IN THIS EPISODE:
If you’re overly focused on your competition, you might not be focusing on your customers.
Many leaders spend way too much time thinking about and talking about their competition. And sometimes this can lead to me-too type reactions, that can lead you to commoditization.
Instead of spending too much time thinking about the competition, leaders should instead think about what their customer needs are, and how to meet those needs in a unique and valuable way.
In this episode, Brad Giles and Kevin Lawrence talk about the challenges with client focus, and why you should spend more time focusing on customers.
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Please note that this episode was transcribed using an AI application and may not be 100% grammatically correct – but it will still allow you to scan the episode for key content.
Kevin Lawrence 00:12
Welcome to the Growth Whisperers Podcast where everything we talk about is building enduring great companies because this is what Brad and I both enjoy doing, seeing companies grow and get better as they get bigger and have a better impact on our world. I’m Kevin Lawrence, joined today as I am for every show with my great partner Brad Giles. Brad, how are you doing?
Brad Giles 00:34
Excellent. Thank you very good today. Very good. Spring in my town. Just starting to warm up so I’m good.
Kevin Lawrence 00:43
And we’ve got the other way, we’re getting a winter. As I drove through the mountains the other night there was a little bit of snow on the road. So the seasons have changed. So what are we going to talk about today?
Brad Giles 01:10
Today we’re talking about the dangerous thing about focusing on your competition, there is a dangerous thing. If you’re going to focus on your competition. What is it?
Kevin Lawrence 01:19
OK! and so, now your word of the day?
Brad Giles 01:27
The difference between a good boat hull and a bad boat hull and I don’t know much about boat hulls, but I know enough to have a go at it. The difference between a good and a bad boat hull is its ability to consistently endure rough seas. And so translating that back into a good business, you can have the best Skipper that you want. But it’s the ability to navigate rough seas. That’s what’s on my mind at the moment, the kind of the parallel between a boat home and a good business. And what about yourself?
Kevin Lawrence 02:12
My phrase is productive paranoia. It’s one of my favourites because Jim Collins had me realized that my paranoia made me more capable and not crazy. And as I think it would go back into crossing the mountain passes, because I go back and forth now probably every week, between this place called the Okanagan, you know, like three, four hours from here and Vancouver. And you know, on my vehicle I have it’s a truck I used to go up into the mountains for like for snow biking, and winter sports. So it’s a truck, it’s later in the back. So I’ve got sandbags in the back, I’ve got a you know, 24 or 36 Hour Emergency bag, I have the best snow tires you can get. And they’re studded with little steel things sticking out. So it’ll even have grip on ice. It’s like, I’m good, no matter what. And you know, and I know some people that don’t think about those things. But it was interesting had a conversation with a couple buddies that were very successful entrepreneurs. And they all operate fairly similarly, they have that similar type of paranoia and productive paranoia is things that you’re concerned about. And then you drive into action and do something about it. So it’s like, you don’t just observe risks, you actively mitigate them all. So you can just get on your way and do what you got to do. So productive the whole of productive paranoia. So why don’t we jump right in. So this thing about focusing on new competition can be very dangerous. And I’ll tell you it is as you know, as you and I were talking, you know, realized how little energy we actually put into competition that we know is you and I had a conversation we’re talking about when you’re building out a strategy, you got to be tuned into the market and the competition and what they’re doing. But most companies that we work with I work with and we don’t have to do, we try not to spend too much time on it because it can be one a waste of time and to dangerous numbers, not saying not to do it. You do need to be aware of them. But the idea is a lot of people start to really stay overly in tune with their competition. And it can get them in a lot of trouble.
Brad Giles 04:37
Yeah, well, when we were talking about preparing for this episode, we were toying with the idea of calling it I you spending too much time thinking about your competition and not enough time thinking about your customers. But that’s a bit long for a title
Kevin Lawrence 04:53
and we’ll get it but that’s kind of the theme that we’re weaving into this here. Okay. But it starts with you consume your Thinking time thinking about your competition, there’s gonna be nothing left to think of what your darn customers. So the first point here is the distinction between understanding your competition or being aware of which is really analyzing their strengths and their weaknesses. And maybe, you know, opposites do almost like a SWOT on your competition. Versus focusing on and obsessing about. And, and, you know, that’s an important distinction, appropriate awareness, versus almost obsessed with and spending your extra discretionary time thinking about them, and or worrying about them.
Brad Giles 05:40
Yeah, your competition should form a part of your strategic analysis. Think about it like this, if you have a quarterly strategic planning day, it should form our agenda and agenda item within that. And then you should be using tools to assess them and what they’re doing and what they’re not. And, you know, it shouldn’t maybe form part of the conversation that you’re having with customers, either we spoke about the for cube before for questions in Episode 78. But you know it that there should be a limit on it. Because then, once you understood and have used the tools to understand, let’s say, the playing field, or understand where the competition are, and what they’re doing, that’s when you can shift over to think about the customer’s needs.
