Want a real advantage over industry competitors? Measure yourself against a different industry.
When Michael Corleone said, “Keep your friends close and your enemies closer” in The Godfather: Part II, marketers everywhere took it to heart.
I can’t count the number of hours I’ve spent clustered around an art director’s desk, surrounded by my agency teammates, tearing into the new creative released by my client’s number-one competitor. It’s easy to fixate on a close competitor because gaining a few percentage points in market share, getting more retweets on a social campaign, or winning more awards at a marketing competition all provide a big boost to the marketing or agency teams’ egos.
Competitor-monitoring doesn’t just happen in the marketing department, either. It can drive the procurement team to adopt a new piece of tech first, or it can spur development to rush a new product to market first.
It’s tempting to try and beat your competitor with these small jabs, but if you only try to climb one rung higher on the ladder, you’ll often miss the chance to summit a mountain.
In this final chapter, we look at how innovation can be negatively affected when you benchmark against your closest competitor. Often, you need to look beyond your competitors if you want to compete more effectively.
I have been a horseback rider for many years, and following college, I began to compete in jumping. The type of jumping I did was called “show hunters.” It’s a modern-day adaptation of foxhunting, where well-dressed riders galloped beautiful horses over the English countryside, jumping the fences they encountered along the route.
In the show ring, hunters compete over a course of eight to ten jumps, and a judge scores them on their elegance, rhythm, and style.
To learn how to compete in this sport, I worked with local coaches. They would take me through different exercises designed to improve my skills as a rider and bring out the desirable qualities of my horse. During horse show season, we would attend competitions in my hometown of Winnipeg, Manitoba. I’d ride in my classes and get feedback from my coach, and then we would stand outside the jumping ring and watch other riders compete.
There were a handful of riders who always earned the top placings in the class. I’d study their rides and use them to evaluate my own performance. Year after year, I could not beat them. I was convinced it was because their horses had better jumping style than mine did. In a judged class, style matters. Training can improve a horse’s jumping style, but it can’t change it entirely. I therefore believed that I couldn’t improve my horse enough to beat the top riders.
I didn’t realize it at the time, but the Proximity Paradox had led me to believe I could not change my outcomes.
One spring, I had the opportunity to work with a coach who had trained and ridden jumping horses in Florida — a mecca for equestrian sport. Florida was her benchmark, and it was light-years ahead of mine.
In Winnipeg, people compete for six months of the year. In Florida, they travel and compete year-round. In Winnipeg, a non-professional rider can win on a CAD$10,000 horse. But in Florida, a non-pro often needs a US$50,000 horse to win. In Winnipeg, the most prize money paid out at a single competition is CAD$150,000. In Florida, it’s US$9 million. You get the picture.
The new coach gave me exercises designed not to help me stay competitive in Winnipeg, but to not embarrass myself according to her Florida-level standards. She broke down every component of my ride, took me back to the basics, and drilled me on perfecting every step of the jumping course — regardless of whether my local competitors were focusing on the same details.
When I entered the show ring again, I had completely different results. My horse still had his flaws, but we had improved every other quality on which we could be judged. Not only did I improve my placings, but I won more prize money that year than I ever had previously (which was, like, $600 — but it felt like a lot more).
What changed? I was riding the same horse in the same city and competing against the same riders. The difference was that the new coach had helped me look beyond my closest competitors, and she benchmarked me against a completely different market. She wasn’t blinded by proximity and could see all the areas of my ride that I could improve. She gave me new sources of inspiration and a new standard to shoot for.
According to Business Insider, the most competitive jobs in the United States are creative, product, product marketing, IT, finance, procurement engineering, and technology manager.121 These jobs are high-stakes, have high salaries, and are hard to secure.
According to Forbes, the fastest-growing industries in the United States are mining support activities (those that serve oil and gas companies), heavy and civil engineering construction, beverage manufacturing (think microbreweries and taprooms), personal services, and direct-selling establishments.122 Companies in these sectors are rapidly trying to carve out market share in the race to the top.
If you’re in one of those jobs or industries, you’ll probably find yourself looking over your shoulder to see who is nipping at your heels.
In highly competitive fields and sectors, it’s tempting to focus solely on your competitors. An individual might set up a Google Alert for his competitor’s name. A large company might hire a media monitoring company to track its competitor’s popularity, influence, and public sentiments.
