Rubicon has a defense practice, which we would love to call “Fighting With 4 Swords: The Art of Competitive Play”. Unfortunately, that’s too long to put on our business card along with our other 3 practices (define, design, optimize). So instead, we get to use the long description when writing articles or blog entries.
There are new realities in our tech world. There always are, of course. Which is why this field is so interesting. But these days it seems like a great deal of our client work is about defensive plays. The key question being “how to ward off a big competitor”, or “what can we do to prevent market erosion”, etc. The conversations I’ve been in lately prompt me to share some thinking of what swords you can use in your competitive battles.
Let me start by disclosing my bias. I think competitors are great. Not just because it causes clients to want our help (smile), but because having strong competitors forces companies to deliberately choose a set of activities and products that create something unique, something of real value in the market place. And I’m nuts about that.
To develop an effective competitive plan, you must understand the four types of swords you have in your armament, and then figure out which one applies to your situation. These types are:
Notice that I didn’t start with the product and how you have a better product. Making a better widget isn’t a competitive strategy. But having crazy love-like affinity between you and your customers is. Do you think that many vendors can come between Apple and their Mac users? No, of course not. I take a tremendous amount of teasing for wanting to use my Mac and only my Mac. But no one will take this thing from me. That kind of passion allows a defense posture that is priceless. Remember that in the high-tech field, you will be attacked by a competitor — sooner or later. So don’t rely on the fact they won’t attack. Make sure that your customers are a place when the enemy can’t attack.
A good example of a company that has a strong affinity for a seemingly inconsequential area of software is Intuit. Microsoft tried to enter the financial software space and Intuit’s extremely strong, loyal user base was one of their biggest assets in that war. When AOL was trying to win the the dial-up market, they were extremely aggressive with their CD-mailers. Someone at the company could have pointed that there wasn’t a person that didn’t know AOL existed but it was their relentless pursuit of each and every customer, repeatedly that made them the dominant leader of their space but also made it very difficult to be displaced.
As soon as a competitor enters a space, the typical defense play is to look for how to do discounting or price / value competition. And while I can understand that price discounting is key to make sure no foothold is gained, the bottom line is that price is only an okay defense play. A better — offense — play is to advance the solution. Create a way to do something new that the customer really needs.
Keep your eye on out-innovating and adding value. Another technology vendor that has done this well is Autodesk. Autodesk was starting to lose market share, and mindshare to low-end vendors. What they did is two-fold. They created a low-end offer that would allow them to do a point-by-point value comparison to the low-end folks. And, they innovated towards high-end vertical solutions that added MUCH more into the solution then they had before. It’s this kind of product evolution that proves a great armor from attacks.
Fundamental to this, also, is to become a brand bulldog. Pick your turf carefully and then defend it with the tenacity of a junkyard dog guarding his bone. Forget about parity and go for distinction. Get clear on your brand position and make sure everyone in your company knows it and can articulate it. If your offer is truly unique and you can lay claim to it, you have a way to fight differently.
High-tech markets, like most, are never single point product offers. They are tied to systems. Palms are hardware that are tied to mobile operators, sync software or software applications. IPods are tied to the entertainment industry, and distribution contracts. Cisco is tied to cross-platform interoperability and standards bodies. It’s the ecosystem of contracts or chains of integrated solutions that form a competitive play.
By being at the Software 2006 show this last week, I was reminded of the role of globalization and outsourcing in our world. Through these macroeconomic factors, we are feeling the growth of commoditization in almost every industry. I believe that means we need to add value in all that we do, of course. By building and participating in value webs, where value is built by a number of companies coordinating their individual capabilities to create a whole new business ecosystem. That’s going to allow you to focus on what you do best, and build a set of alliances and relationships to be different.
Palm was unbelievably good at building their ecosystem. They used both influencer marketing and developer relations strategically to build an alliance web of players who were loyal and committed to that platform. Microsoft and several other players were blocked in many ways because of the value web created. [Note of disclaimer: my key principal, Michael Mace, worked on this stuff as VP of Palm. So I have a slight bias and knowledge of what happened.]
Only you can articulate where you are going and why someone should follow you. For some reason, companies believe they need to first build a product and then talk about that. But what customers need is a reason to believe. A reason to pay attention to you and in the absence of your leadership, they’ll listen to the next guy on the platform.
Remember the movie, American President? It’s the pre-West-Wing work of Aaron Sorkin. In it, an advocate and aid to the President comments on the lack of leadership being demonstrated by the current administration:
“They don’t have a choice! Bob Rumson is the only one doing the talking! People want leadership, Mr. President, and in the absence of genuine leadership, they’ll listen to anyone who steps up to the microphone. They want leadership. They’re so thirsty for it they’ll crawl through the desert toward a mirage, and when they discover there’s no water, they’ll drink the sand.”
While certainly a great line of dialogue, it applies to high-tech also.
Customer need you to articulate why they need to follow you.
So for your vision, don’t leave things unchallenged, don’t be a target for the bully, and give your customers and advocates a vision for why they should choose you. The absence of your voice on the podium leaves a vacuum. Don’t do it. Fill the auditorium and soundwaves for your vision and direction. And don’t wait until you have your product management team all lined up. Vision is vision because a few people have it. And the only way to get vision developed is to force yourselves to articulate it and develop it further.