Wednesday, November 6, 2013

Is Understanding Your Opponents Enough?

By Andrew Yenchik

This weeks most engaging reading, for me, is the HBS article titled “Competitor Analysis: Understanding Your Opponents.” [1] Despite this article’s thorough review of understanding competitive forces, I found myself wanting more concrete details regarding the next steps.  It is good to understand who my competitors are, determine their strengths and direction, and even role-play and war-gaming.  But in the end, business strategists need the next steps.  It is even better to have ideas or frameworks regarding strategic steps to combat competitors and expand your current turf.  But I feel this article, and the other articles assigned, never made this connection – and I need this connection as a strategist in the rapidly changing business environment.

It appears that Pepsi and Coke found themselves in a similar dilemma.  Throughout the twentieth century, Pepsi and Coke battle in the “Cola Wars,” each trying to out perform the other in the low-margin, fast-paced consumer beverage market.  The enlightening thing about reading the historical and strategic details over a 100 year period between Coke and Pepsi is that these competitors only merely understood each other at a surface, Porter’s Five Forces level.  Their knowledge and perception never seemed to go further.  In general, Pepsi followed every good decision Coke made, and avoided the decisions that backfired.  The HBS case is full of lines, such as, “Pepsi emulated that move three years later,” and “Pepsi shifted course and adopted Coke’s anchor bottle model.” [2] Neither Pepsi nor Coke was able to ‘win’ the Cola Wars – but other firms have been able to annihilate their opponents – and I wonder, "what did Coke, Pepsi, and other firms miss?"

Didn’t Blockbuster understand Netflix?  And Microsoft understood Apple?  Didn’t these major corporations follow Porter’s models and the Marketer’s Toolkit?  Of course they did, but this view of strategy formed a myopic lens that hurt these former major market dominators.  So, in general, I feel that merely understanding your competitive opponents – no matter how thoroughly and deeply – isn’t enough.

A few thought and strategy leaders seem to have noticed these trends and have provided insight and frameworks to help solve these strategy enigmas.  Perhaps they begin to answer the question regarding what some big firms just seem to miss when it comes to strategy and innovations.  One example that is extremely pertinent to this class discussion is Clay Christensen’s disruptive innovation framework.  (One of many smart guys with a smart idea)  Applying his insights and research as a layer on top of these base-line readings from the past week give a much more well-rounded, actionable set of strategy methods.  And these disruptive innovation frameworks are essential due to the global IT trends that IT managers and strategists face. [3]  If you haven’t read Innovator’s Dilemma or any accompanying research, I think you’re already falling behind.

Two brief examples of the value that Christensen’s work that enhances this weeks study:

1.   The Marketer’s Toolkit merely mentions that you must analyze your competition and find ones that can kill your business.  Christensen supplies an actionable framework for analyzing competitors and finding those (especially those who may not be on your competitor-radar) that can overtake you in the marketplace.  His ideas help a firm accurately identify competitors as well as preventing innovations form slipping through their fingers – those innovations that will win big in the marketplace. He provides insights and actions for hedging against competitors and becoming a disruptor yourself. [4]

2.  The Marketer’s Toolkit states that a competitor is “any company that aims to satisfy the same customer needs that you do.” [1] To further this idea, Christensen describes the jobs-to-be-done framework, more accurately and more usefully helping strategists make decisions.  “The jobs-to-be-done framework is a tool for evaluating the circumstances that arise in customers’ lives. Customers rarely make buying decisions around what the “average” customer in their category may do — but they often buy things because they find themselves with a problem that they need to solve. With an understanding of the “job” for which customers find themselves “hiring” a product or service, companies can more accurately develop and market products well-tailored to what customers are already trying to do.” [5] Such a framework helps a strategist learn what customer needs are and what drives those needs.

Is understanding your opponents enough?  Or do you think we need to learn to go one step further and understand how to start strategizing against opponents and becoming proficient at analyzing the market for hidden competitors that aren’t on our current radar?  Are you like me, and feel as thought this weeks readings were great, but just not deep enough?

[1]  HBS Press, “Competitor Analysis: Understanding Your Opponents.”
[2]  HBS Case, Yoffer and Kim, “Cola Wars Continue.” May 2011
[3] McKinsey Quarterly, “Ten IT-enabled business trend for the decade ahead.”
[4] HBR, Christensen and Bower, “Disruptive Technologies, Catching the Wave.”

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