me and my team unaware.” Mary appeared really concerned and animated as she described.
She went on to say something that lit the spark in me (and later, for Mary). She said, “We launch new features and work on all the customer inbound requests, but yet we see our competitors find fresh new ideas that become so popular in no time. We’ve been in this business for over 8 years, but there are so many new players in this space that come up with surprisingly new offerings.” My ears went up.
I wasn’t interested in Mary’s claim about her team working hard as much as I was with the new players. I asked her “How many other companies do you compete with?” Mary answered with a puzzled look “..about 11 companies.” And I was puzzled too, and asked her “How did you pick these companies as competitors?” Mary, again, went silent.
Let’s cut down to the definition of competition for a moment. What is competition or maybe, who is a competitor? From having seen the picture from 50,000 feet, I see two broad definitions one could give for what competition is and who a competitor is. These two definitions are from two perspectives:
- Seller-centric or Provider-centric (traditional view)
- Buyer-centric or Consumer-centric (modern-day definition)
Let’s look at the Seller-centric definition of competitor and competition first. This is the general definition that most of us are used to seeing or hearing. This is what you’ll find in dictionaries.
Seller-centric / Traditional Definition
A Merriam-Webster definition of competitor goes like “one selling or buying goods or services in the same market as another”. In essence, the definition states that if you and another company / vendor / provider of products / services are buying / selling to the same set of people, you could be called competitors.
This is how Mary was looking at competition. I’ve looked at competition this way for a long time too. We all have done this. Are you wondering what’s wrong with this? There is nothing really. It’s just that the definition gives a wonky view of how you look at competition.
Buyer-centric / Modern-day Definition
The modern-day definition of competition focuses on the buyer. The definition is user-centric and focuses on what the users are doing with everything they are doing with their resources like time, attention and money. The modern-day definition goes this way “one selling goods or services that compete with limited resources available to your ideal customer”.
The fundamental premise the buyer-centric definition of competition is based on is that we, as humans, have limited resources. No matter what is offered to us, no matter how good that product or service is, we are ultimately going to lay our hands on it only if we have the time, energy or other resources to do so.A competitor is one selling goods or services that compete with limited resources available to your ideal customer #prodmgmt #startups Click To Tweet
Picking Our Competitors
Mary’s silence to my question made me curious. I started to tell her some ways I’d seen product managers and companies define competition (especially in the B2B world). I talked about industry analysts, blogs and communities as some places where I’ve seen product managers identify and pick their competitors. Mary felt good. She started to open up.
Mary told me that her boss gave her a competitive scorecard when she joined and since then she has always tried to build on it. That’s when I asked her two questions:
- “What do these products (including yours) help customers (who buy and use) do?”
- “Can you describe why customers of these products are spending hundreds and thousands of dollars buying these products?”
Again, Mary responded with a radio silence. Alright, this time she seemed to be thinking.
What Jobs Are Your Customers Trying To Get Done?
Have you heard of the milkshake story? If not, read on. If you’ve heard, skip to the next section to proceed.
A famous fast food joint once hired a bunch of experts to study a pattern that they observed in their drive-through stores. There was an increased demand for their milkshakes and they were not sure why. Before hiring these experts, the fast food joint tried making more varieties of milkshakes at different price points, but that didn’t really affect the numbers.
To cut the long story short, the experts interviewed their customers and observed them to conclude that these customers had a long commute by car and needed something to keep their stomach full. They seemed to prefer the milkshake as they were able to keep their stomach full while not making their hands greasy, unlike eating donuts or even bananas.
You can see the below full video of Prof. Clayton Christensen, who explains this in great detail:
Who Are Your Real Competitors?
The milkshakes weren’t competing with other milkshake flavors that this fast food joint was making, but instead with the bananas, donuts and bagels! I gave this precise example to Mary and asked her to rethink her competition. I asked her to re-run her competitor analysis with this simple realization. So who are your real competitors?The milkshakes were competing with the bananas, donuts and bagels #prodmgmt #startups Click To Tweet
Competing With Harvard Business Review?
No company big or small, is protected from competition. It was the case with Harvard Business Review too. In spite of being a preferred and “go-to” publication for CxOs, the publication faced competition. HBR’s ex-editor Karen Dillon describes her journey in detail here.
Had they gone the traditional way of looking at competition, they probably would’ve identified publications like Forbes, Inc. and the like. Instead, they chose to take the modern-day approach by trying to understand what their readers were hiring the product for. They went further to understand how their readers consumed content.
Had the HBR team gone the traditional route, they probably would’ve taken a linear approach to developing content. Instead, their study resulted in a big understanding that their readers were pressed for time and needed more ways to consume their content. One of the results of this was Harvard Business Review’s Ideacasts.
Listen to more of what Karen Dillon says by listening to her directly in Product Strategy is About The Choices You Make.
Your Real Competitor Is Right Next To You
Let’s get back to my conversation with Mary. Her company was making tools for Product Managers, Developers and teams to collaborate around building their products. Mary did mention early on that some of her competitors were Asana and Atlassian JIRA. After she worked on re-picking her competitors using the Jobs To Be Done thinking, she realized that her real competitors were not Asana or JIRA, but tools like Microsoft Excel, Google Spreadsheets and Slack.Biscuits and cookies don't compete with other biscuits and cookies, but with ice creams and chocolates. #prodmgmt #startups Click To Tweet
Taking this to the analogy of a convenience store, the products don’t just compete with other products placed alongside them, but with completely different ones in the store. Biscuits compete with ice creams, mineral water compete with the aerated drinks, and so on.
Your strategy is defined by the choices you make. Your competition is defined by the choices your customers make. #prodmgmt #startups Click To Tweet
Your strategy is defined by the choices you make.
Your competition is defined by the choices your customers make.
So, who is your real competitor? Understand your ideal customer better, for you may be competing with someone you didn’t expect. Your competitor may be right next to you.
Leave your comments and thoughts in the comments below. Also, don’t forget to signup for DYT Insider below to get the Tiny Book Of Triggers to trigger your Curiosity and rethink!