Competitors

1. The competitor set

   Who is actually competing for the demand — direct rivals, substitutes, in-house alternatives and inaction. Defined from what customers consider rather than from the industry.

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2. Capability comparison

   What each rival can actually do, on the dimensions customers weigh. Assessed from evidence rather than from positioning claims, including where they are better.

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3. Reading their strategy

   What a competitor is trying to become, inferred from where they invest, who they hire and what they decline. More predictive than anything they publish.

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4. Monitoring

   The few developments that would change a decision here, watched deliberately. Everything else is interesting and should not be tracked.

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1. The five forces

   Michael E. Porter · 1979

   Profitability in an industry is set by five pressures, and rivals are only one of them.

   The bargaining power of buyers and of suppliers, the threat of new entrants and of substitutes, and the intensity of rivalry. The reason it displaced simpler competitor analysis is its claim that the structure of an industry, not the skill of its participants, explains most of the difference in returns between industries — and that the force squeezing you is often not the company you think of as the competitor.

   Reach for it when

   When entering a market, when returns are falling across an industry rather than at one company, and whenever competitor analysis has become a list of rival firms.

   Where it stops

   It describes an industry at a moment and assumes reasonably clear boundaries. In markets where platforms make an industry a different shape every few years, the snapshot ages fast, and it has little to say about complementors or regulation.

   Michael E. Porter, “How Competitive Forces Shape Strategy”, Harvard Business Review, 1979; Competitive Strategy, Free Press, 1980.

2. Strategic group mapping

   Michael S. Hunt, developed by Michael E. Porter · 1972

   Competitors cluster into groups following similar strategies, and the real rivalry happens inside a group.

   Plotting rivals on two dimensions that matter in the industry — breadth against price, say, or service level against reach — shows clusters rather than a scatter. Two findings follow: you compete hardest with your own cluster, and the empty spaces on the map are either an opportunity or a place where a business model does not work, and telling those apart is the actual work.

   Reach for it when

   When a competitor list has grown long and undifferentiated, and when looking for an unoccupied position.

   Where it stops

   Everything depends on choosing the two dimensions, and the choice is where the analysis is really done. A map on the wrong axes shows tidy clusters that mean nothing.

   Michael S. Hunt, doctoral dissertation, Harvard, 1972; developed in Michael E. Porter, Competitive Strategy, Free Press, 1980.

3. Blue Ocean Strategy

   W. Chan Kim & Renée Mauborgne · 2005

   Stop competing on the factors an industry already competes on, and change which factors are on the table at all.

   Its working tool is a grid of four moves made together: which factors the industry takes for granted could be eliminated; which are over-served and could be reduced; which deserve to be raised well above the standard; and which the industry has never offered and could be created. The insistence on all four at once is the argument — cutting alone is cost-cutting, adding alone is feature creep, and only the combination changes what the offer is rather than how well it is done.

   Reach for it when

   When every competitor is improving the same handful of factors and the differences between them have stopped mattering to anyone buying.

   Where it stops

   The published cases are chosen after the fact, and there is no shortage of companies that removed the wrong factor and were never written up. It is a way of generating options, not evidence that any of them will work.

   W. Chan Kim & Renée Mauborgne, Blue Ocean Strategy, Harvard Business School Press, 2005. Blue Ocean Strategy is a registered trademark of its owners and is named here only to refer to their work.

4. Disruptive innovation

   Clayton M. Christensen · 1997

   Also known as The innovator’s dilemma

   The competitor that displaces you usually starts by serving customers you were glad to lose.

   A new entrant arrives with something cheaper and worse, takes the least profitable end of the market, and improves faster than the incumbents expect. The dilemma is that the incumbent’s response is rational at every step: serving its best customers and protecting its margins is exactly what good management says to do, right up until the entrant is good enough for everyone.

   Reach for it when

   When competitor analysis contains only firms of your own size, and when something cheap and unimpressive has appeared at the bottom of your market.

   Where it stops

   The term is used for any successful new company, which is not what it means, and the original case studies have been challenged. Most new entrants are simply competitors; disruption in the strict sense is rarer than the word suggests.

   Joseph L. Bower & Clayton M. Christensen, “Disruptive Technologies: Catching the Wave”, Harvard Business Review, 1995; Christensen, The Innovator’s Dilemma, HBS Press, 1997.

These are other people’s models, named here so you can go to the source and use them properly. The Omnigoal is not affiliated with their authors and is not endorsed by them; nothing of theirs is reproduced here — no canvas, no diagram, no wording. Each is described in our own words, with the originator credited, because the framework is a place to put thinking, not a replacement for the people who did it. Model names and trademarks belong to their respective owners and are used here only to refer to the work itself.

Ask what a competitor is trying to become. It predicts their behaviour better than any feature comparison.