After another week of hearing budding entrepreneurs claim that they either have no competition or that their competition is essentially irrelevant, I felt compelled to speak out. Whether you’re a scientist with the temporary monopoly of patents you want to commercialize or the latest Internet startup in a niche that no one else has targeted, let me say this loud and clear—you DO have competition.
Why are we generally clueless about our competition? Well, for one thing, competitors rarely reveal their most proprietary strategies and tactics, so you’re not going to be able to Google your competitors and instantly divine their competitive advantages. In fact, often the most threatening aspect of a competitor is not readily visible. For another, sometimes your toughest competitors are not serving your customers at all, but they have the deep resources and experience to quickly move into your space and compete directly with you at will. For example, let’s say you decide to start a job matching site like Monster.com but for a niche market that you believe is unserved. So all you’re worried about are the Internet sites like Monster and Guru.com. You completely ignore the real monster in the field, Robert Half, which has more than 360 specialized staffing locations worldwide and is arguably the biggest staffing company, because it’s a more traditional type company rather than the match.com of staffing. That would be a big mistake, because Robert Half has the resources and skill to focus on your unserved niche overnight, and the company has brand recognition that takes years to build.
- Determine what your competitor has to do to be successful in its core business. Are there any core competencies your competitor is missing and has to acquire? Maybe your startup has that competency and you could position your company for an acquisition once you’ve proved yourself in the market.
- Determine whether your competitor shares your company’s core competency – that’s a big red flag because it will be easier for your competitor to take your customers.
- Determine which of your competitor’s core competences are actually transferable to your business. That means look out! Your competitor could quickly move into your competitive space and beat you with deep resources. Marriott Corp., the hotel and resort company, knows how to effectively train unskilled workers in many languages for skilled jobs. Do you think they could compete in your niche? Absolutely!