• Dom Castley

Want competitive advantage? Ask Rod, don't try to be the best.

Updated: Dec 23, 2018

Most companies think that they will build competitive advantage by being the best in the industry. But what is best, exactly?

Trying to be the best usually translates as a scrabble for developing new product features, or catching up with the competition so sales can close a deal. This is a never ending list, even for giants like Google with deep engineering pockets. This scrabble for new features is exacerbated by product managers slavishly following partner or major supplier roadmaps.

Most leaders and salespeople feel that the competition is breathing down their necks. They need to win the battle for features, or tactically cut prices to win that deal. Competitive advantage is all about having that killer feature and winning head to head tenders. Its reinforced by sporting metaphors that about winners and losers and there being “no second prizes". Companies must be the best to win. Its this kind of thinking that fundamentally misrepresents the nature of competition in business – and stops businesses from actually being more competitive.

Being the best is an impossible goal. What is the best mobile OS, business model, publishing brand or product anyway? The only answer to this is “it depends”. Competition to be the best ends up with competitive convergence – limited choice for customers (some are under-served, some over-served), a scrabble for the next big thing and competition on price. A race to the bottom.

In sport, there is one set of rules, a set playing field where the boundaries are clear. Business is much more complex and multidimensional. Its open ended with no rulebook. No white lines in the grass. Because different sets of customers have different needs, tech companies don’t need to turn up at the game, they should create their own event.

A better analogy to sports is for companies to be like a rock singer. In a big sense, the music market has a size (around $15bn in case you were wondering). But is it true to say that the Rolling Stones are in competition with Rod Stewart? (showing my vintage here). I don’t think so. Each has cultivated their own audience over time based on their music, live performances, attitude via their own personal brands. Rod Stewart has managed to keep his audience all the way from “Da Ya Think I’m Sexy” all the way to cheese-laden Christmas and jazz albums. The hair is still the same though.

My point is that customers (or audiences) define what value is. Competitive advantage for tech companies is best reached through competition to be unique, not the best.

Know your customers and capabilities and create your own audience. Don’t keep turning up to the game. And whatever you might think about old Rod, you have to admit, he’s still here.


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