The 7 Ways Your Key Competitor Is Going to Eat You For Lunch!

April 23, 2011

Every week your key competitor is getting better and its competitive advantage is growing. You don’t even realize it because you are busy fighting fires or accepting good results rather than striving for great results.

Your key competitor has a bead on its competitive advantage, business growth strategies, and company development strategies and it is executing against all of the best new approaches for winning the market and killing you off.

Every week your competitor is getting better and faster than you are getting better.

Your competitor is gaining more brand equity in the market, more competitive advantage, and more customers.

You don’t feel it because you are the frog in the frying pan. The heat is rising, but the change is too small each day for you to feel it. You are going to cook…

Here are the 7 most important things that your key competitor is doing to eat you for lunch:

1. Target Insights– your competitor understood a long time ago to learn as much about the market targets as they could, as the company with the best target insights has the best targets to aim at.

In general, they have done their research, found their best target customer, and really understand the market segment they want to win right now (unfortunately for you, it is the best market segment and you don’t even know about it).

Once they understood the target segment, they fully researched the users, built a great understanding of them, and identified some really important insights that they use to design and deliver a better whole product. Interestingly, their insights not only involve insights around the day-to-day usage of the product, but they also found insights into how to allow for an easier installation and configuration of their product, which will give their customers a much faster time-to-value. They then used these insights to create great whole product strategies and tactics.

Once they understood the target segment, they also fully researched the buyers. They understand the buyer roles, personas, buying process, and buying reasons in great detail. They also understand the marketing channel targets, influencer targets, and sales channel targets in great detail and have a large number of insights and targeting information. They then used these insights to create great go-to-market strategies and tactics.

Finally, throughout the research, they acquired a great understanding of you and what you are doing in the market segment, both from the users and from the buyers in the segment. They understand your strengths and weaknesses from the perspective of the market participants and they have great insights into what they can do to mitigate your strengths and capitalize on your weaknesses.

Meanwhile, you don’t do much, if any, real research on the markets. You feel that you have a good intuitive understanding of the market and that is good enough. Your insights come from second hand news and some filtered information from your sales team, and you study your competing products periodically. You may have done some research at some point, but it was confusing and messy, so instead of doing the work to drive to insights, you decided that research was a waste of time.

The frying pan is getting hotter…

2. Product Design– your competitor realized a long time ago that designing the best product for its chosen target customer segment is the most important long-term winning strategy. The management team understands that everyone has a view on product features, but that everyone’s view is incomplete.

They carved product management out of development, formed a product council consisting of representatives from product management, sales, marketing, customer service, and professional service and each of the representatives is responsible for bringing facts and ideas into each meeting, having a great debate, and going back to their departments with the findings and conclusions from the meeting and what their departments need to do next to improve the whole product (the whole product is the core product plus all of the ancillary services such as customer service, professional services, training, etc.).

Your competitor also realized that they needed resources to really make the whole product intuitive and loved by the users, so they put in place a UX/UI team to research, design, test, and improve the user experience.

Meanwhile, your product design decisions are made by your founder (or your head of development) and you have very little in the way of staff to really research, design, test, and iterate on your product. That worked pretty well when you were a start-up, but now your product design efforts are embedded in a person who has at least one other full time job and you really need a team of people to get to the best product design. You may have tried to carve the product management activities away from the person who has owned product historically, but that person’s reaction is that they know the market best and are the best suited for product design.

(note: if you want a great book on product management, get Marty Cagan’s book, Inspired. It is the best book I have seen on the topic. We have an upcoming product management forum with our portfolio companies that Marty is giving, and we are really looking forward to it).

The frying pan is getting hotter…

3. Ecosystem– Your competitor realized from the beginning that their product is not stand-alone. It fits within an ecosystem of products that their target market uses or wants to use.

Your competitor hired the best business development head in the market to attack this opportunity and that head has been doing great work uncovering the opportunities. They have been building their relationships with the other companies in the ecosystem, integrating their products into the ecosystem, and offering easy to use APIs for the ecosystem participants to integrate into and extend their product.

They have also established marketing and co-marketing arrangements with the most important members of the ecosystem and are working to extend their ecosystem further.

Finally, they realized that the Internet, SAAS, cloud-based business models, and mobile platforms are gaining a lot of traction and they have been innovating to find the new ecosystem partners and platform extensions that will further increase their lead.

