Management Unleashed – Knowing your Competitors

Management Unleashed – Knowing your Competitors
This article was first published in Business Times on 13 April 2019
By John Bittleston

Two weeks ago, this column recommended rethinking who our suppliers are. It is also important to re-identify our competitors. Normally in business we see these as the companies who offer products or services that can be bought as alternatives to our own. Competition is more widespread than that. The person sitting in the cubicle next to you at work may be your greatest friend; s/he will still be a serious competitor, more so today than ever before.

A small-car manufacturer told me recently that he was having to consider electric three wheelers and senior’s motorised wheelchairs as competition for his products. Ten years ago, the thought would never have crossed his mind. But even back then, he was eyeing the growth of early motor driven scooters as a challenge to the car. Similarly, animal-based foods now have to take vegetarians, and variations on the vegetarian theme, seriously. Restaurants are producing increasingly appealing vegetarian menus. A product on which I worked in the 1960s as a credible meat substitute is finding its market 50 years later as Quorn. Timing is all in business.

Who would have thought that cameras would discover their main competition in mobile phones? Who expected to see a fashion model with beautiful long brunette hair advertising Head and Shoulders anti-dandruff shampoo? And who would have imagined that trains would be seriously be considered as competition with planes? And even with office space? Yes, people riding long journeys consider the train their office nowadays. Human adaptability is having a field day in an age of one-off JIT (just in time) production capability.

There are two consequences of this wider view of competition.

You have to be creatively alert to the impact of technology on your products for sale. Robots changed car making fundamentally. Computing power is providing Big Data, some of which is invaluable in tightening definitions and systems. Gymnasia are a growing business but they had a blip in their growth when ‘pacemaker’ watches became cheaply available. People took to running in the open rather than walking treadmills. Netflix, in turn, brought a need for lighter, unbreakable (plastic) plates that could be comfortably handled in front of a screen.

In the service arena, Martin Sorrell may have built (almost) the biggest advertising group in the world. What he seems to have figured out rather late was that Facebook, Google, Amazon and others were advertising agencies in disguise. They sneaked up on the business leaving traditional agency practice standing because they allowed clients to be their own copywriters. Creative advertising had been the prerogative of the educated few. Now it belongs to the many.

Keep an eye – but do not spy

Just watching your direct competitors’ sales is not enough. You need to know about their production plans – but not by spying, it goes without saying. As I mentioned two weeks ago, your own suppliers, if properly handled, will be a great source of information. Sales have become a potentially misleading measure, anyway, with so many goods being sold at bid prices or as loss leaders. The measure of commercial success is profits and the return they provide on the investment involved.

The law about competition is developing, but very slowly. It has been illegal to collude over pricing since I entered business in 1950 but the policing of collusion has been spasmodic and, often, illusory. A famous British case of the 1960s ended up with the judge virtually endorsing cooperative bread pricing to protect the jobs of the many bakers and bakery roundsmen who could be thrown out of work by fluctuating competition leading to big volume swings. When cooperation becomes collusion is now defined as when the customer is disadvantaged. This is not helpful because there is a trade-off in every element of competition and cooperation.

Initiative in business involves knowing the competition.

Being on friendly terms with your competitors – within the law – is still the most sensible way to make an industry stable while keeping its members agile. Having a clear idea about the viability and advantages of another’s products is still the way to win. Manufacturers are inclined to research consumers’ views about their own products, less so about the competition’s. It didn’t require a genius back in the 1980s to see that Brand’s Essence of Chicken was going to be challenged by well-known competitors adding herbal remedies to the basic product. The main competitor was disadvantaged by his long-standing knowledge of herbs. It required market research for Brand’s to steal a march by asking what the consumer believed and ignoring what the other producer knew.

The market for mobile phones was going to stagnate earlier than it did but for the emergence of the beveled edge screen. Of only marginal real advantage, it became a symbol of superiority and thus important. To identify this required an inspired hypothesis by an inventor, market research to see if the consumer even understood what it meant and a business sense to detect a coming fashion. Now there is a market for phones with less technical pizzazz, simpler operation, and lower prices.

It is particularly difficult to guess what a competitor will do when a product has not been developed. In the 1970s I worked on a ‘strap-on helicopter’. None of the technology would permit such a phenomenon then. But the concept of man being able to fly with minimum structure and maximum flexibility of take-off and landing was always appealing to the farsighted. Now we have suits that allow for significant distance flying from a height. Soon we will have strap-on helicopters. Had we asked potential buyers of such a product about it forty years ago they would have thought us daft.

The company with the most common sense usually comes first.

Successful businesses need competition to keep them on their toes. Monopolies, as government departments worldwide demonstrate, become bureaucratic and procedure-ridden, regarding explanation as more important than accomplishment. The great giants of business were not those who penny-pinched their way to wealth or systematised risk-taking but those who eschewed procedure in favour of initiative. They encouraged risks, forgave mistakes provided they were dealt with properly, and saw to it that they got outside their businesses enough to know what was going on in the rest of the world. One of the best ways to learn about the competition is to be locked out of your office during working hours.

Such a policy holds good today even though your competitors are no longer only under the bed.

But remember, some of them are already in it with you.

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