I used to think I had a good understanding of the competitive landscape for my company, but now I realize that I was missing the biggest competitor.
And I don’t think my oversight was unique.
Restaurants, entertainment venues, and most other businesses we interact with can fall prey to the same mistake.
The company I work for provides engineering services for companies in the mobility sector. It’s a fairly small niche, particular once you dig into the specific types of services we provide, so the playing field is small. We tend to run into the same handful of competitors every time we bid on a project.
So obviously these other companies who provide engineering services are a threat to us. They can steal outsourced work right from under us.
But they aren’t the biggest threat. Our customers themselves are the biggest risk.
Before we even have the chance to bid on a project, our customer has a decision to make – do they want to complete the development internally or contract an external engineering service provider?
If they choose to do the work internally, the opportunity is gone before it even started. The business doesn’t show up as a “lost” contract since it wasn’t given to our traditional competitors, but it’s lost nonetheless.
I tend to think back to the small concert venue near my house.
Their biggest threat falls under the broad category of “anything else people could do on a Friday night.”
Sure that includes other concert venues, but it also includes entertainment in general – restaurants, bowling alleys, movie theatres, athletics events, festivals, etc.. And, maybe the biggest competition of all, is anything that keeps people at home on Friday nights – Netflix, board games, dinner parties, etc.
The concert venue can lose even if they win more market share than the other concert venues in their area.
But they can win by taking a small piece of a bigger pie. They win if more and more people leave their houses on Friday nights to watch live music, even if they only capture 5/10% of the market.
-Brandon
It makes me wonder: Should we seek to capture more market share, or should we let our market share be/grow/dwindle and move onto something else?
It’s an interesting thought. Ultimately I think there are certain situations in which it is worthwhile to fit for market share, ideally in parallel with helping to grow the market in general. But I also think there are situations when moving on is the best bet. Netflix is probably a good example. They saw the delivery-based movie rental business depleting, so they jumped on the next wave before anyone else rather than trying to hang onto a dying business model.