When the stakes are high, we tend to look over our shoulders to the next competitor in line. We adjust our performance based on theirs; we try to develop a product with a few more features, or we try to populate our resumés with a little more relevant experience.
In business, this “one-up”-driven mindset can lead to two problems:
What’s the most boring product you could buy? Some would say it’s insurance. Yet what industry wins big at commercial film festivals every year?
Differentiating your insurance company is no small feat. Every provider is selling a similar home, business, and auto product that we begrudgingly pay for once a year and then, in most cases, forget about completely for another twelve months. That’s why insurance providers try to differentiate themselves through branding and advertising. They throw big dollars at creating delightful, shareable Super Bowl and prime-time commercials. But let’s take a closer look.
If you were to put Progressive’s quirky Flo, Allstate’s grizzled Mayhem, and GEICO’s lizards and raccoons in a room together, you’d see they’re not that different. The Proximity Paradox has created a motley crew of spokespeople, all trying to one-up each other in their unexpectedness.
While the spokespeople may feel different to the marketing teams behind them, they don’t actually differentiate the insurance provider from the customer’s perspective. It’s just another wealthy corporation putting a relatable face on the front door.
It’s easy to answer the question, “How can we solve this challenge in a faster, funnier, or smarter way than our competitor?” It’s a lot harder to answer the question, “How can we solve this challenge in a way that makes our customers’ lives easier?”
Constraints make brainstorming easier, which is why the first question is easier to answer. It points you in a direction and hints at the picture of success (the solution that is faster, funnier, or smarter than the competition’s solution). The second question has no direction and no picture. It’s going to take a lot more time and effort to arrive at the aha moment.
In How to Fly a Horse, tech investor Kevin Ashton writes, “Creators spend almost all their time creating, persevering despite doubt, failure, ridicule, and rejection until they succeed in making something new and useful.” And he goes on to say, “Creating is not magic, but work.”123
Wouldn’t you prefer to invest those hours of doubt, failure, ridicule, and rejection into an idea you really care about, rather than a modification of your competitor’s idea? If you do, you must set new benchmarks and find new sources of inspiration — and the best place to look is in a completely different industry.
For example, Louis Pasteur was a chemist with average grades — not a biologist, let alone an expert in invertebrates — when he discovered the cause of silkworm disease and saved the French silk industry in 1870. The Wright brothers were bicycle makers until they built the first successful airplane. History’s most celebrated breakthroughs rarely came from someone inside the industry.
If you want to compete, take a page from the playbook of these inventors and learn to look beyond your industry competitors to find your next stroke of genius.
You can be sure that no one in the accommodation industry saw Airbnb coming. It’s a highly competitive industry where the players constantly compare themselves. But Airbnb managed to disrupt them. And the three founders of the company weren’t even working in the accommodation industry. They were all entrepreneurial in spirit, but were also looking to make ends meet at the time.
We’ve all been in that position at some stage in our lives, but the Airbnb founders thought outside the box when they were in that situation. They came up with an idea to solve a problem that travelers all over the world experience every day: how to find a cheap place to stay. They used contemporary technology to come up with a practical, forward-thinking solution that had never been tried before. It wasn’t one that traditional accommodation providers had ever considered because it largely turned their business model on its head.
The Airbnb founders’ idea has also helped people earn additional income by temporarily renting out their properties or parts of their properties. It’s a win-win-win situation for individuals looking for accommodation, individuals prepared to provide accommodation, and Airbnb.
The competitors that Airbnb disrupted are the traditional accommodation providers who now have yet another major threat to deal with, one that is completely different from any they have ever faced.
In 2007, Brian Chesky and Joe Gebbia were both twenty-seven years old and sharing an apartment in San Francisco. They had gone to college together and studied industrial design, but both harbored ambitions to be entrepreneurs. They worked for about two years after graduation before quitting their jobs to focus on their dream, even though they weren’t sure what they were going to do.
As fate would have it, the week they quit their jobs, their landlord raised their rent by twenty percent. But a major global design conference (the Connecting 2007 World Design Congress124) was coming to San Francisco the following month, and all the city’s hotels had already sold out well in advance.
Being strapped for cash, Chesky and Gebbia thought they could rent space in their apartment to a designer who needed a place to stay. An inflated airbed was the only realistic sleeping option they would be able to offer their guest.
