The ultimate purpose of competitive strategy is to anticipate competitor moves and countermoves, and take the initiative to thwart the effectiveness of their plans. There are several steps to enable your company to do just that.
The first step of competitive strategy is to develop a comprehensive list of competitors in your market. Your competitors have a sense of others’ strengths and weaknesses, as well as their own. We ask each competitor to identify and describe its unique capabilities, competencies, and/or value proposition to understand where its strengths lie, relative to other companies in the same market. Similarly, we ask each competitor to describe aspects of its company and its competitor’s businesses that could use improvement.
We ask each competitor to reveal the opportunities and threats they see in the market. We look for the clear paths to growth and profitability that competitors have already identified. We may later determine that a particular competitor’s view of an opportunity or a threat is false, but first we need to identify all of the viewpoints. The next step is to examine the intersection of strengths and weaknesses with the opportunities and threats identified. Include detailed implications for your company in the analysis. By comparing each strength and weakness with each opportunity and threat, implications will emerge for actions your company could take.
We cannot start to develop competitive strategies in earnest, though, until we have discovered the actions that our competitors will be taking. It is not enough to see the opportunities and threats that they perceive; we must also strive to understand what they are doing about these threats, and how they are taking advantage of these opportunities. We need to be able to plot the present and future state of the competitors.
It is important to understand the various unmet needs of different segments of customers. Comparing the needs of different segments of customers with the positioning strategies of competitors reveals that some competitors are positioning themselves in a no-man’s-land of white space. They are effectively driving themselves off a cliff – where no customer needs exist. Other competitors will be found clustered around the same small customer need that many of its competitors are going after. As a result, they will all starve for lack of sufficient customer need. The wise competitor observes where the competitors are positioning themselves, and where the customer needs are, and looks for the customer opportunities that are not being met by many (or any) of its rivals.
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