A couple of years ago I got to drive a Centurian tank. 50 tons of clanking, smoke belching, killing machine. I can only imagine how terrifying it must be for an infantry man up against one of these heavily armed and armoured monsters. But, quite unexpectedly, I felt very vulnerable in the tank. My top lip was exactly level with a big spike of metal that formed part of the drivers hatch – if we had stopped suddenly I would probably have lost teeth. I could hardly move without bashing a knee or elbow on something hard. It was so noisy I could barely hear the shouting of the instructor, perched on the front of the tank only a few feet away. And, with my eyes only a few inches above the hatch, the visibility was poor. The tank was also very hard to drive, requiring an odd mix of finesse and brute strength. Just changing gear is quite an accomplishment for the inexperienced. I also got to sit inside some Russian tanks of more recent vintage and their ergonomics were even more nightmarish. Being inside one of these things on a battlefield, full of fuel and ammunition, a prime target for every enemy tank, aircraft and gun, must have been terrifying. It was a lesson that, what appears as invincible strength from the outside might feel very different from the inside.
- Your competitor has more staff than you? That means that they have got to make more sales to turn a profit and they spend a lot more time in meetings.
- Your competitor is better funded than you? That means they are spending more of their precious time and energy dealing with investors.
- Your competitor’s product has more features than yours? Their product is probably more complex to use than yours.
- Your competitor is using trendier technology than you? That probably also means they have a lot more third party bugs and issues to deal with.
- Your competitor is based in a trendy location with better access to talent? That probably means they have to pay higher salaries and office rental and are more likely to get their staff poached.
Strength and weakness can be just two sides of the same coin.
I keep a vague eye on competition to my own table planning software. Over time I have built up a list of over 100 other products whose functionality competes directly with mine or overlaps significantly. New competitors appear fairly regularly. I notice that their website might look a bit more “web 2.0″ than mine or their price is cheaper and my heart sinks a little. But, so far, it has never made a noticeable impact on my sales and I quickly forget about them. In fact my sales have gone up every year in the 7 years since I first released PerfectTablePlan. I just keep improving the product, marketing and support, day after day, year after year. While many of these competitors have since fallen by the wayside, with products and websites not updated for several years. Some of them are giving away their products free in the hope of making a few pennies from advertising. Some of them never even launched. Those that are still active are targeting rather different niches to my software.
Many companies respond to competition by trying to copy their competitors feature for feature. This is almost certainly a mistake. You will always be at least one step behind them. It is much better to listen to your customers and innovate. It is certainly a lot more interesting and rewarding. It is also much easier to market a product that is different.
There are cases where competitors can be a big problem, for example:
- markets where there is a strong network effect (I wouldn’t want to compete head on with Ebay or Facebook)
- markets where you might have to compete with the company that owns the platform (for example a Microsoft Office add-on isn’t likely to last long if Microsoft releases a new version of Office incorporating this feature)
So it is probably better to avoid these types of market, unless you are happy to accept that level of risk. But there are vast numbers of markets big enough to support multiple products. There are some 2 billion people with access to the Internet and they all have different requirements. Even a niche within a niche can provide a decent living for a small software business.
Competition can actually help you. The main competition for my table planning software is Excel and Post-It notes, not other table planning software. My competitors are helping to raise awareness of the fact that there is such a thing as software for table planning. Some of the people whose awareness they raise, are going to search for other software solutions and find and buy my software (thanks!).
So next time you find out about a new competitor, don’t panic. It is natural to focus on their strengths and your weaknesses, rather than your strengths and their weaknesses. But they are probably doing the same, and they may be more afraid of you than you are of them.
In truth your biggest fear should be having no competition. If there is a no-one else doing what you are doing then either you are genius who has found an untapped market or the market doesn’t exist. Unfortunately, it is almost certainly the latter.
This is why adverts for commodity products such as instant coffee and soap powders are so consistently awful.
 Microsoft should take note before they ruin a product with 90% of the highly lucrative desktop operating system market in their panic to compete with Apple in the tablet market.
Photo by Alistair Joseph.