It was a lightbulb moment for them. Other designers in San Francisco might also like to offer accommodation, too. Maybe it could be their entrepreneurial venture! Below is the transcript of the actual email Gebbia sent to Chesky the next day (complete with its minor punctuation and spelling errors).
From: Joe Gebbia
Date: September 26, 2007
To: Brian Chesky
Subject: conference
brian
i came up with a name for turning the house into a place to stay…
airbed & breakfast
ha!
airbedandbreakfast.com will be a simple 4 page site or so.
then it occurred to me that it could be a place for other designer people in san francisco to list a room (or airbed) in their own houses specifically for the conference. and if we hurry we could ping the idsa to put some of their ubiquitous Connecting ’07 ads on it…for a fee, of course.
the ideas never end.
joe125
The major initial challenge for Airbnb was a variation on the old chicken-and-egg conundrum. To get people willing to advertise their accommodation, they needed to have lots of people visiting their site to see what was available (and to also be prepared to pay for a non-traditional accommodation option). But to get a lot of eyeballs on their site, they needed to have a lot of accommodation listings available in as many areas as possible.
Raising awareness among potential hosts (the sellers of accommodation space) and potential guests (the buyers) of the Airbnb offering was crucial. They needed to establish a critical mass of both groups on their site to be viable.
Renting your home out is not a new concept. But the Airbnb founders put a new twist on an old idea. They saw the opportunity to crowdsource low-cost accommodation for short stays via the web. It relied on the power of the internet to connect strangers and create new opportunities, just like the ride-sharing service Uber successfully did around the same time.
Airbnb has become the trusted intermediary to facilitate the transaction between strangers: the buyer (the guest) and the seller (the host, as the accommodation provider). Similarly, Uber is the trusted go-between, connecting passengers and drivers in its ride-sharing service.
Airbnb further facilitates trust between strangers by allowing both guests and hosts to publicly review each other on its site. They can each provide feedback comments and star ratings on the other. This allows other guests and hosts to evaluate the likelihood that they’ll have a good experience dealing with these Airbnb users in the future. Again, Uber uses a similar ratings approach.
Both Airbnb and Uber were fringe players who managed spectacularly and unexpectedly to disrupt very established industries. They focused on solving a problem in a unique way, rather than just trying to solve it using the methods existing accommodation providers were already using. Their solutions were ones that their major established competitors simply couldn’t copy.
Gebbia and Chesky created a simple website and emailed some design blogs to promote their new accommodation service. They got three bookings for their own place for the design conference, so they had to buy two more airbeds! It wasn’t much, but it was a start and a proof of concept.
A few months later, in early 2008, Harvard graduate Nathan Blecharczyk came on board as a co-founder. He had an IT background and was crucial in setting up Airbnb’s online payment and other systems linking hosts and their guests. He also saved an enormous amount of money by renting server space as needed to host Airbnb’s website. This wasn’t a common practice at the time, but is now standard practice.
For the rest of that year, the Airbnb operation limped along, making some small progress, but nothing to get too excited about. The concept hadn’t hit the mainstream consciousness by any means. It wasn’t something the average person had ever considered doing.
The company offered three short-term rental types of accommodation:
The three entrepreneurs tried everything to promote their new business. In January 2009, they even attended the inauguration of President Barack Obama in Washington, D.C. They knew the eyes of the world would be on that historic event, and they wanted to generate some publicity for their fledgling enterprise.
Of course, they used their own service to find a place to stay, arriving a few days prior to the event. They did things like handing out flyers at DuPont Circle metro station in rush hour. The host they chose had rented out his accommodation to others as well. One person had even agreed to stay in the accommodation’s walk-in closet!
Chesky thought they could certainly generate some publicity out of that quirky arrangement. He emailed the Good Morning America TV program, and one of the producers subsequently included coverage of it in a story about the unusual accommodation options some people had chosen so that they could attend the inauguration.126
While that one-off story generated some publicity, it wasn’t the ongoing leverage that Airbnb needed. Online ad campaigns became an area of increasingly heavy focus for the company, particularly the use of Google search ads. For example, if someone searched for accommodations in a specific location, Airbnb ads would appear on the top of the search results page.
