Business owners and leaders have a very important task when setting goals and determining strategies: analyze the internal and external environments.
Internal analysis tends to focus on the company’s existing Mission, Vision, Values, resources, and capabilities, looking at strengths and weaknesses in those areas. External analysis has two levels: macro, focused on broader regional, national, and global trends, and industry-specific, focused on industry and competitor trends.
Competition is a huge piece of understanding opportunities and challenges in the marketplace. The usual key questions are important to ask: who are our competitors, how intense is the current competition, how strong or weak are the barriers to new competitors entering the competitive space, who has leverage in buyer and supplier relationships, and what are potential substitute and complementary products and services.
There are some interesting variations on competitor analysis, though, and I find the following simple questions extremely valuable to consider:
- If a competitor was looking to eliminate our company or make us irrelevant, what strengths of theirs would they leverage or need to have, and how?
- If a competitor was looking to eliminate our company or make us irrelevant, what weaknesses of ours would they need to identify and exploit, and how?
- If a competitor was looking to eliminate our company or make us irrelevant, what new or existing markets could they easily go after or invade and gain significant market share? Why and how?
Taking the view of another party looking at you and your industry from the outside changes the conversation. It elevates the discussion, forcing leaders to take a long, hard look at what resources and capabilities they do and don’t possess, and what weaknesses need attention. These questions also force a discussion of whether our companies are actively pursuing the many relevant competitive opportunities that may exist in the industry or region.
I’ve shared this framework before, but it’s so simple and effective, that it’s worth revisiting.
Understanding yourself is critical but understanding your competition may be equally important. Spend a few minutes with these questions with your team and see what insights emerge for action.
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