Watch For Unintended Consequences
Recently, while working with web content development clients, I’ve noticed an increased preoccupation with perceived competition within a market segment. The topic usually surfaces during conversations concerning product positioning, branding and differentiation of products and services. There is big difference between professional benchmarking to improve your business processes, and unhealthy fixation with every little thing your primary competitor does.
Benchmarking sometimes means studying and emulating what some would refer to “the competition.” Business Gurus often suggest identifying and copying those processes that are contributing to the success of a business similar to yours as a ‘best practice’. My interpretation of best practice modeling is encouraging business owners to use our time in the most efficient manner possible. By modeling and replicating those proven business processes within our own enterprise, it frees time and resources to pursue innovation in our business’ core competencies.
As a SBDC counselor, I often helped my clients develop a competitive analysis as part of their business planning or expansion initiatives. When studying business competitors, entrepreneurs are often tempted to match products and services feature to feature. This type of “carbon modeling” can lead to losing all differentiation between the two businesses. When a customer can’t identify a unique feature about a business’ product, service or market position, the business that does it better or cheaper, wins…
Think WAL MART vs. KMART. One became a world retail power; the other was bought out bankruptcy primarily for its prime real estate holdings.
When I was reviewing some old files in my annual, KEEP or TOSS ritual, I came across my notes from a long ago Quality Systems Conference. As I reviewed them, I realized that the observations about competition are even more pertinent today than when I first scribbled them down.
I do not know whom to site for these astute observations concerning the nature of competition — I just know their thoughts are worth sharing.
Excessive Focus on Competition Has Always Been a Formula for Mediocrity
(A cautionary tale about indiscriminate modeling)
“Our word Mediocre comes from combining two old Latin words into an idiomatic expression that is literally translated to mean ‘halfway up the mountain’. The idea behind the expression is that a person stranded in a no-man’s-land between two ideals.
That’s exactly what a preoccupation with competition does to any business or person. Consider a few of the most obvious conditions that emerge when a company focuses attention primarily on its competition.
What Are The Hidden Costs Of Competition?
It causes a loss of identity. All the competitors in a given arena tend to copy each other’s products, services and methods to the point where it’s hard for customers and employees to distinguish one from the others.
1. It causes individuals and firms to get so caught up in struggling with each other that they lose sight of their own customers and markets,
2. It forces so much concern over minor cost-reduction measures that innovations that could create major savings or major income get completely overlooked.
3. It creates so much concern over short-term sales and profits that long term- profits, problems and opportunities consistently get overlooked.
4. It so limits the resources available for innovation that change can come about only as a result of a crisis.
5. It lulls companies into a complacency born of the belief that they are secure as long as they are currently maintaining their share of an identified market.
Are you modeling successful people as part of your business initiative? Let us know how it’s working for you. How are you using that information in your marketing materials, your strategic business planning and website content. We are collecting personal observations and successful strategies to share with our Pleiades Publishing Services clients and followers of this Blog.
Just a reminder — I’m a retired SBDC counselor, who knows where to look stuff up — both online and IRL. In this case, my source documents are my personal notes from the National Business Quality Conference, 1994. For individual business support with any aspect of your business contact the nearest SBA-sponsored Small Business Development Center.