One mistake I frequently see is when tech or game companies underestimate the competition, particularly when responding to a competitor’s product or game. Coupled with the need to be 9X better to get someone to switch to your product, this failure leads to many businesses nose-diving.
Thinking your competitor is dumb
The most basic mistake is acting as if you are smarter than your competitor. Although most readers of this blog are quite intelligent (hence, why you are reading this blog ☺), so are leaders of your competitors. You are not going to create a more successful product or better game simply because you are smarter than other companies in the space. They also have great teams who are looking at the market. You need to find true competitive advantages. You are not going to win just because your mother told you that you were smart.
Not anticipating the competitive response
Another common mistake is treating your competition as static. First, if you launch a product that will compete in an established space, the companies in that space will adjust their offering to compete. That may mean reducing their price, adding a feature (or features) that negates the benefit of your product or swamping the market with advertising so that people do not even learn of your offering. In the game space, you may launch a Match-3 game with a unique matching mechanic, but if it resonates in the market you will find that other Match-3 games in the market quickly copy that mechanic. You need to anticipate that competitors will follow your strategy and have a roadmap in place to stay ahead of them.
You also must anticipate that if you create a new market space other smart people and companies will follow. Look at Square. Square largely pioneered using a small dongle coupled with a mobile device to enable anyone to accept credit cards. Once they demonstrated traction in this market, major players like Paypal as well as other start-ups created a competitive offering. Not only is it important to be first, but even if you do not have competitors when entering a market you need a strategy to deal with—and stay ahead of—the competitors that will appear.
They probably tried the same thing before
The other aspect of competition you need to consider is that your idea was probably already tried or at least conceived by a competitor and you must understand why they did not pursue it or succeed. Going back to my first point: There are millions of smart people out there and many have probably thought of the product, feature, game that you are planning. This is crucial because with any idea, you should think about why established players or other start-ups have not pursued a similar strategy (or make sure that they actually have not). You may be overlooking a reason the market would not accept it, whether a problem with the business model, a more compelling offering on the horizon from someone else, or something else that would doom you to failure. You should assume that companies have thought of your idea and dive deeply on the reasons they may not have pursued it.
Understanding the competition is crucial to success
If you are going to succeed and grow your company, either disrupting an established industry or growing in a competitive industry, it is essential to anticipate and understand your competitors. This understanding helps you build a business that not only can gain market share but also retain and grow it. It also helps you anticipate potential roadblocks and pre-empt them.
- Understanding your competitors is critical for success, as many products and companies fail because competitors make moves the company has not anticipated.
- Do not underestimate your competitors. You are not going to beat them by being smarter than they are; there are many smart people in every industry.
- Do not focus on your competitors’ current products or strategy. They will notice any success in the market and adapt to compete.