Intangible Competition

In addition to direct and indirect competitors, there is also the effect of intangible competition on a company’s profits. Intangible competition by its very nature involves factors that you can’t see or touch. These factors have an effect on your profits, yet aren’t included in the groups of direct and indirect competitors. Intangible competition includes affinity for the status quo, apathy, and priorities.

The status quo represents the existing state of affairs. An affinity for the status quo is a human condition where people tend to favor the way things are versus potential change. This is understandable in that change requires effort. It requires people to both think and act differently. New thinking and new action may in turn induce anxiety and discomfort, as well as expose us to risk and potential failure. It’s no wonder then we prefer the status quo to change.

What is puzzling is why people prefer the status quo when the existing state of affairs is not favorable or the change would lead to an improved situation. In a review of several studies of patients undergoing heart surgery, the results showed that despite a new opportunity for greater health and longevity following the procedure, the majority of patients didn’t follow their doctor’s recommendations to change their lifestyle. Instead, they opted for the status quo. Dr. Edward Miller, dean of the medical school and chief executive officer of the hospital at Johns Hopkins University, explains: “If you look at people after coronary-artery bypass grafting two years later, 90 percent have not changed their lifestyle. And that’s been studied over and over again. Even though they know they have a very bad disease and they know they should change their lifestyle, for whatever reason, they can’t.”26

An affinity for the status quo exists within your organization and externally with your customers. Internally, the affinity for the status quo manifests itself during the strategic planning process as managers continue to allocate their resources in virtually the same way year after year. Failing to include strategic thinking sessions prior to the planning part of the process results in no new thinking and no new insights. Without new insights about the market, customers, competitors or the company, there’s no catalyst for change. And that’s why most strategic plans look the same year in and year out, and generate little if any incremental growth.

A customer’s affinity for the status quo is a formidable competitor. When you introduce a new product or service, in most cases you’re asking customers to make changes in their thinking and behavior. Then you’re hoping they sustain those changes over time. As the heart surgery studies indicated, making and maintaining changes, even when they could mean the difference between life and death, is rare. This is why leaders who find themselves in the role of challenger to a market leader need to overcommit resources and focus like a laser in one area. It’s this type of over-the-top effort that’s demanded in order to break customers out of the status quo.

Several questions to consider in overcoming the affinity for the status quo as it relates to your business issue:

  • • How would you describe the status quo?
  • • What are all of the potential alternatives to the status quo?
  • • What is the most compelling reason the other party would consider moving out of the status quo?
  • • What behavioral modifications are required for change?
  • • What tools, techniques, or support would facilitate lasting change?

Apathy is another intangible competitor that can put a dent in the attempt to grow profits. Apathy is described as a lack of interest or excitement in something that others may be passionate about. Apathy is indifference to the product, service, event, person, or situation at hand. Leaders are faced with internal apathy when too many flavor- of-the-month initiatives are thoughtlessly rolled out, one after the other. This occurs within the context of strategy, when leaders fail to take the time to share with employees what the strategy means to them, why it was developed, and how it translates to their daily work. I refer to this as the 10 Commandment Approach to Strategy. The 10 Commandment approach occurs when leaders spend 45 minutes rolling through their strategic-plan PowerPoint presentation and then indirectly proclaim, “Now go forth and strategize,” assuming their work communicating the strategy is done.

Apathy is also encountered by salespeople in their interaction with customers. When they attempt to sell products or services that weren’t developed with insights into customer’s unmet needs, their me-too offering is met with a blank look that screams, “Who cares?” Certainly, good salespeople still find a way to make the sale, perhaps by leveraging their relationship with the customer, bundling the offering with more desired products, or planting seeds of doubt about the competitor’s offering. However, the customer’s apathy could have been avoided altogether if the business’s product development, research, or marketing departments had focused on differentiated value for the target customer to begin with.

Several questions to consider in overcoming apathy as it relates to your business issue are:

  • • What is the cause of apathy?
  • • What is the extent or reach of the apathy?
  • • What factors are involved in the apathy?
  • • What is the full range of options for altering the apathy?
  • • Are there any solutions for moving out of apathy we could take from other industries, organizations, or situations and apply here?

Another barrier to greater profitability are priorities that differ or are not aligned. Internally, priorities can prove to be an intangible competitor because different groups are often tasked with different goals. It’s not uncommon for one brand team to garner a greater share of their sales force’s time in the field based on the structure of the incentive compensation plan. Based on the weight of the incentive compensation plan, some brand teams may find that their priorities (selling more of brand X) don’t even match up with the priorities of their own sales force (selling more of brand Y because that’s where they’ll make more money). Internal priorities can also differ from the global to the national to the regional to the district levels. In my strategy work with several Fortune 500 companies, I’ve heard more than a few times that the North American leadership team can’t pursue the best strategic course in the United States because leaders at their global headquarters in Europe won’t support it.

The external challenge with competing priorities can be seen when companies are not truly driven by fulfilling customers’ unmet needs. Instead, they work off their own internal agenda and hope it somehow meshes with the customers’ agenda so they can be considered strategic partners. Unless an organization has taken the time to observe customers, identify their key jobs to be done, and produced solutions that deliver differentiated value on those unmet needs, the term strategic partner is a farce. While customers may not always be able to articulate their priorities, strategic leaders are able to infer how their organization can deliver superior value based on differentiation grounded in their capabilities.

Several questions to consider in overcoming priorities as it relates to your business issue are:

  • • What are the priorities of the other groups we work with internally?
  • • Are our priorities and the priorities of these other internal groups aligned?
  • • Have we identified our key customers’ top priorities?
  • • Have we identified our key customers’ unmet needs or jobs to be done?
  • • How can we align our goals and priorities with our customers’ priorities and unmet needs?

A study of more than 3,000 global executives showed that the biggest business challenge leaders face is innovating to achieve competitive differentiation in their market.27 Competition is all around us. Your ability to assess, understand, and outperform the various types of competition will influence your organization’s trajectory. Competition involves striving together, reaching for higher levels of performance. Those higher levels of performance are directly related to your insights for providing customers with differentiated value. Compete, strive, and reach your full potential.

 
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