More On Competition - Is That Even The Right Focus?
In my last post, I discussed the idea of competition and specifically, that it’s existence shouldnt act as a deterrence to us entering into a specific market. In many ways, it can act as a validating factor that should, frankly, encourage us to play in that space.
But the more pertinent question, at least the one I’ve been turning over in my mind, is whether that’s even the right focus. From a mindset point of view, regardless if you’re an entrepreneur or a corporate steward, the more relevant question or choice is, whether we should be focused on thinking through how we enter into and flourish in a competitive marketplace, or whether our time is better spent thinking through how we can (truly) own the market.
To be clear, this is more than an issue of semantics. I’m not talking about simple differentiation or carving out a nuanced niche within a crowded marketplace.
There are 60,000 plus pizzerias in the US and differentiating yourself in that crowd is hard. Sure, you can position yourself on the basis of geography, or type of dough, or quality of ingredients, etc., but in the minds of the consumer, their choices are amongst the universe at their disposal. If your pizza isn’t available, will the consumer be materially impacted? Will they be materially less satisfied with their alternatives? Will they stop consumption of that good or service until you’re back? Will they miss you?
If not, we’re one of dozens, if not hundreds, of choices and when that happens, the selection process devolves into one of simple feature comparisons, unbundled side-by-side beauty contests, and ultimately, choices based on price. And that’s a race to the bottom - there’s absolutely no value in that.
Because all you are is a placeholder, holding the bag until the next low priced player comes along, or the next budget crunch, or all of the above. You’re a nice-to-have, not a must-have. I mean, anyone can start the next consulting firm, or the next toy store, or the next (insert your product or service of choice) company. But how do you own those spaces? How do you deliver something that’s materially, tangibly, perceptibly different in the minds of the consumer? How do you move above the fray?
That’s (quite literally) the Billion Dollar question - how do we own the market, how can we create a new market, or at least carve out a redefined, materially valuable space that the customer believes, buys into and evangelizes for us. To the extent that we can charge premium margins that the consumer is willing (and eager) to pay for.
I certainly don’t think there are any simple answers, no easy How-To’s to help us plot the path (which is why it’s worth so much).
I know it’ll always involve doing things differently: challenging conventional wisdom, integrating technology to do things far more simply, upending existing value and pricing models, rethinking value or service bundles (what gets delivered with what), asking why we need to keep doing things this way, etc.
And that’s our starting point. We need to keep asking, keep iterating until we find our answer.