17 October 2008

Business as War is Half the Truth

Most people see Competitors as the biggest challenge to their business. Business is seen as a war. Books from the Military, like Sun Tze Art of War etc were highly recommended and studied, especially for designing strategies to overcome the competitors. But this war model is not correct.

Reason 1 Busines is a game of A, B & C not A against B

It is Courtship rather than War

It is not A(My Business) against B(The Competitor) in business. It is A trying to serve C (The Customer) with an alternative offering from B. It is a play of ABC and not just A against B.
The key in business is the Customer. He has at least 4 choices.
  1. Don’t know about the Offering.
    For new invention, the Customer may not even know about his needs.
    Henry Ford once said that if you asked customers what they wanted they would answered that they want a faster horse. (not a car!)
  2. Don’t Buy the Offering. Could be pricing, distance, etc. See Non-consuming Context of Clay Christensen’s books.
  3. Choose to buy from You.
  4. Choose to buy from Your Competitor.
Notice that your competitor is only a reference point issue. The main issue remains whether you notify the customer, make an offer that his benefits-cost-analysis is better for you than your competitor. Watching your competitor does not help you in addressing your customer’s needs. Understanding your customer’s needs and build your trust-relationship may even help you to make a profit by selling your competitor’s products! The key I want to stress is to focus on your customer more than your competitors.

Reason 2 Win-Win Not Win-Loose is the Game
A long term relationship that can be build between you and the customer is a win-win one. Win-Loose is a short term game.

Reason 3 Competitors as Partners
There is strength in unity. A marketplace full of competitors addressing similar products, like an IT Mall, is a main attraction for customers. Industry Association works for the benefits of their group of competitors.

Reason 4 Changes
In this world of rapid changes, the Merger and Acquisitions, the rise of new and disruptive technologies, it is difficult to see who are your competitors. The competition occurs perhaps on a deal by deal basis.

Hence, always focus on your Customers first and use your competitors as a reference point for judging how good your offering is.

Reason 5 Competitors are Beyond Your Control
While you can control and choose your actions, you cannot control what your competitors will do. You can influence and even misguide them, but you can never be sure their reactions to your actions.

Reason 6 Incremental Rather than Breakthrough Innovation and Market

(updated 23 Nov 2008)
Looking at competitors only get us further involved in the Red Ocean of low margin competitive Market. We tend to come out with just incremental innovation and improvement. Looking at the customers' needs, and experience allows us to create a Blue Ocean Market of without competitors. We look at not just serving the existing customers but also creating new a market to serve the non-customers of the past.

Microsoft Helped Apple - The True Quality of A Champion, Steve Jobs' Humility.

The best example of Competitors helping each other is Microsoft investing $150 million to help Apple.

Steve Jobs' announcement of Microsoft's investment.
If we want to move forward and see Apple healthy and prospering again, we have to let go of a few things here. We have to let go of this notion that for Apple to win, Microsoft has to lose.

We have to embrace a notion that for Apple to win, Apple has to do a really good job.

And if others are going to help us that's great, because we need all the help we can get, and if we screw up and we don't do a good job, it's not somebody else's fault, it's our fault.

So I think that is a very important perspective. If we want Microsoft Office on the Mac, we better treat the company that puts it out with a little bit of gratitude; we like their software.
So, the era of setting this up as a competition between Apple and Microsoft is over as far as I'm concerned. This is about getting Apple healthy, this is about Apple being able to make incredibly great contributions to the industry and to get healthy and prosper again.
Microsoft $150Million investment, converted to 18.2 millions Apple shares later and sold. It is worth $5.5B+ with Apple shares pricing around $300+ in 2011.

Korean Drama "Bread King"
The Guru was explaining to the loser in the competition, "He, Zhuo Qiu, (the winner), only think about bread, whereas you only think about him (your  Competitor), who do you think will win?"

See also: Competition vs Opposition

No comments: