Pop quiz: do you complete a formal competitive analysis at your company a few times a year? Do you have a systematic way to monitor and capture competitive information real-time?
Be honest. It’s too bad we even have to ask this question, but the vast majority of the companies we meet with do not have a formal process nor do they analyze competitors regularly as a matter of course. They make excuses, telling us that their sales guys know exactly what’s going on in the marketplace. They tell us they rely on the “Magic Quadrant” put out by their industry’s presiding research firm. But the truth is they operate on hearsay and gut feelings. This is true for large and small companies alike, all myopically focused on the tasks at hand and the daily fires.
Competitive analysis is the key to enacting an effective strategy. Without this context, what you think is your strategy has no intelligence or gravitas. If you do not do this well, chances are you will lose in the marketplace. Unless of course, no one in your industry is doing it either. In that case, if you make competitive analysis a pillar of your company, you will quickly outmaneuver and outperform the other players in your space.
So what do we mean by formal competitive analysis? First, you must set up a repository to capture real-time information. Industry articles, press releases, competitive materials picked up at tradeshows and even the gossip heard on the street must be rounded up continuously and evaluated collectively. We suggest setting up a war room, a dedicated space that houses competitive intelligence and maps out strategy visually. We want you to be proactive, not reactive – doing this allows for strategic agility and prevents competitive blind spots.
Next, you need to regularly review and synthesize the incoming information. Do not let the room go fallow. Get to the bottom of who your competitors really are; don’t just include the usual suspects. Make sure to ask your customers who they see as the competitive set and study indirect competition from adjacent markets. The indirect competition is most likely to stage an ambush. When they smell money they move in. We advise clients to enter a market when: barriers to entry are low and a competitive advantage can be had; the industry is large with few competitive players; there is nascent demand and high margins to be had. If you are enjoying any of these characteristics in your industry, beware: it will not last for long.
Create competitive profiles and conduct SWOT (strengths, weaknesses, opportunities and threats) analysis to decode your competitors’ strategy. Like you, they are looking for the honey holes too. Understand where the opportunities are, figure out how the competitors are trying to get there and then chart your course to get there faster.
Jocelyn Atkinson and Michael Graber run the Southern Growth Studio, a strategic growth firm based in Memphis. Visit www.southerngrowthstudio.com to learn more.