Competition Analysis

Where will your future competition come from?

In The Innovator’s Dilemma, Clayton Christensen talks about the threats that come to existing businesses from innovation.

Innovations could be anything from the telephone (which displaced telegraphs), to mini-steel mills (which displaced larger steel mills), to word processors (which displaced type writers), to digital photography (which displaced chemical film), to computer aided drafting (which displaced hand drawn designing), to blogging (which displaced print newspapers), to anything else.

The graph below summarizes the findings of The Innovator’s Dilemma.

Innovation can be anything from a new product (iPhone 4) to a new way to deliver a product (Amazon.com).

Early smart-phones were not very high performing.  I had one with a slide out keyboard that was like a brick.  It held about 40 songs.  It could barely access the internet.

Fast forward just 4 years from my first smart phone.  Now one device does the work that used to take six or more devices (phone, computer, PDA, GPS, mp3 player, gaming systems, etc.).  The newest models of phones have more capability than the wireless networks.  The bottleneck on mobile internet speed moved from the devices to the wireless towers.

As the above graph illustrates, the performance capability of these new innovations starts below where the market can use them.  As old technology and new technology progress in parallel, the former overshoots the needs of the market in general, while the latter comes in to take the place of the old technology.

Over the next year and a half, mobile internet will surpass PC as the top way to get online.  Is your webpage ready for that?  Does your website functionality change when viewed through a touch screen browser?

The irony of innovation is that listening to your customers will cause you to miss the boat for these innovations.  Your future competition does not yet meet the needs of your customers.  How can you allocate limited resources (money and manpower) to develop a product your customer doesn’t want?

Can you anticipate these changes and save your company from losing its customers to down market competition that hasn’t developed yet?

Tags: Competition, Strategy

This entry was posted on June 9, 2010 at 4:04 pm and is filed under Business Plan, Innovation, Strategy. You can follow any responses to this entry through the RSS 2.0 feed.