What’s the best way to navigate competitive forces?

Clayton Christensen (Author, The Innovator’s Dilemma)
a16z Podcast: Disruption in Business… and Life by a16z | Free Listening on SoundCloud

We look at how many products are being sold [and by competitors]. What’s really interesting is the amount of non-consumption that’s going on. Because it hasn’t become more affordable or accessible for them yet. It’s too narrow to focus on consumption as opposed to non-consumption.

What’s the best way to navigate competitive forces?

Clayton Christensen (Author, The Innovator’s Dilemma)
a16z Podcast: Disruption in Business… and Life by a16z | Free Listening on SoundCloud

Management goes on to believe that their product is about features. When you start up, you have an insight about a job that needs to get done. You respond to that passive data to develop a product. But then as a company goes on to be successful the nature of the data is very active. Management loses their insight about the job [that they help a customer accomplish] and now they believe their business is about products and features. Put out all of… (read more)

What’s the best way to navigate competitive forces?

Eric Ries (Author, The Lean Startup)
The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses

Sooner or later, a successful startup will face competition from fast followers. If a competitor can out execute a startup once the idea is known, the startup is doomed anyway. The reason to build a new team to pursue an idea is that you believe you can accelerate through the Build-Measure-Learn feedback loop faster than anyone else can. A head start is rarely large enough to matter, and time spent in stealth mode—away from customers—is unlikely… (read more)

Sam Altman (President at Y Combinator)
Startup Playbook

99% of the time, you should ignore competitors. Do not worry about a competitor until they are beating you with a real, shipped product. In the words of Henry Ford: “The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time. “

Michael Porter (Professor, Harvard Business School)
The Five Competitive Forces That Shape Strategy

Deliberately choose a different set of activities to deliver a unique set of value or choose to perform activities differently than your rivals.

Michael Porter (Professor, Harvard Business School)
The Five Competitive Forces That Shape Strategy

To limit the threat of substitutes, offer better value through wider product accessibility. Soft-drink producers did this by introducing vending machines and convenience store channels, which dramatically improved the availability of soft drinks relative to other beverages.

Michael Porter (Professor, Harvard Business School)
The Five Competitive Forces That Shape Strategy

To neutralize supplier power, standardize specifications for parts so your company can switch more easily among vendors.

Michael Porter (Professor, Harvard Business School)
The Five Competitive Forces That Shape Strategy

To counter customer power, expand your services so it’s harder for customers to leave you for a rival.

Michael Porter (Professor, Harvard Business School)
The Five Competitive Forces That Shape Strategy

To temper price wars initiated by established rivals, invest more heavily in products that differ significantly from competitors’ offerings.

Michael Porter (Professor, Harvard Business School)
The Five Competitive Forces That Shape Strategy

To scare off new entrants, elevate the fixed costs of competing; for instance, by escalating your R&D expenditures.

Peter Thiel (Co-Founder & Partner at Founders Fund)
Peter Thiel’s CS183: Startup – Class 3 Notes Essay

In perfect competition, no firms in an industry make economic profit. If there are profits to be made, firms enter the market and the profits go away. If firms are suffering economic losses, some fold and exit. So you don’t make any money. And it’s not just you; no one makes any money. In perfect competition, the scale on which you’re operating is negligible compared to the scale of the market as a whole.

Mark Zuckerberg (Founder & Chairman & CEO at Facebook)
How To Get Ahead: Entrepreneurial Lessons From Mark Zuckerberg

We had this concept that we actually still have in the company today, called lockdown. Which is — whenever any other company got ahead of us on something that we thought was strategic to us, we literally did not leave the house until we had addressed the problem. Now it’s a little looser of an interpretation. We don’t literally lock everyone inside the office, but about as close to that as we can legally get.

Naval Ravikant (Founder, CEO & Co – Maintainer at AngelList)
“The Anatomy of a Fundable Startup”, by Naval Ravikant (Founder, AngelList) on Vimeo

[It’s] very rarely a case for a startup where a [competitor’s] patent becomes an issue unless you’re already successful.