Kevin Lawrence 06:31
I might even argue that you don’t even need to talk about them every quarter. In some cases, every business is different. So I’m not saying if it’s working for you keep doing it. But for most of the companies that we work with, we’re not even tracking the competition quarterly, we might look at it at an annual and again, it depends, some business models have more sensitivity around it. But the point of it isn’t. And that’s point number one, that the thing that the second point here is that, you know, the first point is here. So basically, you need to understand them and be aware of them because they’re part of the environment. But the second, the real danger is you can if you put too much attention, you start to follow them, and you’ll start to become a me too company. And this is how people commoditize their own business and decrease their own gross margin, and decrease their own net income. Because they start to get they get commoditized by following the competition, and oh, the competition’s doing it, so we should do it too. And, and that’s the danger of paying too much attention to them. And I’ve seen a lot of companies fall into that they, they give up or destroy their own competitive advantage.
Brad Giles 07:43
Yeah, and that’s really the key to the title of this episode, the dangerous thing about focusing on your competition is that you can begin to emulate what they’re doing. And then you’re always playing catch up, or you haven’t carved out your own strategy. And then it’s just a horrible race to the bottom. And of course, profits are significantly affected in a commoditized market like that. So it’s not that you don’t need to not know what they’re doing. But you’ve got to be able to differentiate Are you obsessing? Or are you spending too much time beyond a specific disciplined allocated amount of time that you should in analyzing and understanding them to carve out your own niche?
Kevin Lawrence 08:23
Yes, and that would be the key thing, right? is if you’re thinking about them, and then looking at how to differentiate, if we if you’re looking at them understand they’re going left so that you can go right, that’s different, we’re talking about you’re following them and it would like you know, and this is the danger of as I know, recently teaching my daughter how to drive. If you’re in traffic, and you just start to follow the taillights of the car in front of you, you’re in danger. Because you don’t get time to react you need to be looking 510 cars ahead Yeah, and with the car 10 cars ahead steps on their brakes, you start to slow down. Otherwise if you just get tunnel vision and follow the car in front of you, you’re gonna smash right into them because you won’t have enough time to respond. And that’s what happens and people metaphorically people get that kind of tunnel vision and just start following the taillights of the competitors it’s not it’s not good you’re here to do your own game again, my background racing cars. you’re observing those other cars, but I’m looking way past them because I’m running my game. I’m not gonna follow them in theirs. Yeah. Reminds me of a time when, when it’s almost like when you go on autopilot. And again, bad strategy is autopilot. And you’re supposed to be going somewhere, but then you follow your normal route home, when you’re actually supposed to be going to meet friends for dinner somewhere else. That’s a whole other story.
Brad Giles 09:41
Yeah, no one will admit to have done the having done that before. That’s for sure.
Kevin Lawrence 09:46
No, no, never. I’m never more than once a year. Yeah. And and you
Brad Giles 09:49
know, another way to think about it is that a wolf doesn’t worry about the opinions of sheep. Now that’s a bit of a brutal way to look at it. But you know, you’ve got to understand what the competitors are doing. But if you’re building a unique and valuable strategy that is different from your competitors, understand what they’re doing, and then come back and relentlessly focused on your customers. So that
Kevin Lawrence 10:12
would be the summary read. If you’re paying attention to your customers, it’s to get data to improve your strategy and your differentiation. Yeah, if you find that paying attention to your customers is making you replicate what they’re doing, unless your strategy is to knock them off and be a cheaper version of them, which normally isn’t a good strategy. But if you have if that is your strategy, okay, maybe let them be your r&d, and then you leverage it. But for most people, they want to try and create differentiation, not similar. I was gonna say similar ideation. But that’s not a word. commoditize yourself. Cool? Yes. So So the third point is going to Okay, enough attention, enough attention on your customers to give you differentiation and understanding, but then 80% of your energy on your customers understanding their current, and their future needs better than anyone else. And that’s really plugged into them. And it goes back to that that four cue card conversation we talked about, as you mentioned in Episode 78, but truly understanding what they need, and what they wish they had that they may not even have told you yet. And you know, it’s a quote, the late great Steve Jobs, you know, no one ever said they wanted an iPod. Nobody ever asked for one. But he was able to understand what people were using in their world when it came to music, and potentially not using and triangulate it, and maybe a few special psychedelics mixed together. And he hinted up with his vision of this thing called an iPod. But that’s a great place to hang out and spend time and sometimes people just don’t do enough. And that is a valuable place to obsess.
