Analyzing Your Competition

Earlier I said on a number of occasions that in order to achieve your strategic objectives, you must satisfy the needs of your consumers and other stakeholders better and more efficiently than your competition does. Obviously, in order to do that (especially to be able to do it in the future as well), you must know your competition and predict its future decisions and actions very well.

This is how Sun Tzu – the famous Chinese military general, strategist and philosopher – put it in The Art of War – the most influential book on military strategy:

If you know your enemies and know yourself, you will win a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will lose every single battle.

Well, it’s hard to make a more concise and powerful case for a comprehensive corporate knowledge base, isn’t it? In particular, for a comprehensive knowledge base on your competition.

To be able to always stay at least one step ahead of your competition in terms of satisfying the needs and desires of your consumers and other stakeholders, you must develop such knowledge base and keep it always accurate and up-to-date.

To make it happen, you will need to hire a highly competent specialist (or a team, depending on how many competitors you have) in gathering and analyzing information on your competition and to establish a highly efficient system and process for gathering and analyzing such information. It goes without saying that this system and process must be 100% legal at all times.

This system must support a solid system for forecasting future decisions and actions, including those in response to decisions and actions of your company. Especially those as the best strategy for getting an upper hand in your ‘war’ with your competitors for the checkbooks and wallets of your customers to become a leader and to make your competitors react to your decisions and actions (and not the other way around).

Again, your competition knowledge base (and even the whole competition monitoring and forecasting system) by itself is useless. To be useful and valuable to your company it must be tightly integrated into your strategic and operational management process. In other words, you need to develop and deploy a highly efficient corporate process of using your competition monitoring and forecasting system in your strategic and operational management.

To measure your company against your competition, you need to develop or adopt a Competitiveness Index (which is usually specific for each industry and often even a specific competitor) and to compute and monitor it at all times.