Most founders have experienced chasing a competitor—usually, feature by feature. When you’re in that kind of horse race, it seems like there is no other choice; as though, if you stopped matching your rival’s development, your company would simply die.
I have a lot of compassion for this situation.
When I was running RingGo (US), the mobile parking payment company, I recall prospects telling me that they loved a feature my biggest rival had shown them—one that we didn’t have. My heart would sink, and I would be certain that that deal and every subsequent sale depended on us having that feature.
Inevitably, I was astounded when we closed the deal without it.
We fixate on our rivals. That’s the hallmark of competitor myopia.
Ceding Energy
Way back in the late 1990s, long before An Inconvenient Truth, the hole in the ozone layer and growing pollution had triggered conversations about green energy. I was certain that the big oil companies would jump on the opportunity— leveraging their market power and cash to provide ALL energy—not just oil.
Imagine if Mobile Exxon had chosen to invest in wind and solar power in those days? If they had positioned themselves as energy companies instead of oil companies, we would have a very different world today.
Boy was I wrong. But then, I didn’t know the history of the petroleum industry’s long-lived myopia.
Only Oil
Back in the early days of oil drilling, the oil companies were in the patent medicine business. From today’s view it seems bizarre. But there were no automobiles or airplanes—and so the “black gold” was packaged as magic elixirs, like Morley’s Liver and Kidney Cordial.
When quackery fell out of favor, oil prospects looked bleak.
Luckily, someone realized that it would be cheaper to burn kerosene than whale oil. So in the 1870s, petroleum morphed into fuel for lanterns. Streetlights, home lanterns, business lighting—all were burning kerosene. It was a big business.
The kerosene party started to wind down when Edison showed up with his light bulb.
As electricity displaced kerosene lamps, the oil companies found a new market in fueling space heaters for homes. But that too was a short-term market. Space heaters gave way to coal heaters.
Something interesting happened then.
Thanks to Bunsen (of the eponymous chemistry lab burner) home heating began to change. It migrated away from the filth and smoke of coal and toward natural gas.
Natural gas is a waste product of oil drilling. In fact, oil companies regularly burned it as a means of disposal.
But, the new natural gas heating came about at just about the same time that cars were becoming accessible to the middle class.
Suddenly, oil companies had two different strategic opportunities.
Which would they leverage to make up for the loss of space heaters and kerosene lamps?
Car Vs. House
From the late 1800s until 1918 and World War I, the US population grew by around 1.5 million a year. The growth in headcount and concomitant need for housing was met by building and urbanization. At the time, there was every reason to believe that home-building would continue apace indefinitely.
And that meant the same for natural gas.
Yet the oil barons never really transitioned to selling their natural gas. Instead, they leapt to sell gasoline for cars.
A Curiosity
Why didn’t the oil companies immediately seize upon the opportunity to sell natural gas? They already had it. It didn’t need special refining (unlike gasoline) and the market was ready and waiting.
But, they were focused on the wrong thing.
Not the future–but each other.
From the time of their inception, the oil companies had competed neck and neck for the same customers.
They took their cues from their rivals, not from a strategic view of the future.
As one oil company began to focus on selling gasoline, so did all of them.
A parallel natural gas industry grew under the noses of the would-be energy mavericks.
A Matter of Kind, Not Degree
Competition is strategically important. I am not suggesting that anyone ignore it. But winning in a competitive marketplace demands much more of us than being slightly less expensive or having more functions than our rivals. Tiny degrees of distinction are not strategic, they’re myopic.
We need to think in terms of kind, not degree. So, our strategy should always seek to build something that is of a kind–not one of their kind. [Click to tweet this thought]
That is how we build powerful differences between ourselves and any potential competitor.
It’s not easy.
Even for a first mover, competition arrives. As other entrants imitate us, our job is to continue to differentiate by redefining ourselves–not by adding grains of difference.
The Rideshare Horse Race
One of my favorite examples of this in action is Uber and Lyft.
Uber was the first company to gain visibility as “ridesharing”. While Lyft was technically founded first, as ZimRide, it hadn’t defined itself as an alternative to taxis until after Uber. But in short order, they were two of a kind.
For a while, it was a definite horse race.
But ultimately, the myopic fever broke.
Instead of doubling down on its commonalities with Lyft, Uber began to redefine itself. They didn’t just add bells and whistles to their overlapping services. Instead, they started to conceive of themselves as a delivery company. They delivered people–but also food, meals, shopping and more.
They now occupy the middle space between FedEx and driving your own car.
Even if you never take an Uber yourself–you may use them regularly to deliver something.
Not to be outdone, Lyft also broke out of their myopic race with Uber. They expanded into micro-mobility and partnerships with other technology platforms like Waymo. And instead of going global (as Uber has done), they are entirely focused on North America.
Ditch the Race
Competitor myopia is one of the ways that strategy becomes obsolete, and organizations remain perpetually mid.
Like so many cognitive traps, competitive myopia is hard to spot when you’re in it because it feels essential in the moment.
So, the trick is to notice it’s happening.
Are you chasing a rabbit? Or, are you the rabbit?
It doesn’t matter which it is, because the problem is not which position you’re in, but that you are in the race at all.
Take a step back.
Nothing strategically significant is measured in degrees.
To stop myopically fighting a feature war, you need to redefine what you are in a way that is so clearly unique—so different, other or beyond—that a point-by-point comparison becomes moot.
That may mean enlarging the scope of your value proposition—as Uber did. But it may also mean refining it—as Lyft did. Neither is better. But that redefinition is at the heart of gaining strategic advantage.
You can never win a war of degrees.
