run-competitive-analysis

Run Competitive Analysis

Systematically map the competitive landscape to identify where your product can win and where it cannot.

Why This Is Best Practice

Adopted by: McKinsey, BCG, HBS MBA curriculum, Google strategy teams Impact: Porter's Five Forces framework is cited in over 7,000 academic strategy studies and underpins competitive strategy at Fortune 500 planning cycles

Structured competitive analysis prevents both overconfidence (ignoring real threats) and underconfidence (competing on dimensions customers don't value). Jobs-to-be-Done extends it by revealing who you truly compete with — often different from who you think.

Steps

1. Define the competitive scope — Specify what job the customer is hiring a solution to do (JTBD). List direct competitors (same category), indirect competitors (different category, same job), and the status quo (doing nothing).
2. Apply Porter's Five Forces — Rate each force (threat of new entrants, supplier power, buyer power, substitutes, rivalry) as low/medium/high with one supporting data point each.
3. Build the comparison matrix — List competitors as columns. Rows = dimensions customers use to decide (price, performance, support, integrations). Score each on a 1–5 scale with evidence.
4. Identify strategic groups — Cluster competitors by similar strategies (e.g., enterprise vs. SMB, full-suite vs. point solution). Spot gaps between groups where no one competes.
5. Assess competitor trajectories — Review recent funding, hiring (LinkedIn), product releases, and pricing changes. Infer where each competitor is heading in 12–18 months.
6. Pinpoint your winning condition — Choose one or two dimensions where you can genuinely be best-in-class. Avoid competing on every dimension.
7. Validate with customer interviews — Ask 5–10 customers: "What did you consider before choosing us? What would make you switch?" Use verbatim quotes to sanity-check the matrix.

Rules

• Include the status quo ("do nothing" or "build in-house") as a competitor row.
• Every score in the matrix needs a cited source or customer quote — no opinions.
• Reassess the full analysis at least once per quarter in fast-moving markets.
• Separate features from outcomes when filling the matrix; customers buy outcomes.
• Do not share the raw matrix externally; it contains strategic assumptions.

Examples

When Notion entered the note-taking market, the JTBD lens revealed their real competition was Confluence (team wikis) + Google Docs (documents), not just Evernote. This insight drove their "all-in-one workspace" positioning rather than a pure note-taking angle.

Common Mistakes

• Only analyzing direct competitors — Ignores substitutes and the status quo, which are often the biggest competitive threats.
• Matrix without evidence — Scores based on internal opinion, not customer data, produce false confidence.
• Static analysis — A six-month-old competitive matrix is misleading in markets where competitors ship weekly.

When NOT to Use

• Do not use this framework when the product is in pure discovery mode with no validated problem — competitive analysis before problem-market fit anchors design to incumbents and blinds you to novel solutions.
• Do not run a competitive analysis as a substitute for talking to customers; matrix scores derived entirely from marketing pages and analyst reports reflect competitor messaging, not actual customer experience.
• Do not apply Porter's Five Forces to an internal tooling or platform decision where there is no external market — the framework assumes market competition and produces misleading outputs when applied to build-vs-buy or internal prioritization questions.