How to Use Strategy to Beat Your Competitors

Written By Dave Lavinsky
Black rook chess piece

The entrepreneurs and companies that will prosper and outpace their competitors during the next two decades will be those that outthink their competitors strategically, not outmuscle them operationally.

Specifically, the winning companies will craft a focused strategy that gives them a distinctive advantage. Conversely, too many companies try to compete by imitating their competitors. A successful strategy is one that makes competition almost irrelevant.

Isn’t that the best position of all to be in…to have no direct competition? To achieve this, you have got to stop playing the game by the same rules as everyone else, and to embark on a strategy that changes the rules in your favor.

Chances are you’re in imitation mode when you:

  • Copy what your competitors are doing
  • Attempt to outpromote and outsell them
  • Attempt to outmanufacture them
  • Attempt to outservice them

All of this results in a race with no winner…it will just be brief leads and falling behind again. It leads to incremental advancement only, often fleeting, and certainly isn’t going to help you dominate your market.

Let me give you an example of market dominance by discussing the market for cigarette lighters. Most cigarette lighters are disposable and cost 99 cents or so. However, rather than playing the price game (a race with no finish line), Zippo has turned the game on its head by specializing in more expensive, higher quality lighters that sell for $15-35 each-or more, for certain collector’s editions.

Another example is IKEA, whose distinctive strategy sets it apart from other furniture dealers. Ever walked through an IKEA store? I doubt you’ll find a larger selection anywhere else selling furniture so inexpensively.

Why? Because their strategy targets customers who are willing to assemble furniture themselves (relatively easily) in order to save a bundle. The furniture’s materials can be compactly packaged for shipping still in the box, at a much lower cost than shipping, say, an assembled dining room table that takes up a lot more space.

So here’s the golden rule…never play the game according to the rules the leader has set. Don’t try to outdo the top dog at their own unique strengths they’ve spent years or decades developing. They know the rules better-after all, they designed them!

The joy of entrepreneurship is finding a game worth playing!

Find things competitors are lacking in, or-even better-reach markets they’re not reaching. No matter how big they are, no one company can be everything to everyone.

For every mammoth Anheuser-Busch selling the most beer to the most people, there’s a quaint microbrewery selling a double chocolate stout that would fail on store shelves but is the ONLY one that a certain rabid group of buyers want.

As an example, I pretty much love all the beers created by Lagunitas Brewing Company in Petaluma, California. Since my supermarket doesn’t carry it, I’ll drive 20 minutes to a beer distributor that does.

When you change the rules, you neutralize and paralyze the leader. The odds are they are so entrenched in doing business the way they have, and have grown so large, that they’re slow to change. You can make a lot of progress while they’re catching up.

In fact, sometimes changing the rules of the game can put the entire industry in jeopardy. Examples are Charles Schwab allowing people to trade stocks online by themselves in 1997, and Craigslist making life difficult for print classifieds salespeople.

You might be wondering, “Sure, all this sounds great…but HOW do you actually do this in real life?”

Here are some questions to get you started on your game-changing strategy:

What can you excel at?

The odds are your leading competitor has achieved success because they dominate in some area.

So what? You don’t have to compete against them, remember? Ask yourself what YOUR company can excel at, and you’ll attract customers no matter how big a competitor is who’s not serving their needs as well.

Where do you see opportunities for leverage?

Successful companies leverage their unique set of capabilities (things that make you excellent) across as many products, markets, and people as possible.

Often this is done through alliances with strategic partners and other opportunities for synergy.

What new products or services could you innovate?

No matter how much advertising and distribution a monster competitor has in place, they still can’t profit from a product or service they don’t offer.

Creating a new product or service, or specializing in an overlooked product/service category can make you the best in the eyes of certain customers.

How’s your implementation?

The best strategy in the world still won’t bring results if it isn’t executed. This is where your project planning and management skills will come in handy, to see your dreams through to completion.

In summary, if you want to make substantial gains at your competitor’s expense, tilt the playing field to your advantage. Choose a strategy that helps you sidestep the copycat game, and build your strategic plan around it.

As General Sun Tzu, famous Chinese war strategist, would say, “To subdue the enemy without fighting is the acme of skill.”


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