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Finding Competition in Unexpected Places

September 12, 2014 - Startups - ,
By: Chris Riley

Competition is one of those rare things that can be both good and bad—sometimes at the same time! Glancing through historical quotes about competition gives us Walt Disney’s take: “I’ve been up against tough competition all my life. I wouldn’t know what to do without it” right alongside John D. Rockefeller’s “Competition is a sin.” Whether you think it’s indispensable or indefensible, competition is part of business, and it’s important to think about especially if you’re just starting out.

Startups in particular are always worried about competition, and usually someone is spending quite a bit of energy monitoring the every move of companies with similar products. As a result of this tendency, a lot of startups spend an inordinate amount of time on knee jerk reactions to perceived threats. But unless the competition is actually beating you to sales calls, your focus is probably in the wrong place. In my experience, there are three categories of competition, and by focusing only on direct competition, startups are missing the more serious—and usually more fatal—types.

 

Alternative Tools

We all know there is usually more than one way to solve a problem. For example in the development world, instead of investing in release automation tools for simple applications, a potential customer can opt to use Github webhooks in Azure with Cloud9 Cloud-based IDE. Neither of those vendors is in direct competition with release automation tools, but it turns out they are an alternative. The competition is stealthy, and possibly even unintentional, but potent.

 

Nice but Unnecessary Tools

While you may have developed the most elegant solution to a particular problem, if the problem is uncommon, not immediate or not tied to a critical event in an organizations tooling, you might face some surprising competition from corporate inertia. Companies often see doing nothing as a viable alternative to purchasing a tool they are not convinced they need.

 

Medicine vs. Candy

Solutions can be either medicine or candy. Medicine is necessary, but not usually exciting and sometimes even painful. Candy, however, is great! It’s nice to have and definitely fun, but you never really need candy. Approaching your product with these two concepts in mind allows you to determine which type of solution you’re offering and engage the market accordingly. If it’s medicine, concentrate on the quality, speed and price. If it’s candy, talk about opportunity costs and what’s to gain in taking a new approach. If you’re solving a real problem that simply hasn’t been publicly identified yet, you’ll need to be prepared for long-haul promotional efforts that will pay off when the market either identifies the problem on its own or catches on through your education campaigns.

In reality, direct competition can be positive for your product, especially in the first year. Staying lean and customer-focused in the primary stage of a business can translate into efficiency and survival in subsequent years. Identifying indirect competition is a more immediate need. Putting your efforts into the right kind of competitiveness will go a long way toward improving your business and increasing your market share.


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Chris Riley (@HoardingInfo) is a technologist who has spent 12 years helping organizations transition from traditional development practices to a modern set of culture, processes and tooling. In addition to being a research analyst, he is an O’Reilly author, regular speaker, and subject matter expert in the areas of DevOps strategy and culture. Chris believes the biggest challenges faced in the tech market are not tools, but rather people and planning.