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Why startups claim to have no competition - and why that's not true


Wichtigkeit des Innovationsmanagement

To claim to have no competition is synonymous with ignorance of customer needs


I recently heard again from a startup claiming to have no direct competition (Mea Culpa: I've said the same thing in previous roles). This statement raises an interesting question, particularly regarding the different perspectives of customers and providers on competition. This article describes competition from the perspectives of both customers and providers, highlighting the differences between these two viewpoints. In doing so, I reflect on my past views and why I now consider them short-sighted, if not foolish.


Competition from the provider's perspective

For providers, competition is an omnipresent reality that significantly influences their actions and strategies. Therefore, startups also view the market through the lens of competitive analysis to understand their positioning, strengths, and weaknesses compared to other providers. The bias lies in their inclination to compare themselves with similar companies in similar industries and to feel unique with their "new" solution.


Competition from the customer's perspective

For customers, competition is not only synonymous with choice and variety. They view the market from their personal perspective and seek products or services that help them fulfill their unmet tasks (Jobs to be done) and achieve their goals (Outcome) to have the best possible impact. They compare various offers not only based on classic criteria like price, quality, brand image, and customer experience but also on how well they help them accomplish their "jobs." Even if a startup claims to have no direct competition, customers might still stick to the current solution (maintaining the status quo), but they might also consider choosing solutions from other industries that address similar needs. This is one of the main reasons why established companies in an industry may come under pressure when initially considered inferior products from new players in other industries quickly gain importance among customers.


Differences in perceiving and evaluating competition

The difference in the perception of competition between customers and providers lies in their perspective and priorities. While customers experience competition as choice and freedom of decision-making from doing nothing or from different markets, providers see it as a challenge and an opportunity for differentiation and positioning within their market. So, who is right?


The role of the value proposition

A company's value proposition serves as a tool to convey the "perceived" benefits and added value to customers and convince them of the offered products or services. However, it is important to recognize that the value proposition is only one facet in the complex structure of customer satisfaction. There is often too much emphasis on supposedly attractive value propositions in terms of product features, without fully grasping and understanding the underlying, unmet needs of customers and the impact these solutions achieve with customers. Customer struggles and unmet needs cannot be solved solely through an appealingly presented value proposition but require a thorough understanding of the customer's perspective and a comprehensive solution-oriented approach by the company. Customer validation of the "experienced" value proposition (e.g., "I can now [w], I no longer have to [x], I have less [y], I have more [z]") is a fundamental basis for the value proposition from the customer's perspective.


The Importance of adjustments for customer decision-making

In the end, the customer decides what value a company has for them. Not only does direct competition play a role, but also the possibility of choosing between different options, including the potential of "non-acting" and "non-industry solutions." Companies must recognize that customers not only seek the best available offers but also consider the effort of switching. The entire range of solutions should be considered as competition, including new solutions that better meet their needs, as well as those through alternative offerings and existing solutions. Companies that can flexibly adapt to the needs of their customers will be successful in the long run and able to build a loyal customer base. Ultimately, it is a company's ability to adapt to a dynamic market environment and respond to the needs of its customers that determines whether it will be successful or not.


Conclusion - "We have no competition"

The assertion of a startup claiming to have no direct competition sheds light on the complex dynamics of competition from the perspectives of customers and providers. While customers search the market for choice and variety, providers see competition as a challenge to overcome to assert themselves in the market. It is important to consider these different perspectives to develop a comprehensive understanding of competition and make informed strategic decisions. Ultimately, the key to success lies in being flexible in adapting to the needs of customers and offering innovative solutions that provide real value.

Yetvart Artinyan

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