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Corporates

How to secure your competitive advantage

Here are four considerations to help your team achieve and drive financial success while staying vigilant against competitors.

Amid widespread market volatility, corporate strategy teams worldwide are reassessing the industry landscape and making pivots to protect profitability. A vital part of adapting quickly in an evolving market is knowing who your competitors are—all of them, established players and new entrants alike. The four questions below are designed to help you evaluate your competition and zero in on opportunities to safeguard your firm’s profits despite market tumult.

1. How do we find secondary competitors and new entrants to our industry?

In addition to monitoring for direct competitors, you should be actively searching for new companies with market adjacencies. These up-and-coming emerging competitors may not always be in the news though, so finding them typically requires manual research. Most often, we hear that corporate development teams will do quick Google searches on companies as they learn about them. While this workflow serves as a research method, the best way to stay proactive and on top of the industry is to get access to a capital market database that tracks private companies.

A tool that tracks all activity in a specific industry or vertical may not replace those one-off Google searches, but it will provide information you can’t find in an article—and aggregates it all in one place. Further, you can set alerts to get notified when a new company enters your space and look for opportunistic partnerships or acquisitions long before your competitors.

Another way you can keep tabs on your competitors is through monitoring deal activity in your space. Your competitors will be investing in the areas they’re focused on, so these deals indicate where they’re planning to shift or expand their business strategy. Insight into recent deal activity also gives you a sense of what new products or services may be in the works for your competitors. Maybe they recently acquired a smaller company and are planning to launch a new product line or pivot entirely. No matter the move, understanding your competitor’s recent dealings can be an early indication of which areas they’re moving into and which ones they might be neglecting—leaving room for opportunity.


Bonus tip: Track the people behind your competitors, too
Based on one top competitor, you'd be able to tier secondary and even tertiary competitors—and that's vital. Good competitive intelligence is not just about the companies themselves though; it's also about the people behind the product or service. Changes in management and board seats can often be key to understanding your competitors or a doorway to recruiting experienced professionals to your company.

2. What competitive intelligence tactics and assumptions should we leave behind?

Corporate teams should move beyond their “set-it-and-forget-it” approaches to gathering competitive intel. Operating as though the competitive landscape is mostly static—when we know market conditions and players shift constantly—sets teams up to miss the big opportunities in their space. Rather, robust competitor tracking requires corporations to always keep a finger on the pulse, primed to detect any new movement afoot and respond strategically before it’s too late. Create a system for intelligence gathering that works for you, hone it over time and, importantly, revisit it often to assess new developments.

Additionally, corporations should leave behind competitive intel efforts that rely solely on information gathered from team members’ personal networks. Industries, and even sub-segments within them, are incredibly vast, and those networks—regardless of how expansive they may seem—aren’t failsafe. Assuming that your team’s networks are enough of a filter to surface all relevant goings-on at your corporation is a mistake. For example, there may be early signs of new competition that the network isn’t aware of, and by the time you find out, the window of opportunity might be long closed. The same principle holds true with relying on biased or unreliable sources of information.


Bonus tip: Set parameters for competitive intelligence efforts
While evaluating tactics to refine, add, or remove in an evolving competitive intelligence plan, it's important to ensure that each decision ladders up to a specific company objective. Though it is generally true that more tracking is better while less tracking might help lower costs, dealing in this type of absolutes without leading with the “why” can lead to less optimal results.

Diverting too much into collecting data that either doesn't get used or doesn't support a specific objective can come at the expense of other parts of your business, which may end up under resourced. Conversely, it can be easy to default to eschewing competitive intelligence in favor of other goals—yet without this market knowledge to support them, those efforts may be chasing the wrong results.

3. How can we forecast the future of the competitive landscape to get ahead?

To forecast the future of a particular competitive landscape, corporate teams need to define the space in which they operate. An important part of that process is widening the scope to include insights beyond just where competitors sit today. As discussed, the environment is never stagnant, so you’ll always be one step behind if you’re only looking at the present day. To that end, strategic competitor tracking must include a comprehensive exploration of the industries one’s competitors are primed to break into, or where they might divest. That’s where access to your competitors’ patents and intellectual property data are essential—both can help you shine a light on what an organization might be eyeing as its next step.

As a corporation, it’s important to consider that your intel efforts may lead you to include VC and PE firms in your competitive set—there are likely many actively investing in your space. You may come up against these other investors for a deal, so knowing their previous investments or how they structure deals can play a vital role in negotiations. In addition to deal history, data providers like PitchBook also break down transaction details like series terms, who the participating investors were and more. Understanding a competitor’s investment history allows you to evaluate their strategies, strengths, and weaknesses, to gain a better sense of where the threats and opportunities lie.


Bonus tip: See which companies are in VC & PE portfolios
VC and PE firms are experts at evaluating companies (they do it all day, every day). Their intense vetting processes not only ensure that their investments are financially healthy, but that they also have growth potential, competitive advantages and strong leadership. Let them do the hard part—identifying the best opportunities—and enjoy the fruits of their labor. You can also search for companies nearing the end of their holding period, which is when investors start looking to exit.
Bonus tip: Make a plan for market volatility
Volatility is an inescapable part of the current market, a factor all businesses will have to grapple with on throughout their life cycle. Though no company can know precisely how long periods of volatility will last or when the next will emerge, what they can do is put a plan in place to mitigate its effects. Though looking ahead and creating contingencies will likely insulate your company the most, creating and implementing strategies amidst volatility can also make a significant difference.

4. How can we identify opportunities to buy, build, or partner?

Once you have identified an opportunity, it can be challenging to decide which corporate growth strategy is right for your company. Understanding everything that happens in your space is key to informing any strategy you participate in—including your decision to buy, build, or partner.


Buy
The buy strategy looks to merge or acquire another company that complements or expands your line of business
 

Build
The build strategy invests in your company’s own resources and talent to build products or services in-house
 

Partner
The partner strategy looks to join forces with a different company in order to reach a shared goal

Your competitors are also evaluating which corporate growth strategy is right for them, and each method reveals insights about their mindset. If your competitor chooses to go the M&A route, that could indicate they value gaining quick access to the technology or product they’re investing in, whereas a build strategy might mean that their priority is product differentiation over speed. A strategic partnership might tell you that your competitor identified a new way to connect or reach their consumer base. Whatever the case may be, the competitive landscape should be factored into your decision to buy, build, or partner.

How these 4 questions influence your corporate strategy

Answering the questions above is not only an essential step towards following the competitive landscape, but also applying the information gathered into actionable strategy. These two elements go hand in hand—strategy without market intelligence will lead to off-target results, but the inverse, market intelligence without sufficient application, will fail to significantly impact the business.

Today’s hypercompetitive landscape moves fast, and market expertise must go beyond your core space. If your existing customers or industry experience is ever severely impacted, you must be ready to engage with those in the periphery—ideally well in advance of this potential loss in business. This effort is, of course, precluded by substantial and sustainable market research, which has become increasingly unattainable through manual means. We encourage you access some of the resources below to see how PitchBook can help make your data gathering process more efficient and lead you to the insights you need to act in this changing market landscape.

Streamlining this process with PitchBook




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