Sunday, September 18, 2011

Protect Yourself Against Future Competition

If you want to be a bad product manager, ignore the potential for future competition, especially from bigger and non-traditional competitors. You need to focus on who your competition is now, and what you need to do to get ahead of them. Worrying about who might get in to your market is worthless — and if a big competitor comes in and wants your turf, there's not a whole lot you can do anyway. Focus on the present and do what it takes to win, and wait to see what  happens next.

If you want to be a good product manager,plan, protect, and position yourself for future competition. If you are entering a market where there are competitors today, it is fairly certain that there will be new competitors tomorrow. If you have found something "new to the world," it is guaranteed that others will follow you in to the market if you are successful. As a product manager, you need to plan for future competition, protect yourself from it, and position yourself to actually use that future competition to your advantage.

There have been a number of examples recently showing how new competitors — and in many cases competitors who are much larger and more powerful — have entered certain markets, and how existing products have been prepared and responded effectively.

Apple's iCloud service is currently the buzz of the technology industry. Only time will tell about  the impact of Apple's iCloud service, but the announcement alone created a lot of questions around its impact on existing services (for example, the Fortune story "Why iCloud won't send the competition to the ground").

Dropbox used the announcement as an opportunity to showcase the additional problems they already solve today that iCloud will not address. They likely predicted market entry by Apple (and Google, and Amazon, and others) and designed their solution accordingly. By supporting additional use cases — including the need to access files on multiple platforms and the need to share files with others — Dropbox has a good chance of emerging from the iCloud release not just unscathed but potentially stronger, as Apple's entry brings more interest and attention into the benefits of cloud-based computing.

In another technology example, the popular screen capture tool Snagit identified a need for a simple and easy screen capture tool and built a large customer base around their well-designed solution. However, Windows 7 included a built-in Snipping Tool providing the same functionality.

Is Snagit doomed? Unlikely. First, they long ago began adding additional functionality to address more complex needs and problems around screen capture — including more complex post-capture editing features, add-in toolbars for common software programs, and a wider variety of different screen capturing options. While Windows may meet the needs of some users, for the market segments on which Snagit focuses — including technology professionals, trainers, and graphic designers — the built-in functionality Windows offers will be too limited, and Snagit will be able to retain their customer base. And by introducing a whole new segment of the market to screen capturing for the first time, Microsoft has expanded the potential market for Snagit, since likely some users discovering screen capturing through the Snipping Tool for the first time will feel limited and look for a more robust solution.

Secondly, TechSmith, the company that makes Snagit, did not rest on their laurels and stop at static screen capture. Years ago they innovated and expanded their product suite to related offerings, including video capture (Camtasia), usability testing and market research software (Morae), and online screen and video sharing (Screencast). Had TechSmith simply added incremental enhancements based on current customer feedback, they would be left simply with a bloated Snagit tool and in a much more vulnerable position with the release of Microsoft's Snipping Tool.

Protecting against future competition does not always mean product innovation, however. For example, with a rather simple consumer product like bleach, preparing yourself for future competition may focus on marketing and distribution. When Proctor & Gamble tried to take on leader Clorox in the bleach market, they found that Clorox was prepared for this potential competition and reacted swiftly, according to this interview with former P&G's former CEO A.G. Lafley:

P&G chose Portland, Maine, as the test market, hoping to escape notice from Clorox, which was headquartered in Oakland, California. But Clorox got wind of the plan in time to distribute free gallons of Clorox bleach to every household in Portland, making all P&G's advertising dollars, sampling, and couponing irrelevant. "Game, set, match to Clorox," Lafley says.

Had Clorox been unprepared or unable to react swiftly, they may have faced more severe competitive threats with P&G attempting to enter the market. True, it could be argued that Clorox had made themselves vulnerable to competition by not being more innovative with their core product. However, they were effectively able to put down the competitive threat and are still the market leader in traditional bleach, while both Clorox and P&G have gone on to innovate tremendously in other areas.

Hoping you do not face competition or planning on riding out the good times until a larger competitor eventually enters the market are not effective strategies. It is possible to effectively fend off competitors — be they scrappy startups or well-funded multinationals — though this can only done through proper planning, preparation, and proactive innovation. Good product managers will consider traditional and possible new competitors in their overall strategic planning and roadmapping, and guide their products accordingly.

Thanks to Jeff Lash / How To Be A Good Product Manager

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