『Should We Worry About Our Competitors?』のカバーアート

Should We Worry About Our Competitors?

Should We Worry About Our Competitors?

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Competitors can damage your margins, poach your best people, outspend you, undercut your prices and introduce technology that makes your current offer irrelevant. Worrying about them, however, is not a strategy. The better response is to build a competitive moat before you desperately need one. That means creating distinctive value, stronger client relationships, better delivery systems and advantages that rivals cannot easily or cheaply reproduce. How Much Attention Should We Pay to Our Competitors? Leaders should understand their competitors clearly, but they should not allow competitors to dictate every business decision. The objective is informed awareness rather than corporate paranoia. The intensity of competition depends on the market. In a commodity sector, price and supply capacity may determine almost everything. In a narrow market with only a few suppliers, gaining market share may be extremely difficult. Currency movements, technological disruption, regulatory changes, capital availability and the loss of key employees can also alter the competitive balance overnight. A rival with hundreds of salespeople may reach far more potential buyers than your team of twenty. A heavily funded newcomer may willingly destroy industry pricing to purchase market share. These threats are real, but constantly reacting to them can pull your organisation away from its own strategy. Do now: Identify the three competitor actions that could most seriously affect your revenue, margins or client retention. Why Is Competing on Price So Dangerous? Price competition is dangerous because a rival with deeper pockets can sustain losses for longer than you can. Once buyers become accustomed to discounted pricing, restoring the previous market rate can be painfully difficult. Many companies spend years building their prices to a sustainable level. Then a new entrant arrives and offers a similar product for substantially less. The newcomer may not need to make an immediate profit. It may be funded by a parent company, private equity, venture capital or profits from another division. This creates a zero-sum battle of winners and losers. Smaller firms often cannot match the discount without destroying their own margins. The answer is not always to become cheaper. It is to make direct price comparison harder by changing the value equation. Instead of allowing an apple-to-apple comparison, create a musk-melon-to-apple comparison. In Japan, premium musk melons command extraordinary prices because buyers perceive them as a completely different category of value. Do now: List the services, expertise, guarantees or outcomes that could move your offer beyond a direct price comparison. What Is a Competitive Moat in Business? A competitive moat is an advantage that protects your clients, revenue and market position from attack by rivals.Strong moats are valuable to buyers and difficult, expensive or time-consuming for competitors to copy. A moat might consist of proprietary technology, trusted relationships, specialist expertise, exclusive distribution, superior service, faster delivery, a powerful brand or a deeply embedded client ecosystem. In business-to-business markets, the moat may be the accumulated trust created through years of reliable execution. The irony is that companies usually need to build these defences while business is going well. Unfortunately, good times create complacency. Leaders are busy serving current demand, employees are fully occupied and there appears to be no urgent reason to invest in protection. That is precisely when the work should begin. Once the crisis arrives, the organisation may lack the time, cash or management attention required to respond properly. Do now: Ask what clients would genuinely miss if your company disappeared tomorrow. Their answers reveal the foundations of your moat. Why Do Companies Wait Until a Crisis to Innovate? Companies delay innovation because the cost and inconvenience are immediate, while the danger of doing nothing appears distant. A crisis suddenly reverses that calculation. Our experience at Dale Carnegie Tokyo Training illustrates the problem. Business was surging during 2018 and 2019. Revenue was strong, demand was high and the organisation was occupied with delivering training. Everything looked pretty peachy. Then Japan confirmed its first COVID-19 case in January 2020. Clients began cancelling scheduled programmes, and the outlook changed dramatically. We had no sufficiently developed moat against the disappearance of face-to-face delivery. Dale Carnegie had conducted virtual training internationally since 2010, but introducing it properly in Japan required curriculum translation, instructor development, producer training and financial investment. Before the pandemic, those barriers encouraged us to dawdle. Once survival was at stake, we found the money, time and determination remarkably quickly. In retrospect, the capability should have been built before...
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