Big companies with products in established markets worry about the competition. In fact, at the larger companies I’ve worked at we’ve had entire teams dedicated to figuring out what the competition was up to. Startups on the other hand often spend way too much time worrying about the minute details of features and functions that their competitors deliver. In my opinion the only way that startups should look at their competition is through the eyes of their customers.
Customers Will Give You The Big Competitive Picture
In the very early stages of a startup looking at competitors is a distraction from the job at hand, which is figuring out if your offering is a fit for a particular market. If the focus is on customers, you’ll hear first-hand what customers see as the alternatives to your offering. This list usually will contain a couple of companies, along with some more difficult competitors like “do nothing” or “build it ourselves”. The list is interesting because it tells you what category your customers place you in, what budget they will pull from to buy you, what existing products they might replace with yours. It doesn’t of course tell you what exactly to build.
The Small Stuff Doesn’t Matter for Startups
In mature markets many products get bought based on nothing more than company reputation (including the customer’s history with that company) and a feature/function checklist. Almost by definition, startups don’t make it on the list and if they did, they would lose the checklist war. Less mature markets are a whole different ballgame – reputations matter less and the checklist changes all the time. Startups can bring a whole new approach (a new business model, a new way of solving the problem, new economics or a new something else) that makes the checklist irrelevant. For most startups, your offering will have to be so obviously differentiated from what’s in the market today in order to be successful, it won’t matter what little features and functions your competitors offer. Sure, you’ll have to watch them to see how they react to your approach but they likely won’t even notice you exist until you have some traction in the market. They won’t notice because they are spending all their time looking at what their competitors are delivering and making sure they stack up well in a checklist.
If you enjoyed that, you should subscribe! You can sign up for email updates, subscribe via RSS or follow me on Twitter.
It never ceases to amaze me that startups fret about the small stuff as you mention.
Your points on getting top the customers to have them verify or surface competitive information is great and so true. I wonder if the world of Agile (we have enough customer insight internally) is driving the unnecessary need for scrambling for competitive information? All a startup needs to do is connect with early adopters, market influencers and some real prospects and customers.
Hi Jim,
Great comment, thanks. Agile might have something to do with it but I’ve seen it in teams that aren’t really using an agile process. I think it has more to do with folks getting too focused on product and not focused enough on customers and the bigger picture of what value they can bring to the table.
April
Hi April, very accurate observations. I can relate to both your big company as well as your startup scenarios and could not agree more with your conclusion. Always enjoy your blog posts and forward them to Matthias from time to time. Best, Paul
Great post. What do you do when you are a product manager and it’s your exec team that is too competitor focused? I’m finding it hard to convince my founders that some of the things the competitors have just don’t matter all that much.
Hi Farhan,
That’s a good question. One of the most important things a product manager at a startup can do is to make sure that the founders are hearing what you are hearing from the market. You’ll need to figure out how to get them in front of more customers and also make sure that you are documenting the feedback you’re getting from customers/prospects and sharing that with them as regularly as you can. The other thing that’s important is to make sure everyone is on the same page about what market you are targeting, and what the key value points are that your solution delivers. If everyone isn’t clear and in agreement on that, you will have no end of disagreements about what’s important and what isn’t. Good luck.
April
Hey Paul,
Thanks for the comment – and say hi to Matthias for me 🙂
April
Hi April,
Some really useful insights there that those of us who have worked in larger corporates and startup arenas know to be true.
The one additional point I would make is that far too many people, both in large and small companies, focus far too much on product oriented competitive intelligence. If you are a small startup in, say, the Unified Comms space you absolutely need to keep your eyes on the strategic intent and tactical moves of Google and Cisco either to stop yourself being drowned in the tidal wave as they change direction, or to spot the real “blue water” opportunities.
If you had been new into the personal accounts software business at the end of the 80s and not spotted what Microsoft’s intentions were with Money you would have gone out of business however many product differentiators you had.
So the moral is, don’t focus on competitors product features, keep an eye on their strategy!
Hi Paul,
Great point! It’s hard I think to step away from the feature/function stuff but you’re right, the bigger strategy is much more important.
April
blog post: Competitive Intelligence, Startup Style http://bit.ly/99bZ3E #startup #prodmgmt
Cool post by @aprildunford. We need to be reminded of this off and on – Competitive Intelligence Startup Style http://bit.ly/99bZ3E
RT @aprildunford: blog post: Competitive Intelligence, Startup Style http://bit.ly/99bZ3E #startup #prodmgmt