Know your enemy

A couple of days ago I came across a great anecdote. It concerned the skirmish that broke out in the early 1750s between an Englishman called Jonas Hanway, and the hansom cab drivers of London.

Hanway’s crime was being the first umbrella user in the city. Prior to that point umbrellas had only existed in the form of sun parasols, originating in the far east and gradually spreading across Europe. It was only in the early 18th century that the French had cottoned on to their potential as a rain deterrent, and it was following a trip to Paris than Hanway brought the new innovation to English shores.

There were a number of reasons that umbrellas were initially an object of scorn — not least their association with the dastardly French — but their main crime turned out to be the threat they posed to the business of cab drivers.

It doesn’t take much thought to figure out why. Rainy days were the cornerstone of the cabbie’s trade (especially in London), and so naturally they were concerned when a new method of rain protection hit the market.

Thus, as Hanway strutted around town with his new contraption, he was not only subjected to jibes about being a “mincing Frenchman”; he was also pelted with rubbish from cab drivers. One even tried to run him down, resulting in Hanway using his umbrella to “give the man a good thrashing”.

Aside from finding this quite amusing, the reason I want to share it here is because I think it serves as a good illustration of true competitive dynamics.

Most businesses routinely fail to see their competitors as anything other than “things that look like them”, which results in them completely missing all sorts of threats, as well as growth potential. The true definition of your competitor is anything that results in you losing a sale.

• Chocolate bars and fruit are competitors
• Boats and home extensions are competitors
• Bars and TV are competitors
• Porn and sex are competitors
• Religion and politics are competitors

If it has the potential to scratch the same itch, then it’s a competitor.

What this means of course, is that most businesses have far more competitors than they realise. At first this sounds a little alarming, because more competition means more threat. But then at the same time it also means more opportunities, since the places your business goes are also the places it can come from.

Now my sense is that most people understand this point, at least intellectually. I expect you will have heard variations of it before, maybe even from me! However although everyone “gets it”, almost nobody bothers to engage with it — which is a problem as its value lies entirely in the specifics, not the abstract theory.

For this reason, it’s a great idea for every business to map out its true competitive landscape: consisting not only of its obvious competitors, but its less obvious ones too.

To do this, I suggest looking at it in three dimensions:

1. Direct competitors — the obvious ones, the businesses that look like you (e.g. boat brand A versus boat brand B)
2. Indirect competitors — businesses outside your category which have the potential to scratch the same itch (e.g. boats and home extensions, or boats and cars)
3. Non business competitors — activities, behaviours, and motivations which may prevent a sale (e.g. boats and not living near the sea)

I have found that strategically strong businesses tend to orient themselves against “competitors” which come from category 2 or category 3, and largely ignore those in category 1.

This is often what I mean when I talk about “companies without competitors”. It’s not that such companies don’t have “rivals for their customers’ attention”. Everything has that. It’s more that they choose to attack rivals which are outside of their superficial category.

Ultimately this is about realising that brands don’t operate in this neat and bounded thing we call a “category”. That’s a fake concept we invented to make things seem more simple than they really are.

In reality brands operate in this messy and unbounded thing we call the real world.

You’ll never be able to map it or master it. But if you try, you can get a rough idea. And that’s a hell of a lot better than nothing.

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This piece is from my newsletter The Way, which teaches strategic thinking to founders. To sign up, and access my free 7 day course in strategic thinking, just go here: https://mailchi.mp/53e8061f1686/basicarts