Business Strategy Blind Spots: Why Your Biggest Competitor Doesn’t Look Like One
When evaluating market competition, most business owners focus exclusively on direct rivals, companies selling the same product to the same customer base.
While monitoring direct competitors is necessary for day-to-day operations, it isn’t enough for long-term survival.
To build a resilient business, strategic planning must account for tangential disruption: indirect shifts in technology, consumer habits, and adjacent markets that quietly erode your market share.
Direct vs. Tangential Disruption: Lessons from Kodak, Blockbuster, and Colgate
When leaders talk about market disruption, they usually point to famous corporate collapses:
- Kodak: How digital camera technology destroyed the traditional film business.
- Blockbuster: How video streaming platforms eliminated the physical video rental store.
However, the story of Colgate provides a much better strategic framework for managing indirect competitive threats.
The Hidden Impact of the Electric Toothbrush
Colgate’s core revenue comes from toothpaste. When electric toothbrushes entered the market, they weren’t viewed as a direct competitor to toothpaste, after all, consumers still needed toothpaste to brush their teeth.
However, electric toothbrushes caused a subtle shift in consumer behavior:
- Reduced Product Usage: The smaller brush head on an electric toothbrush holds significantly less paste than a manual toothbrush. Back-of-the-envelope analysis suggests toothpaste usage dropped by as much as 20% per brushing for electric toothbrush adopters.
- Revenue Risk: Colgate could continue beating all its direct toothpaste competitors while still watching total market demand and revenue fall.
Rather than ignoring the shift, Colgate jumped heavily into the electric toothbrush market, protecting its core business by adapting to how customer habits were changing.
4 Strategic Questions to Uncover Your Market Blind Spots
Effective strategic planning isn’t about predicting the future; it’s about asking better questions about your market environment.
To identify unseen threats before they impact your cash flow and bottom line, ask your leadership team these four strategic questions:
- Product Usage: What subtle shifts could change how much or how often customers use our product or service?
- Technology Risks: What emerging technology could make our core offering less important or redundant?
- Economic Shifts: What macro changes could fundamentally alter the unit economics of our industry?
- Alternative Solutions: Who is solving our customer’s primary problem in a completely different, non-traditional way?
Summary: Watching What Happens Around Your Customer
Your biggest competitor might not be the company offering the exact same product as you. Often, it’s the indirect force changing what your customer needs in the first place.
That’s why good strategic planning isn’t just about watching your competitors.
It’s about watching what is happening around your customers.
📌Frequently Asked Questions:
Q: What is the difference between direct and tangential competition?
Direct competition consists of businesses offering the exact same product or service to the same target audience. Tangential competition (or indirect competition) comes from alternative products, changing consumer habits, or new technologies that solve the same underlying customer problem in a completely different way or reduce overall demand for your industry.
Q: Why did Colgate's toothpaste usage drop with electric toothbrushes?
Because the head of an electric toothbrush is smaller than a traditional manual toothbrush, consumers naturally apply less toothpaste per brush. Back-of-the-envelope estimates show this subtle shift in user behavior reduced toothpaste usage by up to 20% per session, creating a hidden revenue risk for toothpaste manufacturers.
Q: How do small businesses spot market blind spots before it’s too late?
Business leaders can identify blind spots by routinely analyzing shifts happening around their customers rather than solely tracking direct rivals. Key indicators include changing buyer habits, emerging technology that simplifies a manual process, economic shifts altering unit margins, and alternative non-traditional solutions entering the market.
Wayne Wanders is an experienced Business Advisor and Outsourced CFO who can help to scale and grow your business profitably.
Contact Wayne on wayne@arealcfo.com.au or 0412 227 052.
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