Airbnb also made extensive use of Facebook’s online profiling of its users to target its advertising, which was still a relatively new approach at the time. For example, if a Facebook user’s interest was wine, he might receive a targeted Airbnb ad encouraging him to rent a spare room to a wine lover.127
Airbnb’s highly targeted online advertising approach began to pay dividends. By February 2011, it reached its first significant milestone: one million accommodation nights booked via the site. Less than a year later, that number had quadrupled. It had well and truly reached its critical mass and it has since grown to become the biggest accommodation provider in the world. Even though it owns no hotel rooms, the company is valued at US$30 billion.128
In many ways, Airbnb has shared a similar pathway to success as Uber, which similarly hasn’t had to invest in any vehicles to shake up the personal transport industry. A focus on a different solution to their potential customers’ problems allowed both these start-ups to disrupt established players, without needing a big up-front investment in assets.
It also means that they don’t need to tie up their revenue in fixed assets, like accommodation and vehicles, as part of their ongoing operational costs, like the major established players in their industry have done and must continue to do.
And now that Uber and Airbnb are dominant players in their respective industries, neither company has the need to benchmark themselves against their traditional competitors, just like they didn’t have that need when they first disrupted them via their innovative business models.
Crushing competitors is a natural part of what drives us in business. Competitor successes directly affect our operating budgets and job security. We feel threatened when they do something different, so it’s easy to obsess over their activities. That line of thinking is destructive. It can lead us to follow the tracks created by the current market leader. The Proximity Paradox is at work when we begin to question our own actions and miss opportunities to take the business in an alternate (and potentially more lucrative) direction.
To create distance from the competition, set your sights on a new competitor — someone you admire but who operates in a completely different industry. Practice putting yourself in their business’s shoes to gain new ideas and an outsider’s perspective on your own industry.
One of the difficulties in-house marketing teams face is insular thinking. This isn’t a result of an inability to think of the big picture, but more a symptom of their proximity to the problems they are trying to solve. In our experience, those old problems are easily conquered when you invite new problem-solvers to the table.
Do you know marketing and creative professionals from a different industry? Try bringing them together to solve business challenges. Professional development organizations are great platforms to meet people and host brainstorming events, so sign up for your local chapter of International Association of Business Communicators, CreativeMornings, The Ace Class, Toastmasters, your alma mater, a or special interest group. Event coordinators for these groups are often looking for new ideas or activities to incorporate into upcoming seminars.
Running a cross-industry brainstorm is easy:
If hosting an event with a professional development organization is not an option, you can easily gather a few people together and offer to buy them coffee in exchange for an hour of brainstorm power. As the convener of a cross-industry brainstorm, you’ll get focused attention on your challenge and dozens of viable ideas. As a participant, you’ll get a break from your work routine, discover different brainstorming styles, and may even pick up on some new ideas to try in your own business.
Every industry has them: trade publications. You know the ones I’m talking about — the ones that call you every few months asking for ad sales. Love them or hate them, there are a lot of them, and they regularly publish interviews with established and emerging players in the industries they represent.
There is a good chance you’ve taken a look at what is happening in your industry mags (or, at the very least, you’ve told your boss that you have done so). But what about looking at another industry’s trade pubs? Read the articles and see how these businesses, which have no relation to yours, are innovating:
There are not always going to be direct transfers, and sometimes you’ll have to stretch your imagination, but we promise that you will take away new ideas that you can apply to your business. At the very least, exploring a completely unrelated industry will make you look at your own through a different lens.
In our own company, we regularly publish “Meet the Marketer” and “Creative Crush” blog posts. We reach out to people we admire, set up an interview and ask them five simple questions. It gives us a chance to network with marketing and creative professionals, and it always inspires some fresh ideas that we can apply to our own business. If you’re feeling stuck on a project or at work, try this for yourself.
Hit LinkedIn and search for a marketing professional who works for a company in a completely different industry from your own. If she lives in your hometown, treat her to coffee or lunch. If meeting in person isn’t an option, connect for a phone or Skype call. Interview her for a blog post you’re going to write that’s called, “What I learned about marketing from the X industry” (or something sexier).
Use our list of questions to inspire your own:
Write your blog in a traditional interview format. At the end of the article, include a section of takeaways or learnings. Recap the comments that resonated with you and list a few techniques that you believe you could implement in your own business.
Interviewing marketers regularly is like tapping into a well of fresh thinking that never runs dry. It will energize you and help you examine your company, department, or products with new eyes. You’ll discover strategies that have been proven in other industries, and you’ll gain the confidence to implement them in your own company. You won’t even notice you’re crushing the competition next door because you’ll be too busy measuring yourself against the marketers and industries you admire.