Brad Giles 12:00
Yeah, yeah. So what we’re saying here is, like many of the concepts, the peredo rule, it just plugs in so nicely. So yeah, if we were forced to put a discipline around this, why don’t we say, let’s use the peredo rolling thing. Don’t spend more than 20% of your time thinking about the competition. If you spending 10, or whatever, that’s, that’s fine. I
Kevin Lawrence 12:27
would say to Yeah, 20 is great, too. But if you want to stick to the prayer thing, but 20 is way too much. Yeah.
Brad Giles 12:35
But we want to find some kind of discipline, because I can tell you, some people, in some businesses, it would be flipped, they’d be spending 80% of their time, thinking about the competitors, and 20 or less thinking about the customer? I believe
Kevin Lawrence 12:55
you Brad, I think that’s just, yeah. Unless there’s some unique reason why they need to.
Brad Giles 13:03
And this is all of the time, this is not just the time within an agenda at a strategic offsite meeting. Let’s be clear about that. It’s also the time where there’s informal chats over the water cooler, where we’re talking about. It’s Yeah, it’s all of the stuff in the day to day running.
Kevin Lawrence 13:24
I vote for 2%. Yeah, maximum 2% of time on the customer on No, not on the customer on the competition.
Brad Giles 13:31
Yeah, yeah. And that might be, that might be reasonable. But just think about for our listener, think about how much time in total of all the time that you spend on the subject, how much is spent on the competition, you want to make it as little as possible, after you understand them. Then moving on to number four. Once we, once we have reduced, our time spent thinking about our competition, and we instead spend more time focusing on the customer’s needs. Remember that commoditization is what we’re trying to avoid here, right? So we understanding the customer’s needs, then we can dedicate time to improving our systems to enable better customer experience. So how can we meet those customer needs better than any other organization?
Kevin Lawrence 14:30
Yeah, and with the least amount of friction and or cost in the system, which will also benefit your own efficiency and profitability, it likely has spillover benefits onto your team. And this is where the whole thing about Lean and Six Sigma and process improvement comes from. You stand in the shoes of the customer on the receiving end of the experience and you think about Okay, how do we make this notably easier and or less time consuming less mistakes, less whatever it happens to be, it’s the ultimate way to streamline our systems. Unfortunately, as companies grow and get more complex, we get more caught up and looking at it from our own perspective. Because we have people that are crying and screaming and frustrated about things that we have that don’t work. And we get caught up in that, versus going back to the customer shoes. And yes, we need to do both. But even if you want to streamline something for your customer service team, it should be done from the perspective of the customer. And then the customer wins, the team wins and the profitability or effectiveness of the company wins to.
Brad Giles 15:40
Yeah, so that’s about systems. And also it’s about our products and services. Let’s go back to that peredur rule, what you know, and maybe think about 80% of our bottom 20% of our products and services. Are they meeting the need as much as they could? Or 80%? Just really thinking about? How, if we understand our customers need? are we selling it just because the competitors were? Or in actual fact, could those products and services, maybe they’re not relevant? Or maybe there are parts of them that would be more valuable to more customers?
Kevin Lawrence 16:23
Yeah, for example, we just had our annual retreat with our team. And as the 10 of us went through and worked on our strategy and thinking, Well, we know we produced a report with a number of our clients that we’re only doing, providing one of the solutions that we have. Now over the years, we’ve built a bunch of additional solutions that a lot of the clients probably don’t even know about. Yeah. And the pains that growing companies have are similar, no common pains. And we’ve just realized is that for someone, we need to need to make sure they’re aware, hey, if you need help with this, then we can help you. But everyone’s so busy doing their job, we often forget to go back and hey, you know, Mr. or Mrs. Customer, here’s what’s possible. Because people just know, trying to get the existing stuff completed in across the line. So yeah, thinking about the same the existing products and services you have, maybe there’s additional products and services, and how can you do that? Because generally, generally, I had it noted in our prep notes here, where did it go?
Brad Giles 17:27
I don’t know. But while you’re looking for that, the other thing is about our employees. So it may be worth considering, pausing, taking a moment and listening to the types of conversations that our employees are having, and trying to think how much of the time that our teams spend is spent on talking about the competitors, compared to talking about our customers. And that would be interesting thinking about that maybe in the leadership team, maybe in the mid management or other teams, other areas. But if you were just to observe, pause, how much of your team’s time is actually spent talking about competitors? or talking about the customers needs? And not?