Meanwhile, you haven’t realized this opportunity (or you have and are doing very little to capitalize on it). You don’t have a business development lead (or you have hired a second tier player), so other members of your senior team are taking on the role part-time and you are generally playing catch-up against your top competitor. You are falling further and further behind.

The frying pan is getting hotter…

4. Scrum– Your competitor realized years ago that Scrum was a game changer for their product efforts.

They took the effort seriously, trained all of their developers on the technique, hired people onto the team that had some experience, and let-go their team members that could not keep up.

Their scrum masters have real authority and the senior management is doing everything they can to remove obstacles and increase the team’s velocity.

They have continuous integration and automated testing and their product releases are more frequent, more valuable, and higher quality than yours.

They got a great grade on the Nokia test a long time ago, but they continue to have serious retrospectives and improvements in their approaches with each sprint. Their velocity gets better regularly and the unit cost of their true velocity (the cost of the story points that make it into software releases) is a multiple of yours.

They even learned how to add to their staff while maintaining a near-linear scale-up!

Take a look at this Jeff Sutherland video to hear about the types of results they are seeing and how they are using Scrum to decimate you.

Your competitor understands the power of Scrum so well that they started using a scrum-like approach to help them manage their business, not just their software!

Meanwhile, you think that you are doing scrum, but your team can’t even pass the Nokia test (perhaps, doesn’t even know about it) and you aren’t focused on improving the situation. You management team thinks of development as a black box and isn’t helping you to get better. You may not even be calculating your velocity, so you don’t even know that your velocity is low and you aren’t getting better…

The frying pan is getting hotter…

5. Marketing Rules

Your competitor understands that there are 10 fundamental rules of marketing and they are nailing every aspect of their marketing program. The market is really getting to know your competitor very quickly and they like your competitor a lot. Your competitor is so good at content marketing that they have incorporated many of the Hubspot marketing practices

Meanwhile, your marketing department has been narrowly focused on leads, leads, leads and has been using a narrow set of marketing channels (perhaps even just using Google Adwords). In the worst cases, it may get to the point where you tell people in the market that “we are just like

The frying pan is getting hotter…

6. Sales Factory

Your competitor realized a long time ago that they could gain a competitive advantage if they built a methodology for selling that was world class, repeatable, scalable and resulted in a great economic model.

(if you are e-commerce) Your e-commerce competitors are conversion rate experts, understand every prospect click, and have truly optimized their sales.

(If you are B2B) Your B2B competitors built a sales factory like Oracle or They recognized that telephone-based contact models are a major part of any selling system and found the absolute best inside sales manager to run that part of their sales unit. They also perfected all the other aspects of their selling system and they have a very clear understanding of all aspects of their system.

The frying pan is getting hotter…

7. Team- Management Team, Board, and Advisors

Finally, and most importantly, your key competitor realizes that people are at the core of everything they do and they hired the absolute best people for each role in the company and they surrounded the people with the best board members and outside advisors to help connect the company with the best ideas and resources. They even have clear, compelling, and shared aspirations for their company that help their team work toward common goals.

Meanwhile, you have some good people, but some combination of loyalty and priority has stopped you from making the adjustments to your team that would really bring in the best people to the company. You don’t realize that the current team members could still have great roles in the company, so you don’t bring in the best people while your competitor just gets stronger. With respect to company aspirations, you either don’t know what it means or just don’t think it is a priority.

The frying pan is getting hotter…

Your competitor is working on aligning all of these strategies into an arrow with a razor sharp, titanium point that is directed at the market at which you are also aimed. Their management team is doing their work and improving their market clarity score every week and they continue to get better and better.

In summary

I hope this post put some fear into you.

These techniques for winning have been proven for a long time and companies that are implementing them have serious advantages against companies who aren’t.

You may be the frog, but you also have the opportunity to be the company that owns the frying pan!

What are you going to do about it?

Founder & Partner

As the founder of OpenView, Scott focuses on distinctive business models and products that uniquely address a meaningful market pain point. This includes a broad interest in application and infrastructure companies, and businesses that are addressing the next generation of technology, including SaaS, cloud computing, mobile platforms, storage, networking, IT tools, and development tools.