DILEMMA: We've never worried much about the competition. As leader of the business, I would prefer everyone to spend their time improving our offering rather than worrying about our competitors, which are mostly larger corporate bureaucracies anyway. The narrow market niche we've created has grown significantly and the money is rolling in. Long may they ignore us.
ISSUES: Making your competitors irrelevant is a great goal. But this doesn't mean you shouldn't keep an eye on them. Who knows, you might learn something. This may be hard to believe when you're doing well. However, there will always be some things that they do better than you.
Being more aware of your competitors may also unearth potential customers, suppliers, people to hire, distribution channels, partnerships and so on. But be careful. If you are off the radar now there is nothing like taking customers or key staff to get you on it. Knowing the competition may help you to avoid antagonising the gorillas among them or drawing undue attention to your business. You may also find that if your offering is well ahead of the pack and difficult to replicate, there is potential to raise prices.
Niche players scaling up often come to grief because they believe bigger competitors don't care. They discover later that this belief was true only while they were tiny. The moment they become a threat or develop a significant-sized niche, the competition wakes up. So plan your approach to them in advance.
Being respected by your competition is healthy for all sorts of reasons. After all, it is likely to be one of them that ultimately buys you. Even if they don't, an aggressive competitive environment might reduce the value of your business to someone else.
Good market intelligence and good judgment make for success. It sounds as though you have had very good judgment to date, but there is an important piece of market intelligence missing.
- Be aware that you are not too good to learn from someone else.
- Be clear why people buy from you; increase your differentiation.
- Understand the growth dynamics of your market and what may happen as it matures.
- Have a clear competitive strategy, even if it's just to keep an eye on rivals.
- A bigger competitor that admires you may offer a great future exit, so get admired, not hated.
- Remember that complacency kills.
Patrick Dunne works with 3I.