When competitors grow faster, gain market share, or constantly make moves that force a business to react, the question often asked is: “What are they doing better than us?” However, before trying to outperform the competition, a business needs to ask another strategic question: “Are we competing on a playing field where our rival holds the greatest advantage?” Sometimes, the issue is not that the business is weaker, but rather that it is attempting to win based on criteria defined by the competitor.
When a Competitor Defines the Game
When a competitor cuts prices, the business follows suit. When a competitor launches a new product, the business develops a similar offering. When a competitor boosts its communications budget, the business reviews its own media spending. When a competitor expands distribution, the business seeks to add more channels.
Any single reaction might be perfectly rational. However, if this becomes the company’s standard strategic approach, a major issue arises: strategy gradually devolves into a mere chain of reactions to a competitor’s moves.
In that scenario, competitors are doing more than just competing with the business; they are effectively dictating where the business must compete, the criteria for competition, and the required level of investment.
This is the moment to distinguish between a competitive response and a competitive strategy.
A competitive response addresses the question: “What has the competitor just done, and how must we react?”
A competitive strategy addresses the question: “Where do we want to compete, and why are we capable of winning there?”
While these two questions may sound similar, they lead to entirely different approaches to strategy formulation.
Not every game is worth winning.
Businesses often evaluate competitors based on easily observable criteria: lower prices, more product features, wider market coverage, a stronger brand, or a larger marketing budget.
However, the fact that a competitor is stronger in a particular area does not mean a business must beat them on that exact same front.
If a competitor holds an advantage in scale and cost structure, engaging in a price war could trap a business in a game with unfavorable economics. If a competitor possesses a superior distribution system, attempting to build a larger network may not be the best competitive strategy. If a competitor has immense brand equity, simply ramping up media spending to “catch up” does not guarantee that the business will quickly achieve a comparable market position.
The more important question is: What are the criteria that allow a business to create a genuine advantage?
It could be speed, agility, specialization, customer experience, customization capabilities, or a specific customer segment that major competitors are failing to serve adequately.
Competitive advantage does not necessarily stem from doing everything better.
It can come from choosing the right area in which to excel.
Don’t just copy actions; understand the logic that creates the advantage.
A common mistake in competitive analysis is observing a “move” without seeing the “engine” driving it.
A competitor might lower prices because they possess a cost advantage. Another might expand rapidly because their operating model is built for scale. A brand might invest heavily in communications because they have established the economics to sustain that level of investment over the long term.
If a business merely copies external actions, it may replicate the “what” but fail to capture the “why.”
This is why benchmarking can create a paradox: the harder a company tries to catch up with a competitor, the wider the strategic gap becomes.
This happens because they are investing resources to become a weaker version of that very competitor.
Instead of asking, “How can we be more like them?”
one should ask, “What enables them to win in that way—and what advantages do we possess that they would struggle to leverage in the same manner?”
The answer will open up a different competitive path.
Being “different” is not enough; there must be a reason to win.
This often leads to a familiar reaction: if direct competition is to be avoided, a business needs to differentiate itself.
However, differentiation in itself does not constitute a competitive advantage.
A product that is different but holds no value for customers will not generate preference. A premium service with an excessive cost-to-serve may fail to yield favorable economics. A highly distinctive positioning that does not align with the company’s capabilities is difficult to sustain in the long run.
A meaningful competitive advantage requires the convergence of at least three elements: it is valued by customers, the business is capable of delivering it effectively, and it is difficult for competitors to replicate or neutralize.
Therefore, the question is not: “Where can we be different?”
Rather, it is: “What value can we create that is significant enough for customers to choose us, yet sufficiently aligned with our capabilities to sustain?”
That is the point where differentiation transforms into strategy.
Strategy is sometimes the decision not to participate.
In business, resources are always finite. It is impossible to simultaneously be the cheapest, fastest, best, and most widespread provider while serving every market segment.
Therefore, strategy is not just about choosing what to do, but also what not to do.
If a competitor holds a structural advantage in a particular arena, a business does not necessarily have to engage in that game. They can choose a different customer segment, value proposition, channel, or basis of competition.
This does not mean avoiding competition.
On the contrary, it is a way for a business to proactively choose where it wants to compete.
A business with a strategy is not one that ignores what its competitors are doing. It monitors competitors closely, but uses that information to validate strategic choices—not to dictate them.
After all, if every competitor move created a new priority, the business would be constantly busy yet struggle to maintain focus.
Don’t ask “How do we beat the competition?” too soon.
In many cases, the more important question isn’t how to defeat a rival, but rather which game the business wants to win.
If a competitor has a price advantage, you don’t necessarily need to be cheaper. If they have a scale advantage, you don’t necessarily need to scale faster. If they have a stronger brand, you don’t necessarily need to spend more money to shout louder.
A business needs to identify the intersection of customer value, company capabilities, and competitive position.
Because competitive strategy is not a contest to see who can react faster to a competitor.
It is the ability to choose a game the business is well-positioned to win—and to maintain the discipline not to be drawn out of that game.
Mind Connector | Strategy and Growth Consulting
