Too many companies let competition drive their strategies. It puts the competition, not the customer, at the core of strategy!

"The competition will bite you if you keep running; if you sit down, they will eat you up." - William Bolitho

Many companies, especially startups, fall into the trap of becoming overly focused on their competition. They study everything the competitors do and react to every strategic move, desperately trying to maintain parity or gain a momentary advantage.

In my research, I've seen firsthand the pitfalls of building strategy around what rivals are doing rather than delivering outstanding value to customers. Excessive competitor orientation saps creativity, stunts innovation, and takes the focus away from where it belongs—understanding and fulfilling customer needs.

Ratan Tata, former Chairman of the Tata conglomerate, cautioned businesses, "Never give up your goals and dreams, irrespective of how bad the situation becomes. Stand firm on your focus and principles." Keeping the customer at the core enables you to remain focused on their evolving needs rather than getting distracted by temporary competitor actions.        

Competition Matters, But Not That Much

"Focus on the customer. Stay ahead of the competition." - Ratan Tata

Healthy competition breeds innovation and gives customers more choice. Of course, you can't ignore rivals. But few companies have ever differentiated themselves through a pure competitive strategy not anchored in creating outstanding customer value.

Jeff Bezos, Founder and Executive Chair of Amazon, revealed their customer-driven approach from day one, “We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.” This mindset catapulted Amazon from a small online bookseller to one of the most valuable companies on the planet.        

The problem arises when competition becomes too much of an obsession. Management spends more time scouting competitors than listening to customers. Instead of focusing where they can raise the bar or do something truly novel, they reactively match trivial competitor offerings that may not even matter to buyers.

Sundar Pichai, CEO of Google and Alphabet, suggested, “Focus on the user, and all else will follow.” Customers value great experiences over features for the sake of features. Don’t just ask what competitors are doing; ask what they are not doing that could tremendously benefit your customers.         

The Perils of Reactive Strategy

“If you spend your time focused on your competition, you can lose sight of your true customers.” - Maynard Webb, Chairman, Yahoo!

Few startup pitches I see don't mention competitors on the first few slides, hoping to position themselves as superior alternatives. Some openly benchmark product checklists versus rivals, expecting that conveying parity will impress investors. Occasionally, teams even lack basic customer and problem understanding, instead quoting vaporware announcements from high-profile competitors as their motivation.

Reactive thinking poisons effective strategy.

Yes, you should absolutely understand your competitive landscape when formulating strategy. But competitive focus and strategy are vastly different things. Observe competitors, but use those insights to fuel creative thinking on unsolved customer problems, not line-item benchmarking. Instead of reacting to a competitor feature release, ponder about how you could help customers in ways they likely haven't even considered. Swing for 10x, not 10%.

As legendary business professor Clayton Christensen noted, “People say you have to know the competition. No, you have to know your customers.” Founders who know exactly what frustrates their customers will beat copycats, even with an inferior product on paper. They feel their customers’ pain as their own. Connect those dots to create something meaningfully better.        

Avoiding the Trap

“Do not be distracted by competition. Focus on your customer." - Shellye Archambeau, CEO, MetricStream

So how can executives and founders avoid over-indexing on competition? Here are a few suggestions:

First, talk to 10 customers for every 1 hour you spend analyzing competitors. Their language holds the insights ripe for innovation. Visit their offices, homes, factories, stores and observe them using your products and solutions. Master their vocabulary so you can even think like a customer.

Next, have your highest level company meetings focus 80% on customers, buyer needs and external ecosystem trends, with only 20% discussing competitors. Direct manager attention and rewards towards customer value creation over beating rivals .

Additionally, continually challenge product managers and engineers to identify overlooked customer needs before fetcher requests. Solicit wild wishes, not just feedback on current attributes. Watch non-customers and tangential markets too, not just current user behavior.

Finally, foster a culture centered on pride of seeing customers succeed, not pride of surpassing competitors. Repeat customer quotes highlighting specific value they attained from your products in company meetings, not congratulatory excerpts from the latest Gartner report.

Stay Hungry But Customer-Focused

“Focus on where you will be, not where you are now.” - Tony Hseih, CEO, Zappos

I certainly understand founders vigilantly watching their back, knowing fierce rivals want their market and could crush them in an instant. But excessive competition paranoia also creates self-imposed ceilings by restricting imagination and initiative.

From looking at commentaries of heads of product and R&D, I don't observe bold visions nearly as much as nervous attempts to match and hopefully squeak by notorious competitors. There’s no longer wide-eyed excitement to create breakthroughs but rather tense conversations on how Company X just announced Y and how to counter it.

Competitors should motivate you and keep you honest but not define your approach.

Like Wayne Gretzky, renowned hockey legend, counseled, “Skate to where the puck is going, not to where it's been." Customer needs are that puck – always on the move.          

Yes, prevent blind spots through competitive awareness but don't let it distract from your customer obsessed innovation. Because if you lead people where they are already going, someone else already got there first. But when you can see what others can’t and build what others only imagine possible, that’s when revolution happens.

The Road Ahead

Ultimately, the companies that will thrive are those who maintain an unwavering prioritization on customers and resist the temptation to fixate on rivals. They forge their own path forward based on unique insights into evolving buyer needs. And they have the courage to create truly bold innovations even in the face of daunting competition.

As author Simon Sinek wrote, “Customers will never love a company until the employees love it first.” Your team rallies around a shared sense of purpose to profoundly impact your customers, not defeating the enemy. Love the problem you solve more than you hate your competitor.        

Leaders must set this tone. Rely on your internal compass, not external scorecards. Tune out transient competitor noise and tune into customer signals. Then convert that learning into customer-centric strategies that make rivals irrelevant. This commitment becomes magnetic, attracting and inspiring the best talent.

When you build what customers dream of rather than just matching what competitors deliver, you become that north star competitor chase instead. And then you don’t have to worry much about them – because your customers won’t let them catch you.

#customerobsession #competition #strategy #innovation #leadership #startups #entrepreneurship