Kevin Lawrence 18:20
Yes, exactly. Beyond that above, by the way as that as we’re tone is a one Yo, I bet you there is some companies who probably do need to pay a little bit more attention to the competitors. But I would imagine most would probably need to pay more attention. I would guess more towards the knee from experience of other clients more on the needle towards customers. Yeah, I guess we do we get caught up in the day to day and instead of zooming out and looking at what are the other needs or things that we could help at a macro level and Michael Dell, I just listened to a great podcast with him. But Michael Dell used to call this read reading the tea leaves, he used to do this in the earlier days of Dell, he would take all the customer feedback and kind of spread it out and try and find patterns. And this is before we had kind of word clouds and all of those things. But he would look for the common patterns of the positives and negatives, the customers were thinking to help him figure out what he needed to do in his business.
Brad Giles 19:15
Yeah, yeah, it’s, it’s important to understand what’s happening with the customer. You know, the customer pays the bills, and sometimes they come second fiddle to politics or to gossip or things that we hear,
Kevin Lawrence 19:36
or even broken systems are flawed processes. At the end of the day, it’s easy to get sucked into the drama or obsession with their competitors. It’s easy to get sucked into the drama of broken or inefficient systems and processes are issues in the company. And it’s always the best choice to try and get back to the customer.
Brad Giles 19:57
You know, I I’m sorry, go No, please do go ahead, I, I was recently setting up a new internet service. And it took two and a half months for me to set it up. From the time, from the time when it was supposed to be set up, let’s say there was a, there was a date that was agreed with the carrier that the internet service provider, it took them two and a half months to the point where they could tell me what my account number was where, and it got to the point where I was in the store. In I won’t mention the company’s name was in store. And I was talking to the customer service person. And he said to me, Look, if our systems are so bad, if we can’t get this to work, I’m going to recommend that you go to another provider, you go to one of our competitors. They’re just not focused around the customers. In any case, that’s a side
Kevin Lawrence 20:57
Yes. And as it but I had another similar story. I am working with a bank on a piece of real estate that I own and refinancing it. Yep. And trying to get it refinanced and trying to get it done. And I wanted a couple of changes that were reasonable based on the situation I when I first bought it, there was no tenant, now there’s a tenant. So the the the the the needs for the financing are different, trying to get them to change it, they couldn’t do it. Finally, the guy said, Kevin, you’re probably better to go to one of our competitors. Yeah. And he gave me a name and I got names and somewhere else. So I go to the competitor. Not only is the interest rates 30 basis points lower. They turned around and I was going back and forth to this other one for about a month, the existing bank that already has my business, the new one, turned the whole thing around in I think seven days. And at a better rate, and better actually better rate and some other terms. And they made the changes that were would be normal to do. So here’s the bank, the last chunk of business. And it’s just and the guy, the guy actually told me to go somewhere else because he says he his people were just being silly about it because of the changes. Because it’s like they like to follow the process. Yep. And it’s fascinating. You know, and then people are worried and thinking about it. But at the end of the day, when you’re letting customers leave like that, when there’s no need for it. No, where’s your focus on your customer? And they’re all trying their hardest? They are trying but you know, it’s challenging sometimes.
Brad Giles 22:41
Okay, so let’s move to review. So number one is there is a dangerous thing about focusing on your competition. And that is if you’re focused on your competition, you might not be focusing on the customer, A and B the customers needs more importantly, so we got to understand our competition is point number one, we’re going to understand, what are the competition doing? What are they good at, and what are they not good at. And that should be allocated in a disciplined manner within your strategic planning process. Number two is, is if you don’t do this, you could end up as a commodity, you could just follow and replicate what the competitors are doing. And the risk is that that obsession means that you’re just a follow up, and it’s just driving the prices down. And then number three is think about the peredur rule. Think about your teams, think about yourself. Think about the leadership team, how much of the time is spent focusing on customers, instead of focusing on competitors. And know that Kevin’s advocating for 2% I’m just simply advocating understand the number and think about the pariatur rule What if you flipped it? What if you spent most of your time spoke focusing on the customers and a customer’s needs. Kevin, you want to move on to number four?
Kevin Lawrence 24:04
Yeah, and the taking that that extra energy you have on your customer? Or maybe you’re already doing this right? But think about how do you better improve your customer experience so that it’s easier for customers to transact with you and be thrilled the end? And then number five other products and services that you could be providing to those customers? How can you further help them and make their world better because you have some things that will enhance their business and help them to perform better? Very good, pretty straightforward. But yeah, petition is important, but not that important.
Brad Giles 24:39
And to maintain that as we’ve already said a few times. Think about the four questions. It’s a simple five minute survey that we advocate and again we did that. We discussed that in Episode 78 of the growth whispers so this has been the growth whispers My name is Brad Giles. As always, as always joined by Kevin Lawrence you can find me at evolution partners.com.au and you can find Kevin at Lawrence and koat.com. Don’t forget, please do click the subscribe button. And we’d love to have you as a regular listener. And thanks very much for listening. We look forward to chatting again next week.