As a Designer, we were told not to look at competition or competitor product when starting the project. Instead, we have to focus on “User”.
We might be tempted to benchmark Competitor’s product to understand market signals, market behavior, market trends, what competition has already done, how it has already positioned itself. These competitor data is a noise and a distraction from our core activities. Product data about the market can be gathered more successfully by studying the community.
If you are trying to build every feature competition is doing, then you won’t be building things, what competition is not doing.
Have a look at the below picture of domestic water heaters from the market.
All are looking different in SAME Way and they race to the bottom in pricing.
As one brand released a new version of the product, other companies rushed to copy each feature and differentiation is lost. Every product looks good when you see them individually, but when you put together, we are lost for choices. There was no real focus on what people needed or wanted. Above similarity between products show that most of the products are based only on “Market Research” and not on “User Research”.
Instead of focusing on features, we need to focus on providing deep, meaningful engagement to the people who use our product/services.
It clearly shows that Incremental Features, Incremental Innovations will not help us to sustain and increase market share. Added features in any product will diminish the experience a person will have with any feature of the product.
Hick’s law states “Adding more features exponentially increases the amount of time a user takes to make a decision”
“Styling” or “Usability” alone cannot be a differentiator anymore. You cannot sell a product because you just look different when aesthetics has become a necessary element to survive now.
Twenty years back, Operational Effectiveness through programs such as TQM, Zero Defect, Benchmarking etc… was helping companies to achieve a competitive edge. Later Outsourcing, Virtual Co-operation, and Integration helped competitive edge, but this operation effectiveness strategies are now followed by everyone.
Constant improvement in operational effectiveness is necessary to achieve profitability but not sufficient enough for long-term sustainability of a business.
Cadbury and Design Thinking
In early 2000, Cadbury Schweppes was effectively locked into a form of “Red Queen Competition”, pushing the company to run faster just to stay in place. To maintain their market position, they need to increase investments, which may not justify the financial returns. Cadbury’s Chief Strategy officer Todd Stitzer(Who later became CEO) asked him, teammates
Look for a Strategy to grow the market rather than just the company’s market share. If I ask you to increase our market share, you will look at our competitors, and we may not succeed.
Instead of fighting in the existing market boundary, Todd Stitz understood, that he needs to create a new marketplace or extend the existing market boundary. He wanted to find a new way of skinning the cat.
Cadbury used the same strategical approach to U.S chewing gum market
In Chewing Gum Industry, Cadbury explored new consumer benefits beyond Breath Freshening and came ours with options like Teeth Whitening, Stain Prevention, Cavity Repair and New Fruit Flavours.
New value innovations helped Cadbury to achieve Growth rates, High consumer consumption at high price points. Focus on “User” and “Value Innovations”.
Why Competitive Strategy?
Design thinking helps in new product launch by creating a new product category and helps us to extend the market. Whatever competitive advantage we have, may evaporate in one year. In present competitive scenarios, your competitor will be on your heels. FMCG, Consumer electronics industry have turbulent market scenarios.
Thirty years back, Most Industries were relatively stable, having predictable market and malleability and you can define strategy. But now, the industry borders are invisible, have unpredictable market conditions.
We may have competitors from adjacent industries, like how Pepsi entered drinking water industry and created a ripple. Some unknown startup can suddenly enter and disrupt the market, like how cab aggregators like UBER and OLA disrupted Taxi industry(When people thought this industry is saturated).
Competitive Strategy is needed for following reasons
- Understand root cause of future profits
- Create frameworks for profitability over a period of time
- Sustainability for a longer period
- Remain non-vulnerable or adaptable to Technological Disruptions, Upstart Competitions, New regulatory regimes, Political changes, Unpredictable business environments.
Design thinking aims at creating at Adaptive Strategy through iterations, testing and then proceed to a deliberate strategy.
Design thinking will not help you to look at Strengths and Weaknesses of a competitor, as nobody can tell, from where our competitor will come.
UBER came to the market to satisfy the unmet customer need, which was clearly visible before UBER entered the market.
We may not predict the competitor or substitute product, but we know all those competitors are going to enter, survive, disrupt our market for only one reason – To satisfy the rational and emotional needs of user/customer.
How to connect Design Thinking and Competitive Strategy?
Design Thinking after creating Differentiation, Focus and Value Innovation in your product/service, can help and contribute to Positioning Strategy, Competitive Strategy, Growth Strategy and Operational Effectiveness Strategy.
Target Segment and Needs
As Michael Porter pointed out that first step for “Competitive Advantage” is to look at a market segment where competitive forces are weak.
