“Keep your friends close and your enemies closer.” This quote — variously attributed to Sun Tzu and Machiavelli and made more famous by Michael Corleone — is good advice. However, the fast pace of business today means the line between “friend” and “enemy” is blurring. Your enemy today could become your ally tomorrow, and vice versa. Too many CEOs and entrepreneurs don’t think broadly enough about whom their competitors might be or how to deal with them. See if you are guilty of making some of these common mistakes when handling the competition:
You only have a handful of competitors you recognize. Many entrepreneurs have a myopic view of their space and don’t look beyond it. It’s the role of leadership to constantly scan the horizon and look for competitive threats.
You ignore startups in your space. It is surprising how many CEOs and leaders know nothing about the startups in their industry. Just because a company is small today doesn’t mean they aren’t going to be a major competitor tomorrow.
You don’t know who your competitors are. What’s more likely, and as bad, are entrepreneurs who refuse to believe they have any competition. This is unrealistic and dangerous. Everyone has competitors, even if it isn’t obvious who those companies might be.
You treat competitors only as adversaries. There are many reasons to build relationships with competitors, including partnerships, acquisitions, and regulatory issues.
How then should you approach the competition? Here are some recommendations.
Understand the competitive topology.
The importance of knowing the competitive landscape cannot be overstated. Many CEOs can quickly rattle off a list of four or five competitors, but many are stumped when asked to go beyond this. Bob Barker, managing partner of CEO advisory firm 20/20 Outlook, has some advice for companies looking to be acquired that you can apply to any business: Make a list of 20 potential competitors. It may seem difficult, but the exercise will make you think beyond the obvious to companies in adjacent or other vertical markets. This will help you uncover potential threats, buyers, and partners. You can better understand everyone’s strengths and weaknesses and then address your own.
Watch out for disrupters.
Limiting your competitive approach to your current market may not be enough. Disrupted companies always miss the fact they are no longer competing against the current incumbents. Too many entrepreneurs get complacent, especially regarding startups. Don’t confuse current revenue with future results. It’s imperative to watch for startups that are getting traction. Remember, every company started as just an idea. And they are all trying to be the Uber of something.
The lesson is to continuously be on alert for changes in the market. Watch to see if customers start selecting new products and services based on a previously insignificant or unknown factor.
Develop relationship with all the key players.
People don’t want to do business with people they don’t know. I grew up in Ruston, Louisiana, population about 20,000. If you could afford to build a $2 million house in Ruston, you were in rare company. If you wanted to sell that house, then you’d better know who in town can afford it (or at least recognize them if they come knocking at your door).
The same principle applies when leading a business, whether you are trying to sell your company, partner with the right people, or band together to fight bad government policy. CEOs and executives who know their competition like the backs of their hands often do not have a personal relationship with a single soul at those companies.
Take the time to develop the right relationships. Seek out their company at trade shows and other events. Ask them to lunch. It’s worth the effort.
Check your attitude.
Not everything you do competitively has to be about taking business away from each other. Another reason to reach out to competitors is to collaborate on making the pie bigger. This is especially important when you are trying to bring awareness to your market. The relationships you develop can be beneficial from a personal and professional development standpoint as well.
It’s easy and even beneficial at times to have an “us vs. them” mentality. Keeping your friends close and your enemies closer is smart business, as long as you realize all the nuances. Set yourself up for success by understanding who your current competitors are, scanning for new ones, and developing relationships with all.