When leaders evaluate their competitive landscape, they naturally look at the same set of players in their industry, year after year. Traditionally, these competitive sets were well understood, and evolved slowly and predictably. These days? Not so much.
A company used to be considered a competitor when it showed up to market with a similar product that was cheaper or better than yours. Now, many companies find themselves doing battle across industries, competing not just on their core offerings, but also on their business models—think Uber vs. the taxi industry, AirBnB vs. the hotel industry, and Netflix vs. television studios.
And competition can now spring up from adjacent industries that weren’t even on a company’s competitive radar. “The biggest threat is new competitors that aren’t yet classified as competitors,” Piotr Ruszowski, Chief Marketing Officer of Mondial Assistance in Poland, said in an interview for the 2015 C-Suite Study published by IBM’s Institute of Business Value.
According to the study, CXOs chose “industry convergence” as the trend that will affect them most in the next five years. And 54 percent of CXOs expect to see more competition across industries, while only 29 percent see more competition coming from within their fields.
How, then, can CXOs detect emerging competitive threats? Obviously, being an expert in your own industry is no longer enough. Fortunately, many companies have under-used sets of data and information sources, that, properly leveraged and analyzed, can broaden their perspective and heighten their ability to respond to new players.
Step 1: Broaden your information base
The first step toward seeing around corners is getting a change of perspective. There are plenty of people who have a much different view of the world than your organization does, and you’re already doing business with many of them. Now’s the time to ramp up your natural curiosity, and that of your organization, and make it a point to learn from them.
• Customers According to the 2015 C-Suite Study, only about half of CXOs use customer feedback as a tool for seeing into the future. Yet customers are the ones who are going to be courted by competitors. They’re the ones who best know what the various offerings are lacking, and what innovations, common in other industries, they’d like to see become more widespread.
• Partners Companies that have learned to see around corners partner aggressively and wisely. They don’t just look for potential partners that fill a gap in their own capabilities—that’s not nearly enough. Instead, they look for partners that are known for innovation and forward thinking. The stated goal of a partnership may be to sell cars or design a new product—but the equally important, unstated goal is often to learn how an adjacent industry works and what makes successful innovators stand above the rest.
Step 2: Improve existing processes
Some 80 percent of CXOs surveyed say they use brainstorming to help see the future, but too often, brainstorming is shallow and unproductive. So if you’re going to brainstorm, use best practices (like these compiled by McKinsey): choose participants carefully; use focused questions to help generate ideas the organization can really use; divide everyone into idea-generation teams of three to five people; and make sure leadership follows-up quickly on the submitted ideas.
“I encourage companies to use trends as microscopes to hone their ideas,” Rohit Bhargava, a trend curator and founder of Influential Marketing Group, told THINK Leaders. So if the most important challenge is market share, don’t simply brainstorm ideas to increase market share. Instead, set limits: brainstorm within the context of trends that are affecting your industry.
3. Embrace new tools
Technology has opened a wide variety of tools that can help organizations divine important aspects of the future, but most CXOs surveyed say they’re not using them. The use of predictive analytics is becoming somewhat widespread, with 63 percent of CXOs saying they use the tool. But only 51 percent use simulations, and only 46 percent use prescriptive analytics. Crowdsourcing (23 percent) and cognitive computing (13 percent) are even further behind.
All of these technologies can help companies identify new trends. Prescriptive analytics and simulation can also be used to examine “what-if ” situations. Together, they can be used to help prepare for different events and outcomes, and to assess the risks of different actions or, sometimes, inaction.
“Decentralized organizations will do better at finding trends and identifying threats,” says Bhargava. “The ones that really struggle have a very hierarchical approach where everything needs approval.”
There are two chief reasons that decentralizing decision-making helps organizations better identify the competition. Decentralization helps to empower employees, and it could be someone relatively low in the hierarchy who first smells trouble. It’s important for that person to be confident that he or she can act on that instinct, if appropriate, or to run his or her concerns higher up the chain.
The second is that decentralizing decision-making gives organizations more scouts on the front lines. That means more decision-makers interacting with customers, gathering market intelligence, and improving relationships.
5. Start noticing startups and venture capital
When a company raises $10 million to build a business that seems only slightly related to the one your organization is in, it’s tempting to be dismissive. But if the startup shows promise, $10 million will be just the beginning, and the newcomer’s horizons will broaden accordingly—quite possibly impinging upon those of your organization.
Only a small percentage of startups grow to be serious threats to larger companies, of course. But their mere existence shows that someone has found a way to re-think your offering, and to convince other people that this revised version is worth funding. It’s worth investigating to see if your organization can discern exactly what the insight is, and whether it’s worth acting on yourself – before it’s too late.