In business meetings, when someone brings up what competitors are doing, does everyone else respond in a panic mode? If your answer is yes, yours is not the only company that reacts in this way. Competition paranoia is prevalent across industries and companies of all sizes. In this short article, we review why it is not a good idea to be reactive in your strategy. We also provide simple tips that let you cut back on tactical distractions and allocate your attention to strategic issues.
The fundamental problem with competition paranoia is that it sets your strategy in a reactive mode.
One of your competitors makes a move. As soon as you come to know of it, you respond by making your move. In the meantime, another competitor makes another move. Now you get busy attending to that threat.
Before you know it, you are busy responding to threats, and then your strategic plan reduces to doing what you must when competitors play their turn. In the extreme, this makes your strategic planning so dysfunctional that you simply wait for competitors to do something so you can decide what you want to do. In this way, your strategic direction is lost. You have let your competitors hijack your strategy.
Competitive paranoia also leads to another dysfunction. Your teams cannot innovate freely because their attention is focused on the catchup game. This deprives your business of value creation opportunities. You have replaced the pursuit of your vision with staring at the rearview mirror.
How does one avoid competition paranoia? Here are three simple tips that let you cut back on distractions resulting from the tactical moves that your competitors make.
You read that right. Do not wait for someone to bring it up in a meeting. Set a frequency – weekly, monthly, or quarterly – and go over a list of all your competitors. See if new entrants are lurking in your space. Find out what they are doing.
Put yourself in an open frame of mind, ready to accept all inputs about your competitors’ actions. There should be no place for anger, anxiety, fear, or panic in your competitive survey. Simply keep an open mind and collect all relevant information.
Most competitive actions pose tactical threats to your position. React tactically, not strategically, to such threats.
Routine and dispassionate competitive evaluation frees you up from distractions. You get time to look at strategic threats. Strategic threats involve the big picture – involving changes in the economy, markets, technology, customer preferences, regulatory environment, supply chain, new entrants, market alternatives, and competition. After all, as Michael Porter’s 5-Forces Model suggests, competitive rivalry is only one of the several forces that should drive your strategy.
The new way also leaves you with the ability to innovate. It frees up your imagination to create value through innovative thinking. After all, if you try to build every new feature in the product based on a competitor’s action, when will you innovate? Remember, if you respond to competition in panic mode, then the competitor sets your agenda. Is that what you really want?
I would love to hear your thoughts and experiences.
Phil Bookman
About Phil Bookman: Phil Bookman, a successful tech founder in Silicon Valley turned author of mystery novels.
https://philbookman.com/
