Competitive Paralysis

This article originally appeared on The DIV-Net

August 4th, 1954 two world record holding sprinters Bannister and Landry squared off in a one mile race at Commonwealth Stadium. The two men had a close race with Landry leading coming into the final few lengths. Knowing that Bannister was sure to be close, Landry looked over his inside shoulder to check his position. Bannister, following closely behind, saw the move and used Landry’s shoulder check as an opportunity to pass on the outside and ultimately win the race.

In reading some recent business releases from market leaders I was surprised to see how much time is dedicated to talking about strategies for dealing with smaller competitors. Essentially, doing this very same type of shoulder check.
Ignorance of your competition is most certainly a mistake; a company can often learn to improve itself by looking at what others in the same market are doing. Trying to run a race forward by constantly looking back is though a guaranteed formula for failure. A company who follows this course of action will end up, at best, only as good as its weaker competition.

Visionary companies focus primarily on beating themselves. Success and beating competitors comes to the visionary companies not so much as the end goal, but as the residual result of relentlessly asking the question- How can we improve ourselves to do better tomorrow than we did today.
P. 10 Built to Last- Successful Habits of Visionary Companies

Thoughts on Reading Financial Statements

When you read company financial statements you should think about this:

1. Does this market leading company understand how it got in front and what it needs to do to stay in front?
   
2. Are they trying to beat their previous performance or are they simply trying to do the minimum required to lead.
   
3. Are they on the offense: trying to grow customer bases, develop new products, reach new markets, and improve on current products. Or, are they purely on defense trying to fend off a competitor and are therefore letting this competitor set the tempo.

Leading companies don’t stare at their competition; they stay appraised of their condition but ultimately they run their own race as hard and as fast as they can regardless of what the competition may be doing.