How Are You Beating Your Competitors Tomorrow? By Carol Etter, P.E Carol Etter is founder and president of Helion Consulting, www.helionmanagement.com, and has more than two decades of experience in management consulting, business planning and operations. This article, the third of a four-part series, was originally published by State Business Louisiana, www.statebusinessmag.com, in its Fall 2003 issue. The most dangerous way to look at the future of your business is the Scarlet O’Hara model: “I’ll think about that tomorrow. After all, tomorrow is another day.” Beating your competition takes planning and forethought. If you are working only to stay even—to keep the customers you have and grow business on a day-to-day basis—you will find your business slipping years behind. Beating your competitors requires you to think far into the future to see what innovations are going to change your industry. Those are factors that can cripple your competition as you benefit from them, but only if you anticipate them, identify them and make them part of your business model. Before you start down the list of everything you’re doing and have done to meet and surpass your competitor’s service, price and selection, think for a moment about those competitors. If you’re like most business owners, the competitors you list are businesses that provide the same products or services you do. If you own a hardware store, you’ll list other independently owned hardware stores, along with Lowe’s and Home Depot. You’d better have Wal-Mart on that list because if there isn’t one in your area today, there will be tomorrow, and they are experts at beating their competition years down the road. Your competitors are those clear-cut rivals. But they’re not your only competitors, and they may not be the competitors who matter in the long-term. Just 20 years ago, the U.S. Postal Service was the primary correspondence carrier. The organization was complacent and believed it had a lock on the business. It did, until technology and entrepreneurship came in the back door. Federal Express, United Parcel Service and other delivery firms offered businesses fast service with guaranteed pickup and delivery. And shortly thereafter, fax machines became commonplace. Page 1 of 4
The postal service reacted after the damage was done, introducing Express Mail and a pilot program to accept faxes at the post office and deliver them via letter carrier. But postal service pricing and service couldn’t compete with FedEx, UPS and the dropping prices of fax machines. The organization’s balance sheets showed it quarter after quarter. Ceding the overnight business to their competitors, the postal service focused on what was left: bills, personal checks, personal letters and cards. Not watching for hidden competition outside the realm of couriers, the postal service was blindsided by the explosion of the Internet and email in the mid90s. Into the 2000s, we are now seeing a reduction in the number of bills paid via mail, as banks and organizations of every size are offering online banking and bill paying. There are hundreds of other examples of industries that have been knocked down or out by competition coming in the back door or out of the blue. So, how do you figure out whom to watch for? Take yourself out of the channels and connections you surround yourself with every day. Step back and look at the world outside your industry, outside your social circle, outside your generation. Kodak is typically held as the leader in the photographic industry, particularly in selling and developing film. Its vision for success revolved around “Kodak moments” and “genuine Kodak paper.” The problem with this vision was that it blinded Kodak to changes in technology and its own industry. Amid a brutal price war with rival Fuji for the American film consumer market in the mid90s, Kodak watched its market share drop below 70 percent, as Fuji’s exploded from too small to measure past 20 percent at year-end 1997. Kodak executives were only examining the photography industry from their own business perspective. No sooner had the company begun to regain market share with innovations in film and processing, when new firms identified ways they could exploit the Internet and email to provide benefits to the average American amateur photographer. These innovators found avenues the giant of their industry wasn’t even considering, avenues customers needed and wanted. So then, what are your customers’ needs and wants? What businesses meet or could meet those needs? Answer those questions, and you will discover the competition you can’t see from inside of your own comfort zone. As an example, let’s consider a local bookseller. Amazon.com and Barnes & Noble are her competitors, as is the independent bookstore across town. But she sells more than books. She sells escape, entertainment, family time, personal advancement, educational growth and adventure. If our bookseller defines her product that way, her competitors aren’t just bookstores. They include theaters, parks, museums, movies, educational institutions and even shopping malls.
Page 2 of 4
If our bookseller focuses solely on today’s competitors, she will devote her resources to luring shoppers to the store to read. She’ll miss the people who didn’t even consider that a book would fill those needs for entertainment, advancement, education and adventure. By simply visiting the local art museum and zoo—and watching and learning while there—our bookseller gets herself out of the book industry comfort zone and may learn an entirely new approach to reaching her audience. Similarly, let’s consider a family law attorney. Today, he may list the other law firms in town that provide family law services, but what about his hidden competition taking shape tomorrow? If he takes some time to investigate how else families seek legal advice—on the Internet, at the bookstore, through legal franchise corporations and prepaid legal services—he may see how his practice could better benefit these consumers. Then his challenge becomes how to reach that audience and tell them about the advantages of his services over the other resources peeking in his back door. If you don’t look at what your future competitors are doing, you will miss the developments that are occurring on tomorrow’s cutting edge. You may think it will be difficult to identify where the next opportunity lies, but by keeping your eyes—and your mind—open as you shop, read, talk with people and go about your day, you may see the key to competing in an entirely new arena. In the case of Master Eric O’Neal, Sr. owner of Blue Lion Karate Academy, the arena of competition he is confronting is society and the economy. “In the 90s, I would have said my competitors were other karate or martial arts schools, plus other sports,” O’ Neal, who has combined martial arts training with self-esteem guidance for thousands of youth in his 20-year career, said. “Five years ago, I would have added video games and the Internet.” Using the model we’ve outlined here, O’Neal adds a different dimension to his list of competitors— the basic needs of families. “The children who can most benefit from my program typically come from families on the edge,” O’Neal observed. “With Southeast Louisiana’s economy so dependent upon low-paying jobs in the hospitality sector, we’ve seen families increasingly having to choose between meeting basic needs and sending their kids to karate.” “How can you advocate for the child attending karate when his family has a utility bill they can’t pay?” he asked. As a result of the changing situation, O’Neal established Lionman Foundation to seek sponsorships to enable youth in need to attend karate lessons free. By examining his competition not only in terms of where his customers spend their discretionary income but also by what discretionary income actually exists, O’Neal found his business could thrive as he works to improve the lives of at-risk youth. Most of us read the trade press for our industry to know what traditional competitors are doing. You need to know that, but if that’s all you know, you’ll just be trying to imitate or catch up. Go beyond trade press. Look beyond selling tools or books, practicing law or teaching karate. What you learn will enable you to jump ahead of your traditional competitors, sometimes even the giants.
Page 3 of 4
Visit a convention totally out of your industry. With Louisiana’s booming convention trade, this is easier for us than our competition in other markets. Your business may have no need for backhoes, but if you attend a heavy equipment convention, you can explore how they market backhoes and consider developments in equipment maintenance and tracking. Perhaps you’ll discover a new system for tracking vehicles that reduces idle time by your drivers, increasing efficiency and enabling you to under-price your competitors. Perhaps you’ll discover a new service you can offer your clients that no one else in the market provides. Research the hidden competition outside the comfort zone of your industry and put your new ideas to work before your traditional competitors. You’ll lead the pack, and they’ll be playing catch-up. Now, won’t that be an enjoyable vantage point.
Page 4 of 4