The business environment is always challenging. Aside from various crises and macroeconomic shocks, competitors are vying for your customers. Yes, sometimes you can contract customers over a number of years but not all industries are so lucky. Political change may affect investment and taxes. Economic change may increase your cost of borrowing. Social change may force you to become more diverse, pushing for equality and equity. Technological change is a given but some products and services are moving faster than others and disruption is a real risk. Legal changes could also mean further regulation and red tape. Finally, environmental changes could force you to be sustainable and change your supply chain. So, read on as we explain how business research gives leaders a wider lens on competitive advantage.
Competitive advantage
Competitive advantage is when a business is able to outperform its competitors. Sources of competitive advantage include differentiation, cost leadership, willingness to pay and human capital. The enablers may be due to your innovation, size and efficiency of supply chain, successful marketing strategies and attracting the best talent. The outcomes may be products or services that are hard to replicate, a low cost base creating more profit, demand from customers increasing with prices and innovations that come from creative minds. The result is increased revenue and profits with higher market share, as long as you can find and establish competitive advantage(s).
Alternate sources of competitive advantage are size, when there is a monopoly, duopoly or oligopoly; High barriers to entry; Control of scarce resources or infrastructure; Brand loyalty; Elasticity of demand. These structural sources of market power are hard to overcome – which is how transformative businesses (doing different things to different markets) and disruptors (innovating a completely new industry or the way an industry operates) make return on investment. Some long-standing businesses also successfully leverage their history for advantage.
Business research an enabler
Some industries see themselves as stable or static. The industry may not be growing and market share is significantly unchanged. Product innovation may be low and the products themselves become commoditised (according to our perception). There are few large players and a relatively known playing field on which to operate and compete against. Anyone in such an industry will find it difficult to create rapid growth if things remain the same. You may think this is unusual, but it is not. Not everyone can afford to start a business, buy a building, create the systems, hire the people, purchase the equipment and sell to a mature market. The existing players possess the infrastructure, knowledgeable people, systems, products, brands and processes that shaped their market. So, what is the answer?
Business research is an enabler of competitive advantage. Whether the research focuses on the market, customers or competitors, leaders gain a broader view. Specifically, this is a broader view of market trends, customer needs and competitor innovations. This may be via industry research, market sizing, customer surveys, competitor intelligence or adjacent industry research to find opportunities. Armed with insights into where the ‘gaps’ are in the market, where competitors are weak and what customers need from us, businesses make decisions. Those decisions and actions are aimed at achieving or increasing competitive advantage. Occasionally, the objective is to become a supplier to your competitors where you have an infrastructure to sell (such as Ocado’s robotic warehouse).
A broader view of competitive strategy
Business research is important because it enables a broad view (also known as the outside or external view) of your market. Many businesses suffer from the narrow view and familiarity bias, limited to what we know and the facts in front of us. Ultimately, this leads to apathy towards competitive advantage and market position, allowing hungrier competitors to eat your lunch. For example, why is everyone raving about ChatGPT? It is because companies with an external view are looking for first-mover advantage in a particular area – to gain competitive advantage.
The common-held wisdom is that organisations possess the best human capital when they fill their ranks with experienced industry stalwarts. Perhaps they should look at Steve Ballmer, former CEO of Microsoft, who missed the boat on mobile, or John Sculley, who was poached by Apple and ended up ousting Steve Jobs. Sometimes, your experienced industry professionals suffer from confirmation bias and/or specialist bias, seeking only information that supports their entrenched beliefs or recommending solutions that they know how to do. With these things in mind, the old Steve jobs quote would now seem apt, that “It doesn’t make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do.”
Business research for competitive advantage
It goes without saying that your competitors are not going to show you how to beat them. The trouble is, our own people may not know how to beat them either. Business research can help you to identify gaps in your competitors’ approach, products, services or pricing. It also helps you to identify customer needs so that you can better tailor your solutions to satisfy them. So, if your competitors won’t allow you to shoot at an open goal, industry and competitor research might help. Additionally, if your people don’t know how to beat the competition, maybe your customers or external business experts might.
In some cases, businesses are ‘flying blind’ with little research or insight into what is happening in the business or outside of it. Others suffer from data overload with an overwhelming volume of data to mine, interrogate and analyse for insight. Too little data and too much data are common business problems but both are solvable. There are also a plethora of providers waiting to assist you with industry research and market data – though this is sometimes repackaged from other clients and is not bespoke to your needs. After all, a piece of industry research benefits everyone in the industry and so some research houses will try to sell it to all of your competitors as well.
Research that goes beyond
Think Beyond offers a range of research services and bespoke offerings that we tailor to the individual needs of our clients. If you need research on a specific market, we will research it. If you need answers from your customers, we will design it, collect it and analyse it for you. We will also size your market how you need it, based on your ideal customer profile, providing you with insight and recommendations. Finally, we offer neuroscience research services to optimise your brand, campaigns, packaging, customer experience and employee experience.
Intrigued? Why not send us an email stating your needs or request a quick call back online?
Alternatively, send us a message through LinkedIn if you have a question.
Finally, why not read our 5 top tips to support you with business decision-making.