Is competition a good or a bad thing?
As a child I hated competitions, and to some extent I still do. There are various reasons for that, though mainly it was just stressful for me.
Later down the road, when I examined the concept of competition in a more mature and experienced manner, I came to conclusion one can classify competitions to two types:
- A competition by choice
- A competition which is forced by reality
Competition by choice
When I’m talking about competition by choice I’m talking about people or teams who have decided to compete against each other by their own choice. For example – two soccer teams which are playing against each other, marathon runners or even a competitive video game shooter. Those can mainly be classified as ‘sporting competition’, though when two people are placing a bet on something (for example – who can drink more) – this can be also classified as a competition by choice.
The motivation behind such competitions usually drills down to prestige (value other people see in it), personal challenge or pure entertainment.
Personally, I’m trying to stay away from any such type of competition, though I do admit I play competitive online games mainly because of the challenge (the single person games are just too easy…).
Competition forced by reality
When I’m referring to competition which is forced by reality I’m talking about situations where either your or your business wealth (and sometimes even survival) depends on staying ahead or winning a competition for a resource.
Yes, forced competition happens due to lack of resources. Resources, in this context, can be customers, jobs, land, and practically anything which is limited and finite in number or capacity. For example – there is only one position available but there are many candidates who want the job. Another classic business example – winning the consumers’ attention. This is a very common resource to compete on as it’s very scarce and there are many competitors who want to win it. If your product manages to grab the consumer’s attention long enough it can be regarded as if you won one of the holy grails of the resources.
There are tons of other personal and business examples and I’m sure you have seen or experienced plenty in your personal life.
When it comes to forced competition – it doesn’t really matter how you feel about it. You need to stay ahead of the competition if you want to make progress or even just to stay in the game. Sometimes, when it comes to business (well… mainly) it may even determine its fate.
In the context of this blog (and newsletter) we are discussing scenarios and challenges all of which are taking place in a forced competition environment. Yet, we still haven’t seriously discussed this environment and I think it’s time to do so.
So, with this long introduction I’d like to touch the basics of the competitive landscape you work in. Specifically, we will cover the basics of how to identify and get familiar with your competitors.
Let’s get to it.
Your competitive landscape
Knowing your competitive landscape is a requirement which applies both to entrepreneurs and product managers. For entrepreneurs this requirement is a pre-condition even before they start their fundraising. After all – why step into a market which is a red ocean with very strong and established companies? It’d be foolish to do so and waste others’ money unless you have a secret sauce which is going to disrupt this market.
But exciting as it may sound – this is not the scenario we’ll be touching on today, since it’s a more advanced topic (we will touch it in future posts, I promise).
In our scenario – your company is already operating in a market and has a product (or an initial offering at least). Your task is to get familiar with this competition (whether you were explicitly asked by your superiors or you decided to do so yourself).
Why is it important (to know your competition)?
I guess you are familiar with some or all of the considerations, but just for the sake of getting everyone on the same page, let’s list them here. So, by understanding who are the main competitors, their size and their market share you will understand:
- Your customers’ expectations in terms of minimal feature set and product maturity
- The pace you need to release new features and products in order to stay ahead of your competition
- What has already been tried, and what seems to work well and what seems to fail.
- What is your competitive edge and what should be your unique value proposition.
- What would make an effective defensibility strategy against this competition
Got it. So how do I draw my competitive landscape?
Well, as noted above – we’re going to cover only the basics today, or otherwise it will become a very long post.
I’m gonna outline below an effective approach for a basic competitive landscape. It’ll be good for:
- Presenting for all internal stakeholders and get everyone on the same page as competitive environment they live in
- An initial mapping of the competition and from there you’ll be able to decide which competitors deserve a further drill down
- Your basic understanding of what is (or what should be) your competitive edge and unique value proposition
It’s not gonna be good enough for:
- Shaping your product roadmap
- Make tactic decisions about the features that needs prioritization
- Finalizing your defensibility approach
For those you’ll need to do a full analysis of your main competitors and get additional market signals from customers, sales, customer success and product marketing.
An effective competitive landscape recipe
Ok. Here you go:
- Prepare an empty spreadsheet that will contain all of your competitors and their various attributes. Columns that must be included:
- Position in terms of market share (a number from 1 to 10 max). Any competitor which is not one of the top 10 is most likely not interesting enough (or otherwise your company is in serious trouble). Personally, I’d even put the cap on 6 or 7.
- Top markets. If you know the percentage of dominance for each – write it down, though you’ll probably won’t find this data for most competitors.
- Year founded (use Crunchbase for that)
- Funding received (same)
- Number of employees (same)
- Top customers (if B2B or B2B2C) or number of active users (if B2C)
- Value proposition and how they position themselves to customers/users
- Top unique features/capabilities (not more than 2-3)
- What makes them unique – according to your best understanding from what you’ve read
- What they seem to suck at – 2-3 things according to reviews or your own understanding by viewing/using their product
- Pricing (if applicable and available)
- Get an initial list from your peers. Talk to the internal stakeholders with focus on the company’s management and sales. Ask them to name drop for you all the competitors they know of. If they can provide a prioritized list from the biggest competitor to the smaller – it’d be great.
- Add your own competitors. Mainly by Googling yourself several terms that represent the problem your company is trying to solve. Add the names to the list which weren’t mentioned by your peers. Also, here is a trick I was taught by a friend: in the search box put the name of the main competitors and add ‘vs’ (e.g. ‘Oracle vs.’). Google will fill up the main search terms people are looking for, so you can get a hint for names you’ve missed.
- Prioritize and filter the list. First – filter out small competitors with a tiny market share, but make sure they are not just ‘warming up’. If you are unsure – check their unique value proposition (as they position it). Is it really unique? If not – filter them out. Aim to size down the list to 6-10 (as noted above). Prioritize what’s left according to market dominance or according to the pace where they acquire new market share (the latter is actually more important).
- Fill the spreadsheet you prepared above with the details of these competitors. Use Google, Crunchbase, Apple & Google app stores (with focus on # of downloads and reviews), review sites (but check only bad reviews as most of the reviews on these sites are sponsored).
- Take screenshots of each of the products. Take a screenshot of their pricing if available.
- Make a nice presentation. It should summarize everything you’ve learned in a digestible way. Focusing on a presentation format will force you to focus on what matters. The outline of the presentation should be:
- Overall market overview. Total addressable market size and a short profile of the target customers/users.
- A magic quadrant slide in Gartner style (see here) which includes all the main competitors you’ve mapped and where they are positioned on the map. [A personal note – I’m not a big fan of this slide as it has several drawbacks, however, it’s a good start for getting everyone oriented]
- A short slide for each competitor mentioning their ‘threat level’, unique value proposition and their main drawbacks as you see them.
- A summary slide in the form of ‘our offering vs. the competition’ as described here. Note that this is NOT a feature matrix, but rather a ‘benefits’ matrix which focuses on what’s important.
- Present the presentation to one of your peers. If you were asked to in advance – then great. You know who you should present it to. However, if no one asked you to work on it – I recommend presenting it to your boss. Even if your boss has some tough feedback it will still leave a good impression since you took the initiative yourself.
- Embed the feedback back into your notes and presentation.
By working and executing on the above you’ve made yourself familiar with your competitive environment. Yes, there is still more digging to do, but it’s a very good start. Don’t rush to in-depth analysis just yet. Give yourself some time to digest and reflect on. You’ll know when it’s the time to proceed to the next step.
That wraps up the post for today.
If you found this post/series useful – please let me know in the comments. If you think others can benefit from it – feel free to share it with them.
Thank you, and until next time 🙂