2009 starts in earnest for businesses this week. And for many leaders and managers, the focus will be about "what should I do now?" Things were tough in 2008, and many are wondering if 2009 will be even worse. So the tendency is to look at how things have been done, talk to existing customers, and see if there's a way to keep doing things but possibly with fewer resources. Many businesses are looking for some new way to Defend & Extend the old business – even as leaders realize the returns are declining.
And that just might make you a target for competitors – thus worsening your situation.
Think about what's gone on in Detroit. GM, Ford and Chrysler have kept focusing on what they should do. In the process, they've paid precious little attention to competitors. As a result, they've kept slipping share year after year, while profits have disintegrated. Now, each American company keeps focusing on its own problems, and trying to find a way to deal with them. Meanwhile, as the Wall Street Journal is reporting (link to article here), competitors such as VW and BMW – at the least – are targeting the U.S. Big 3 automakers.
Recognizing how weak these U.S. companies have begun, the German manufacturers are taking aim. The other German manufacturers, as well as Japanese, Korean and Indian are doing the same, we can be sure. And why not? In business, the best time to attack your competitor is when they are ignoring you and focusing on themselves. All the layoffs, reorganizations, pay cuts, plant shut-downs and other internal actions give the company a false sense of "doing something" to solve their problems, when in fact it makes them a target for more market-aware competitors. By focusing internally, even if talking to existing customers, these companies make themselves targets for those who understand their Success Formulas and have developed ways to attack it.
Woolworth's was a leader in American retailing for decades – until they were displaced by more aggressive retailers they chose to ignore. But after going bankrupt in the U.S., the chain lived on in the U.K. until this week – where after 99 years the chain will close on Tuesday (see video about Woolworth's failure here). Woolworth's spent its energy trying to figure out what it should do in a weak market environment, and it missed more aggressive competitors who moved faster to liquidate inventory at lower prices and keep customers coming in the store as sales declined. Yet, Sears and its KMart subsidiary keep trying to find ways to "resurrect" their out-of-date business – oblivious to more aggressive competitors such as Kohl's that are rapidly making Sears obsolete. How long will Sears survive ignoring the aggressive actions of competitors that would like to drive it out of business?
It's tempting, especially in a tough economy, to look inward. Phrases like "cut the fat" and "get lean" sound very appealing. It makes managers think solving problems is all about improving execution of the old Success Formula. But it's the Success Formula itself that needs addressing – not execution! When markets shift, it's competitors that make the Success Formula value decline. It's competitors that create the market evolution obsoleting your business. Competitors generate the "Creative Destruction" which pushes down results.
Competitors are what makes for tough business conditions. Instead of talking to ourselves, and customers that know us only for what we've been in the past, we should be a lot more focused on competitors and what they are doing. The competitors that act quickly to introduce new products, new technologies, new services and new customer programs are the ones that will steal share in these tough times. It's competitors that deserve a lot more of our attention – because they are the ones who are causing our market share to decline, our prices to stagnate and our profits to drop.
Phoenix Principle companies obsess about competitors. They eschew spending lots of planning time on what they used to do, and what the old plans were. Instead, they spend time talking about actions taken by competitors – and then figuring out how those competitors accomplish those actions. Competitors show us new technologies to introduce, new features and variations desired by customers, and new ways to improve sales and profits. As the chairman of Intel, Andrew Grove, once said about competitors "only the paranoid survive."
No one wants to get chewed up in this recession. But focusing internally makes you a target – like GM, Ford, Chrysler, Woolworth's U.K. and Sears have become. While they obsess internally, competitors are taking innovation to market. Those who want to not only survive, but thrive, in 2009 will be the ones who look at competitors to understand the actions they take, and to move competitively to thwart those actions. As they understand competitors, they will launch actions intended to make competitors' lives miserable – thus stealing share from them. Winning in 2009 is about being a tough competitor, not waiting for someone to bail you out.
Success rarely comes from doing more of the same – even if better, faster or a touch cheaper. Success comes from developing and launching new offerings that steal sales from competitors. To hold onto your share, you have to fight off competitors. To grow, you have to outdo competitors. And in 2009, with things as tough as they are, those companies who will avoid having a target on their backs will be the ones who focus on competitors, rather than themselves.