By creating a new category or uncontested marketplace, we are entering a market where competition is weak. But soon, the competition will enter. So, let’s see how we move forward. We have to cover many elements to remain competitive. I’m listing down some of the elements to be taken care of.
There are hundreds of activities required to create, produce, sell and deliver their products and services. We can start from the activities from where Users interact(User Touchpoints with the Industry). We can analyze how those activities are different from existing rivals, and look at activities which are similar to existing rivals. If there are more similar activities, then we may lose competitive advantage, and the solution which you have designed is an incremental one. We need to have more of “Unique Activities”
Design Thinking uses “Customer Journey Map(Or Activity Map)” tool to travel along with user from Need Stage to Knowledge Stage to Persuasion to Decision making to the Implementation stage. (Each stage has many sub-activities)
Customer Journey Map is a framework that aims at providing Unified and Wonderful Customer experience by filling gaps, removing pain points, combining activities, creating an inter-relational lock between activities. Due to dissimilarity and interlocking of activities, competitor finds it tough to copy/imitate few activities alone. We need to apply Operational Effectiveness strategy to make the chosen activities more efficient.
Trade-Offs and Gains
A strategy is not sustainable unless there are trade-offs. Meeting all customer needs is not the best solution. Trade-offs may be guided by User Needs, Organisational Capabilities etc…
Neutrogena Soap is positioned more as a medicinal product than as a cleansing agent. The company says “No” to sales based on deodorizing, gives up large volume and sacrifices manufacturing efficiencies – M.Porter
Some activities are incompatible, so we may have to trade-off. A low-cost airline may want to reduce turnaround time at Gate, but serving meals may affect turnaround time, as food items have to be loaded on the flight, and increase the cost of travel. Trade-Offs create the need for choice and help in brand building, Consistencies in image creation, protect against competition.
Deep Understanding of Users will help in arriving at suitable Gains and Trade-offs
Some Design Thinking Tools which help in finalizing Trade-Offs and Gains are mentioned below. User Behaviour and Contexts need to be accounted.
Value Proposition Canvas
Trade-offs can be due to organization capabilities like inflexibilities in machinery, people or systems, which is outside the scope of this article.
Creating “Fit” among Company’s Activities
Choosing Value propositions, Trade-offs, Activities, interlocking them, combining them, depend on which activities company can perform, what kind of resources, key partners, communication channels, distributions channels the company has. As a designer, we need to understand Innate qualities of organization, operational processes, distinctive capabilities.
An organization culture is built up gradually, continuously reinforced through various practices and process. So, it is important to utilize the same to create distinct, coherent corporate identity
The way a company culture shapes the product/service is considerable and is largely irreproducible. Just visualize how an APPLE product and a MICROSOFT product feels. An IPOD and ZUNE mp3 player.
A competitor can copy features of market leader’s product features, but cannot get the feel of employee’s inputs, working environment effects, work ethic’s influence, and emotional resonance.
Let’s look at Zappos. Anybody can create an online shoe store, but very hard to match the customer service and trust the company is known.
Keeping track of Advancements in technology
The mouse was invented in 1964, but it remained relatively obscure till Apple launched LISA mouse in 1984.
Buxton, a futurist at Microsoft describes “Any technology which is going to be humanized in 10 years is already ten years old. “
To learn and follow this slow process of technological humanization, we have to duck our heads below the radar to find it, which can be used in our respective fields. Somebody has to read those tech journals and attend those high tech conferences.
Design Thinking is a generative process, where we use provocative thinking to brainstorm for future situations. We use “What If” statements and word “Po” predominantly to think about various future situations, fictional narratives, and solutions. It helps us to imagine future scenarios and plans to tackle the same.
What if a competitor launches a product with a similar feature in the same time frame?
What if a user of our product/service encounters a dangerous situation while using the product?
What if Government comes out with a regulation to ban certain features?
What if there is a negative review in the press?
There are other tools like “Analogous situations” to help us to understand future scenarios and be prepared for the same.
Design Thinking coupled with existing competitive strategy can help us to look beyond existing rivals and can detect wider competitive threats and be better prepared to address them.
What to expect in part 2 of Design Thinking and Competitive Strategy
In part 02, we will discuss how Design Thinking can contribute to handling forces that shape competition like Threat of Entry, How to create Barriers for entry, How to benefit from Demand-Side benefits of scale, How to increase Customer-Switching costs(Increase customer loyalty), Distribution channels etc…
Will be happy to know your feedback to keep exploring further, learn and spread the knowledge. One’s own Wealth when you share may decrease, but knowledge when you share increases manifold.