By Milan Kendall Shah, senior strategist at Wolff Olins
In any competitive environment, it’s crucial to know who you’re up against. Understanding your opposition will help you tailor your approach accordingly. And if all goes to plan, you’ll have set yourself up with a good chance of success.
As a result, businesses often become fixated on their immediate competitors; the set of companies who compete in the same product category. Supermarkets focus on being cheaper than their peers, retail stores seek to out-do their category on sustainability credentials, and tech companies boast about releasing the industry’s most advanced features.
But what are the pitfalls of focusing too much on your competitors? And why might looking beyond this immediate group hold the most valuable clues to success?
The limitations of competitive sets
Of course, competitive sets are important for businesses – guiding strategy and shaping marketing efforts. They also provide businesses with a way to benchmark themselves, measuring performance on indicators such as market share, brand value and share of voice.
However, competitive sets are less useful when exploring how to gain an innovative edge over said competition. This partly stems from the simple truth that you’ll struggle to outperform someone you’re copying. But more importantly, a war of marginal product improvements is a difficult war to win.
All too often, differences between products go unnoticed, with alternatives being indistinguishable in the eyes of customers. This is not only true in low-involvement categories such as FMCG, but also in service-based and public categories. For example, the energy market has seen its products become essentially commoditised, with customers caring almost exclusively about price.
As a result, innovating for competitive advantage requires solutions that focus not on the product itself, but on the process around the product; improving your customer experience and increasing the value customers attach to your brand.
The case for looking beyond the competition
While it may seem counterintuitive, the most valuable insights for this innovation challenge come from looking outside your category. But why is this the case?
Firstly, businesses within any given category are conditioned to think things should be done a certain way. Legacy codes lay out what can and can’t be changed. But by broadening your scope, you can assess your context with fresh eyes; reframing challenges and using new tools to solve them. It’s no coincidence that before their success, Jeff Bezos worked as a hedge fund manager and James Dyson worked in furniture. Both leveraged their intelligent naivety to disrupt their adopted categories in unprecedented ways.
Secondly, the challenges you’re facing are rarely unique to your category. Businesses across the board are striving to improve their customer experience and brand perception. In fact, in some categories these non-product factors are not just important but absolutely critical, so it’s likely that businesses within these categories will have already invested considerable time and effort into improving them.
The strategy in action
So, what are some examples of businesses that have found success through cross-category thinking?
The value of this strategy was recognised acutely by Steve Jobs, who designed the Apple store experience by taking inspiration from the luxury Ritz Carlton hotels. As a result, Apple stores see staff meeting customers proactively on arrival and using customers’ names for a personal touch. The iconic ‘Genius Bar’ was also directly modelled on the concierge desk of a grand hotel.
Apple also looks to luxury fashion for inspiration on its retail experience, hiring the industry’s top thinkers such as former Burberry executive Angela Ahrendts for a stint as head of retail operations.
To solve the challenge of quick and easy delivery, Domino’s Pizza turned to those doing it best – the Ecommerce leaders. Taking learnings from players like Amazon, it allowed customers to save an ‘easy order’ that they can request in just a few clicks, and created the Domino’s Tracker: the first food delivery service to update customers on their pizza order in real time.
Similarly, businesses have revolutionised their entire operating models by looking beyond the competition. The need for speed led the McDonald brothers to turn to Henry Ford and the world of cars. If Ford could use a specialised system to build a car in two hours, the McDonald brothers could use it to make a burger in less than a minute. The resulting ‘Speedee System’ became the basis for modern day fast food as we know it.
The call to look outside
When faced with innovation challenges, the natural instinct of businesses might be to seek inspiration from those within their category. But with huge untapped potential lying in the way you deliver for customers, and the wisdom to improve on this scattered across all categories, looking to your left and right might just be the most detrimental thing you can do.