Respect the Competition
Andre Agassi’s run at the U.S. Open has provided a topical reminder of a key strategic lesson: never underestimate your competition.
In an interview, Agassi recalled preparing to meet a then-19-year-old Pete Sampras in the 1990 U.S. Open Final. Having beaten Sampras easily in their previous encounters, the brash Agassi told his coach: “I feel sorry for him. I’m going to keep making him hit balls until he implodes.” As all tennis fans know, Sampras demolished Agassi to win his first of 14 Grand Slam titles. And as even casual sports fans know, Agassi has since lost that cocky attitude, along with his mane of hair, and is now an intense competitor, but one who always respects his opponent.
A Safe Little Experiment?
With Steve Jobs announcing the new iPod nano and Motorola Rokr E1 cellphone, we have another topical reminder of the same lesson, but this time from the business pages.
In a useful discussion on Apple’s strategy, Business Week On-line notes that: “When Apple unveiled its first iPod in Oct. 2001, the market was a smattering of little-known devices used mostly for playing songs illegally downloaded off file-sharing Web sites. That's one reason why the music labels agreed to CEO Steve Jobs' plan to sell their music for just 99 cents a song. Besides, with Apple's anemic 3% PC market share, few record execs figured Jobs would be able to win over anyone other than his loyal base of Mac buyers. It would be a safe little experiment, letting music execs learn about the market while Apple picked up most of the tab.”
To paraphrase Business Week: Ooops.
Apple has sold half a billion digital songs and now claims 85 percent of the world market for digital music sales. As a result the record executives are suffering from the inflexibility of the 99 cents pricing model and cheering for other players who might be able to knock Apple off its leadership perch.
It’s easy to understand how a cocky young athlete could dismiss a competitor, especially one he’s easily handled in the past. But should we be surprised that seasoned executives would make the same mistake? Not really, because it happens all the time.
In the case of the record executives, it’s easy to understand how the error happened. Apple wasn’t a traditional competitor, so they lacked the insight into the computer manufacturer that they would have regarding players in their own market. For example, they did not grasp the significance of Apple’s strong competencies in usability, elegant design and great advertising, and the impact that strength would have in a market dominated by hip, tech-savvy consumers. Instead, they took a cursory look at easily accessible data—i.e. marketshare—and dismissed Apple as a threat.
Gain the tools to evaluate competitors
Unfortunately, we constantly see examples of business leaders who either fail to analyze their competition at all, or only give them a superficial glance. It’s a surprising error, especially when developing an Internet strategy, because competitors make all the necessary information readily accessible on their own sites!
Much like the record executives who lacked the methodology and knowledge to assess thoroughly the risk posed by Apple, many companies don’t have the tools necessary to properly evaluate competitors when developing an Internet strategy.
The thorough competitive benchmarking methodology and SWOT analysis that form the basis for our strategic recommendations, for example, consistently elicit positive feedback from our clients. They not only receive valuable insight about how they stack up, they often appreciate the reminder that they need to evaluate the competition.
For example, The Ontario Realty Corporation (ORC) strategically manages one of
ORC saw tremendous value in our competitive benchmarking strategy, which enabled them to make improvements to their strategy and incorporate valuable enhancements to the resulting site. Their Internet strategy has played a key role in attaining their overall objective of becoming an innovative, service-oriented and customer-focused organization; in essence, becoming a “digital enterprise.”
For organizations like the ORC, the intent came before the methodology. Unfortunately, too few organizations have the intent and, unlike Agassi, learn to respect and truly analyze their competition. This is surprising when you consider that they don’t have the option of staying fit and waiting for their nemesis to retire, an approach that has allowed Agassi to continue his remarkable career. Along with his mature respect for the player across the net, of course.
