Years ago, a Tektronix executive burst out of his office brandishing a report showing the company had achieved a 99 percent market share in analog oscilloscopes. He beamed at what he viewed as a sign of world domination.
However, the executive missed the subtle signal in the report that the market – and Tek’s competitors – had moved on to digital oscilloscopes. Tektronix had corralled the lion’s share of a vanishing market. It wasn’t world domination as much as a crisis of competition.
When we consider crisis in terms of business, our minds naturally think of environmental spills, financial fraud, cyberattacks and sexual misconduct. We forget about a crisis of competition, which can be an existential battle, not just a bad headline. People get fired and businesses pay fines in most crises, but in a crisis of competition a once-thriving company may cease to be relevant or even exist.
RCA was the biggest thing in vacuum tubes and actually did pioneering work on semiconductors, long before they made vacuum tubes obsolete. RCA executives apparently thought semiconductors never would amount to much, let alone replace their bread and butter. They failed to see their crisis of competition in the glare of their own success.
A crisis of competition deserves the same forethought, careful planning and strategic preparation as any other kind of crisis. Perhaps ironically, the best time to plan for a crisis of competition is when your business or organization is on the top of the mountain. Think of it as the most strategic view to see what everyone else is doing that may affect your standing – and eventually your bottom line.
Competition can take many forms – lower prices, better marketing, new technology or a wholly different approach. A competitor may be a business you know and watch, someone who comes out of left field or a galaxy like Amazon. Like RCA, the next bright idea could be shining in your own lab or workshop.
Unlike more common forms of crises, an apology or clever social media post won’t do much good in a crisis of competition.
Keep in mind success invites company and competition isn’t spontaneous. That means you know competitors are coming after you and you have a head start – not a bad position to begin crisis of competition planning, but also not a moment for complacency.
While market research is good for revealing what customers like, dislike and want, it isn’t the right tool to search the universe for innovative new competitors or disruptive emerging ideas. This takes a vastly different mindset to see the world of potential competition less like a vector and more like an erratic line.
Market research for automakers didn’t stumble onto the idea of car-sharing. Market research for Folgers Coffee never anticipated Starbucks. Market research for multi-family housing developers left unexplored the idea of adult dormitory living. The strategic lens for crisis of competition planning isn’t looking for trends; it is looking for trendsetters.
Canvassing the arena of ideas to see which ones make economic sense, which ones could be disruptive and which ones are most likely duds is the business of crisis for competition planning. And just because an idea initially looks and behaves like a dud doesn’t mean it is permanently a non-starter. The investors on Shark Tank frequently wave off ideas that go on to be entrepreneurial successes, despite their misgivings.
Companies must realize they have a built-in bias for their product or way of doing things, which can result in their downfall. (Think of the progression of cameras from boxy things on a tripod to a button on a smartphone.) They need to fertilize their own thinking with outside views. Be curious. Follow some promising trails. Talk to people with unconventional viewpoints. Talk to you customers about what their next frontier looks like so you are better prepared to take the journey with them.
Back to Tektronix for a moment. There was an engineer who walked through the corporate cubicles carrying a small disk with wires sticking out both sides. For anyone willing to listen, the engineer would say what he held by his fingers could do everything that one of Tek’s large laboratory oscilloscopes could do – only cheaper, faster and anywhere. A lot of people thought he was crazy. What he was carrying around was, in actuality, a digital oscilloscope.
Make a point of listening to the contrarian in your midst. He or she might not be crazy. They may be on to something. They may show you how to avoid the crisis of competition by discovering the road to your own breakthrough. That breakthrough might eventually put you out of the business you’re in, only to set you up in the business you could be for years to come.