Seth Godin (Founder at Yoyodyne Entertainment)
Seth’s Blog: What are you competing on?

What are you competing on? It’s pretty easy to figure out what you’re competing for—attention, a new gig, a promotion, a sale… But what is your edge? In a hypercompetitive world, whatever you’re competing on is going to become your focus.In any competitive market, be prepared to invest your heart and soul and focus on the thing you compete on. Might as well choose something you can live with, a practice that allows you to thrive.

Paul Graham (Co-Founder & Partner at Y Combinator)
Startup Investing Trends

We currently advise startups mostly to ignore competitors. We tell them startups are competitive like running, not like soccer; you don’t have to go and steal the ball away from the other team. But if idea clashes became common enough, maybe you’d start to have to. That would be unfortunate.

Dharmesh Shah (Co-founder and CTO of HubSpot)
Happy Birthday HubSpot! 9 Lessons From Our First 9 Years

Don’t obsess over competitors. Obsess over customers. I’ll confess. I’m likely more guilty of watching our competitors too closely than anyone at HubSpot. But, the good news is that though I watch them closely, I try not to follow them. Knowing what your competitors are up to is good. Doing what your competitors are up to is bad.

Clayton Christensen (Author, The Innovator’s Dilemma)
a16z Podcast: Disruption in Business… and Life by a16z | Free Listening on SoundCloud

We look at how many products are being sold [and by competitors]. What’s really interesting is the amount of non-consumption that’s going on. Because it hasn’t become more affordable or accessible for them yet. It’s too narrow to focus on consumption as opposed to non-consumption.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Some Lessons From Vine – AVC

Once again, it appears that the category creating innovator isn’t hurt too badly when the bigger and more popular social platform copies their signature feature in their product. We have seen this before with Twitter and Facebook and Foursquare and Facebook and many other similar situations.

Clayton Christensen (Author, The Innovator’s Dilemma)
a16z Podcast: Disruption in Business… and Life by a16z | Free Listening on SoundCloud

Management goes on to believe that their product is about features. When you start up, you have an insight about a job that needs to get done. You respond to that passive data to develop a product. But then as a company goes on to be successful the nature of the data is very active. Management loses their insight about the job [that they help a customer accomplish] and now they believe their business is about products and features. Put out all of… (read more)

How can I interview customers to create a better product or service?

Do you understand the “job to be done” that your customer is hiring your product or service for?

  • Yes I do. Why aren’t people using my product?
  • Not yet. What’s the best way to interview customers?
BrainQuilt
  • “Focusing on a Job To Be Done removes the need to specify who your target customer is, because your target customer is anyone who needs to get this job done.” — David Jackson, Seeking Alpha
  • “We realized that the causal mechanism behind a purchase is, ‘Oh, I’ve got a job to be done.’ And it turns out that it’s really effective in allowing a company to build products that people want to buy. — Clayton M. Christensen, The Innovators Dillemma
  • “Early stage startups often describe their product as meeting a “market need”. But markets don’t have needs; real people have needs” — David Jackson, Seeking Alpha
  • “Google was designed for the job of finding information, not for a search demographic. The unit of analysis in the work that led to Procter & Gamble’s stunningly successful Swiffer was the job of cleaning floors, not a demographic or psychographic study of people who mop.” — Clayton M. Christensen, The Innovators Dillemma
  • “You can’t avoid doing sales by hiring someone to do it for you. You have to do sales yourself initially. Later you can hire a real salesperson to replace you.” — Paul Graham, Y Combinator
More information

The job to be done is what your customer is the reason the customer is choosing your product or service. Think about it as them “hiring” your product or service, just like they would a Task Rabbit. What are they hiring them to do?

Clayton Christensen shows a compelling example with his Milkshake Marketing piece (h/t David Jackson). The job of the milkshake is to keep them full and entertained on their commute. To do this well it had to be portable (on the go), thick (to keep them busy), and was hired instead of coffee/bagel/donut.