"Innovate"
entrepreneurship blog – Post 4
Competitors are what every business fears. If you have exclusivity in your market, you worry about them appearing. Once they appear and identify successful businesses, you’re really afraid. The routine is to struggle with them for the customer – by concealing information, watching what they do and looking for the secret of their success.
The Oriental approach is to understand your enemy and to embrace him. This will give you a better understanding of yourself, and there’s a lot of truth in this attitude.
In the earliest stages of developing an idea, competitors help the venture to position itself in the field and to discover its weaknesses. Later, there is the potential for strategic partnerships with competitors – cooptition – instead of fighting over the market.
When Sagi and I, as partners in our Internet venture Wibizz, were starting to define our business and study the market, one of the things we focused on in our feasibility study was the existence of added value in our product or service or patents, something that would differentiate us from our competitors enough to enable us to establish a successful financial model in the market.
Once we had defined our target market (see the previous post) we sat down in front of our computers (man’s best friend in the 21st century) and began studying the competition, the main players in our niche of the Internet. We sorted their sites into direct competitors and indirect competitors, we looked at what they offered, their size, their added value, and lots more. We didn’t just stick to the Internet, but also glanced at off line companies supplying alternatives to the service we were offering. After a great deal of effort (and some disappointments when we found we had some close rivals) and accumulating a mountain of files and links, we started to put together our positioning map:
First of all we had to see if we were in the right arena. The map, based on thorough knowledge of the competition, showed us that there was indeed a market and a clear need for the service we were offering. We found that in fact it’s the immature markets where it’s hard to find the data to help you put together a business model. Data such as potential income, costs, market penetration time and all the other benchmarks are essential ingredients of a proper business/ financial/ marketing plan. Private internet companies have limited information, while publicly traded companies publish prospectuses and financial reports where you can learn a great deal. But we had to dig even deeper to find the value of the market and the venture’s potential.
Our positioning map was incorporated into our presentation for investors, and help us to highlight our unique features and added value in comparison to our competitors.
The market is dynamic (which we’re glad about) and we occasionally discover another competitor with a business model similar to ours. It’s a bit like the feelings you have at the start of a race: for a second your heart drops, you are worried about succeeding, but the shock lasts for an instant and drives you forward. The truth is you have to get over the feelings that drag you down and just sit down again with the material and find a sharper focus for your service.
In the end, creativity and innovation, which luckily for us are the bread and butter of our daily work as industrial designers, are what saved our venture over and over again. In the words of the Nike ad from the 90s, Innovate, don’t imitate.
Even now new, ambitious players in the field crop up every few days. Whenever it happens, you just have to get your thoughts together again, and if necessary seek advice from a business mentor/ supporter. (The School of Enterprise and the experts it put us in touch with were enormously helpful in showing us how to refine our added value, time after time).
You mustn’t throw in the towel. The venture has to go through a funnel to filter out all the external noise and uncertainty, before it finally reaches a solid, strong place. Even then the market or an investor will find cracks in it, so it’s an ongoing process of defining and redefining the core identity of your venture.
More later…
