Knowing where, when and how to overtake your competitors requires planning and a thorough understanding of their strengths and weaknesses.
The COVID-19 pandemic presents extreme challenges to businesses and the competitive landscape will be a hot bed of innovation, quick pivots, divestments and acquisitions as businesses devise new models to recover growth.
Businesses need to understand where their products and services fit within the new marketplace, and emerging competitors can quickly usurp incumbents when their offering is better suited to the changing market demands.
Ian Pascoe, managing partner of Grant Thornton Thailand, says: "It's important to remember every unexpected event creates new opportunities. Your direct competitors were likely as unprepared as you for the COVID-19 pandemic. If your supply chains were interrupted, theirs probably were too – and a competitive advantage awaits whichever business develops the more effective solution."
Check your mirrors for emerging competitors
Tony Markwell, managing partner private advisory Grant Thornton Australia, says: "You could find that new competition is doing things completely different from what they've done before as they try to jump into your market. How likely are they to undercut you? Are businesses outside your traditional industry going to change what they're doing? Suddenly you may find you've got competitors you never had before. If you're in a good industry, it doesn't take long for other people to find out you're in a good industry and decide they want to diversify and take a share of it."
Maintaining your existing competitive edge requires businesses to exemplify their strengths and differences – whether it be price, quality or customer service – and clearly articulate their superiority over other brands. Any permanent innovations or enhancements made to product or service – such as free or faster delivery times – need to be communicated, so they cut through to customers as efficiently as possible.
Use alternative data to understand where you stand in the market
Businesses need to be on top of what their competitors, and their industry as a whole, are doing to inform management decisions – such as where to take advantage of customer attrition, where to find newly available talent or when to move defensively through divesting non-core operations. At the same time, they need to be mindful that their competitors will also be gathering competitive intelligence.
Pallavi Bakhru, partner at Grant Thornton, India says: "People have realised that data can give you a lot of information. They are sharp enough to ask, 'If you run analytics, what is the information that you can give me that'll help me make better decisions?'"
There are plenty of market intelligence sources, reports and dashboards that will be invaluable to your understandings of the competitor landscape and your position in the market. However, smart businesses are increasingly looking to alternative data to build a more complete picture of their competitors. This might include monitoring intellectual property filings and job advertisements to understand product development and strategy. Equally, conducting sentiment analysis on public statements and company communications or monitoring search trends or social interactions with customers can also help you glean business confidence and levels of customer advocacy. Similarly, there may be ways of using third-party services in your supply chain to gain useful competitive information. For example, in the hospitality industry, a close analysis of booking platforms can indicate how well a hotel or restaurant is managing its capacity.
Start scanning for strategic opportunities
The macro-economic challenges affected global M&A levels and, at the start of the pandemic, many planned transactions were stalled. But deal flow is beginning to pick up again with the new trading environment providing opportunities for acquisitive funds and businesses. During these difficult months, some direct competitors or suppliers may be under stress and struggling. Distressed assets and low valuations may provide suitable targets for acquisitions now or at a later date.
Matthew Woodgate, director at Grant Thornton UK, says: "Companies that have emerged from the crisis weaker are considering their strategic options. Some companies are looking to divest non-core businesses and ensure their business models are 'future-fit', and some opportunistic acquisitions are taking place."
Being mindful of those potential targets, and being prepared and poised for any possible transaction will allow you to move rapidly when the time is right. You will need a clear sense of how that acquisition supports your strategy, and those targets align or complement your manufacturing or operating capabilities.
Prepare to pivot your business quickly
One encouraging aspect of the pandemic has been businesses’ ability to pivot very quickly to where the demand is. That will only continue as global and regional economies recover.
Bakhru says: "Indian passenger airlines got grounded in the pandemic. There were no domestic or international flights. So what some of the smarter private airlines did is to move into cargo hauling. They quickly converted aircraft for carrying cargo, because suddenly, there were supplies needed, medicines and ventilators that had to be moved within the country."
"One airline started it, and within two months, everybody started doing it. Normally what happens is competitors always have an eye on each other. There'll be somebody who will be the first one to hit the market and capture the largest share, then the rest will follow."
Businesses will need to weigh up the short-term and long-term market scenarios and have plans in place which they can execute with speed. Part of that includes examining your and your competitors' customer base and assessing if you are addressing the right demand and the right customers that will put you ahead or protect you from the competition. Markwell says: "If you find you have a customer base you really shouldn't have, now may be the time to chase the customer base you need to have. Bear in mind your competitors might be a bit slow to shore up their customer base."
Like Formula 1 teams attempting to overtake their rivals, they will know the optimum conditions and point on the track at which their car can outperform their competitor's. In the same way, businesses must plan for the opportunities to get ahead and seize the moments when they come around. They need to constantly survey the track ahead and be ready to move position and accelerate forwards when the time is right. To do that, businesses must develop a deep understanding of the market’s dynamics and how their competitors are adapting to it.