Most organizations think of competition as the unavoidable and most unfortunate evil of doing business. There probably isn’t a business leader alive who hasn’t thought, at least once, ‘If only my product or service was the only game in town.’ The thought is that doing business would be paradise were it not for competition… or a particular competitor. After all, while competition may be great for customers – offering choice and driving down price — it is really nothing but a pain for business owners. Right? Wrong.
The truth is that competition is the best thing for any business. We’re not talking here about competition in the abstract sense. The leaders of Coca-Cola should be glad for Pepsi and Ritz and all the other cola manufacturers that are their direct competitors. The folks at Apple should be grateful for the existence of IBM and any other manufacturers of computers, smart phones and the like. Why? Competition, while bitter-tasting and hard to swallow, is the best medicine for any business.
1. Competition injects focus and energy.
For example, Harvard University and Yale University sell the same product: a first-class college education and all the fringe benefits that come with it — top-notch faculty, a high-achieving student body, rich local culture, a variety of academic specialties and unmatched alumni connections. So why is there such competitiveness between them? Harvard isn’t the only university in Massachusetts. Massachusetts Institute of Technology (MIT) and Boston University are both a stone’s throw away from Harvard. Nor is Yale the only university in Connecticut. Why single out one school as a rival? Why doesn’t Harvard see itself as Harvard vs. all U.S. universities or Yale vs. all universities in the world?
By channeling the collective competitive spirit of Harvard into a rivalry against Yale, the student body has a point of focus and motivation. The benefits of this are clearly illustrated on the athletic field. Few matches are so heavily anticipated as the one of Harvard against Yale, and school spirit reaches a fever pitch in the week leading up to game. It undoubtedly motivates the athletes for each team to train harder with the hopes of making their alma mater proud. If there existed no focal point for the season, achieving such an aggressive momentum would be more difficult. True fans – the ones who paint their faces either Crimson or Yale Blue — inject a vital energy into the rivalry.
2. Competition inspires collaboration.
Many faculty at Harvard and Yale have spent time at both institutions, and none have been struck dead by the wrath of some broken blood oath. They often work on research projects together. The two schools overlap in more ways than meets the eye. Collaboration lies on the flip side of competition, and that’s what makes the rivalry even more successful. As the saying goes, keep friends close and enemies closer. Harvard and Yale have developed productive ties that have led to success for both sides.
3. Competition rouses a desire to excel.
Competition prevents an organization from becoming too comfortable and lazy in its business operations. During good times, it is easy for the leadership and staff to feel relaxed and confident, especially if it is offering a unique product that is in demand. There is no pressure to improve the product or the service. However, when a company comes along that offers similar and better products, then there is an intense pressure to perform or perish. To retain customers, there is a constant need to improve products and standards of customer service. There is a need to work harder and do better in order to convince a customer to stay loyal to the organization.
4. Competition encourages innovation.
When a company understands it is not the only one selling a certain product or service, the savvy move is to develop more products. Imagination is allowed to go wild to find new concepts or improve existing ones. New color schemes. New accessories. New styles. New techniques to expedite or facilitate service. Competition pushes companies to be unique and different and express their individual brand’s creativity.
The fierce drive to one-up the opponent pushes everyone to raise the bar in their respective fields. For example, at Apple – from programmers to designers to marketers – everyone is driven to not just put out good products, but to solve the very problems that consumers experience when they purchase a computer from IBM or a smartphone from Blackberry. This intense desire to go one better pushes companies to imagine the previously unimaginable.
5. Competition rejects complacency.
Competition forces a company or organization to get out of its comfort zone. It forces a business to examine its customer base, consider the quality of its staff and products, and work hard at remaining visible in the marketplace. It forces the leadership to think outside of the box and try special promotions or sales, give to worthy causes, and get more engaged with the community. Competition reminds each business of the need to stay top-of-mind with customers. Competition pushes businesses to be memorable and be noticeable. When Henry Ford first invented the automobile, he was quoted saying that customers could have their car “in any color, as long as it’s black.” At the time, few companies were mass producing cars which allowed Ford the luxury of limiting choices. However, as more competition entered the market, competition led to innovation in paint colors that could dry fast enough for mass production. Cars began to be offered in different colors, even those manufactured by Ford. Perhaps that is why Ford was later quoted as saying “Business is never so healthy as when, like a chicken, it must do a certain amount of scratching around for what it gets.”
While competition may feel like the ‘enemy’, it is actually every business’ best friend. Every business owner, leader or manager should be grateful to have worthy competitors…. and perhaps even one particularly loathsome adversary in business. As Walt Disney once said, “I’ve been up against tough competition all my life. I wouldn’t know how to get along without it.”
Quote of the Week
“In business, the competition will bite you if you keep running, but if you stand still, they will swallow you.“ Victor Kiam
© 2012, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.