Outcome-based Competitive Analysis
Lessons From Learnings
I just saw Superpumped: The Battle For Uber on Showmax. One remarkable scene in the series was in the last 2 minutes of episode 2. Travis, the CEO of Uber was about to get into an Uber when he noticed a woman ordering a Lyft.
Travis immediately walked over & asked her:
“Hi ma’am, what made you choose Lyft over Uber?”
She replied not knowing he was Uber’s CEO:
It’s so much cheaper and the drivers are super friendly.
Travis did not stop with the rider, he quickly glanced over to the driver and said:
Hey buddy, I was thinking of becoming a driver, what do I need to know?
The Lyft driver, a very nice man who didn’t know who Travis was handed him a Lyft flier and said:
“Hey man, we make more money and we receive tips, that is something I never got driving for Uber.”
That scene immediately got me thinking about the Jobs-To-Be-Done Framework or theory which posits that products are hired to deliver an outcome or job.
From the scene I just described, you can pick out the functional(cheaper rides) and emotional jobs(comfortable & friendly rides) Lyft was delivering for the same kind of riders Uber supposedly had. For the driver, you can also pick out the functional job(tips).
That scene covered what competitive analysis should be about. How do other products serve the target customers better and why do customers stick to these guys?
Uber positioned itself to be better than cabs and Lyft positioned itself to make any car look like a cab. Both of them had different strategies but they did the same job for riders and drivers.
But, Lyft was winning because they expanded the market to include soccer moms and taxi drivers. If Uber did not make a shift, they would have lost out to Lyft because their own drivers were buying normal cars to get on Lyft instead of maintaining the black executive cars Uber had built its strategy on.
Competitive analysis is a powerful tool for product teams to spot unmet needs or unfulfilled gaps that exist in a market or industry.
Competition & The Jobs To Be Done Framework:
All products are hired to perform a job for the user/customer. If you Google competitive analysis, the results you get out are more concerned with evaluating features, competitor tactics, pricing, or investment raised by the competitor.
All these things do not primarily inform why the customer stays with them, it doesn’t speak to the customer sentiment about these products. I can bet that no user cares about the money raised by a company, it might shape the perception the customer has when they are acquired but it won’t make them stay.
You should be primarily focused on the jobs that your customers want to get done and go on to study how well your competitors carry out the same job. Doing this will help you figure out where they are doing a great job and where they are not.
Outcome-Based Competitive Analysis
Outcome-based competitive analysis is about evaluating how well other products are meeting the outcomes for your target customer.
Once you begin to see competitors from the perspective of the customer’s outcome, you begin to see competition differently. In fact, there will be different tiers of competition.
Let’s use Uber as a case study and focus on the outcomes that matter to Uber riders. Every Uber rider wants to be able to search for a ride to their destination no matter where they are.
Competition can be broken down into the following tiers:
Direct Competition: The products that solve for the same outcome in the same way you do. For example, Uber and Lyft were direct competitors helping people hire drivers from their phones. Lyft solved the problem better because they were cheaper and the rides were friendly.
Indirect Competition: The products that solve for the same outcome in a different way or in a different industry. For example, Calling or whistling out to a taxi is an alternative to ordering a ride. Some people call people who own cars to drive them for a fee.
Alternatives: These are unrelated solutions that do not exist in your industry but solve the problem and have the potential to reduce your customer base. Most times, it might be a process or ritual that the target customer is used to. For example; Uber riders taking the train, Uber riders deciding to buy their own car or deciding to buy a bicycle or even deciding to walk.
Every single competitor mentioned there is focused on helping Uber riders achieve their goal of getting to their destination, your analysis should be to uncover ways in which you can beat all of them by evaluating how well they currently solve those problems and taking advantage of the gaps that you uncover from the analysis.
How Do You Do Outcome-Based Competitive Analysis?
I haven’t done this a lot but the basics are not hard to grab. Here’s a list:
Identify The Outcomes That Matter & Who They Matter To:
This is a classic case of you needing to know who the customer/user is and you need to understand the outcomes that matter to them. Once you are clear on their problems and outcomes and the motivations behind why these outcomes matter to them, you can move on to identify key players.
Set Goals:
There’s a reason why you feel the need to conduct competitive analysis. At the start, set your goals. This gives you and your team clarity around the essence of the analysis.
Identify The Players & Processes That Meet These Outcomes:
You need to do deep customer-informed research on the product and processes that solve the problems they will hire your products for. Pick out 5 players that are direct, indirect and alternative competitors.
List Out The Key Capabilities That Meet Outcomes:
This could be a product feature or a process by which your target customer achieves their goals. For example, driver search & pairing on Uber is less efficient than shouting at a cab that is a few inches away from you. The wait time for the latter is less.
Evaluate How Well Each Capability Meets The Outcomes:
At this point, you need to find a methodology that keeps things objective. Evaluation can be you saying yes or no to a capability and rounding it off to yes being 1 and no being 0.
Alternatively, you can take a qualitative approach and place these capabilities in front of actual users and ask them what they think about it.
Align & Act On Your Assessment:
The whole point of a competitive analysis is to discover a way you can get the job done better than whoever is in the market. Once you discover how to do that, you need to align the team on your findings and create a strategy around how you want to get this done.
When To Do Competitive Analysis?
Competitive analysis can be done at any point in time, it’s a tool that should be used to uncover uncertainty around how to improve your product and spot areas where your product will win. You can apply it in the following ways:
Understand How To Shape Capabilities To Meet Outcomes During Early Stages:
When you are building a new product and you want to stand out, you can use competitive analysis to spot areas where existing players aren’t doing a great job and build your product’s capabilities around that.
For example, you may be working in an industry where players make users go through a course or learning curve before delivering value. You can decide to build something simpler where users can learn as they use the product. Canva built its entire product ecosystem around this.
Understand How To Remain Relevant During Growth:
Imagine if Uber were not a user-focused company, they would have stayed committed to their strategy and not the customer’s needs. Lyft might have bought out Uber because they would have outgrown them. Spotting the gaps that exist in your product can drive even more growth and slow the time to stagnation.
Mini Case Study: Spotting Gaps In The Savings Sector
To make this work, we would be working with assumptions that we spoke to people who fall into a hypothetical segment about their savings.
The users have mentioned the following as ways in which they save.
Cowrywise
Piggyvest
Bank savings account
Esusu
Kolobox
Saving with cooperatives
To go further, we need to ask all out users about the specific jobs they want to be done with each of these products, and let’s say they give us the following reasons:
Save consistently
Cut my savings automatically from my income so I don’t have to be disciplined.
Ensure I don’t have access to my savings.
Ensure my savings are secure and accessible when I need them.
Over 20% - 30% interest on savings.
To move further on these themes, I would have to do more research to find out what more these guys have to offer and why customers stick to them. Spotting each issue as a theme will show me where I can compete.
Now, let’s assume I want to build a savings product that is tech-enabled, which means they offer the same outcome of savings with a mobile device or computer.
Cowrywise
Piggyvest
Bank Savings
The next thing would be to spot the indirect competition and alternatives, let’s group them together:
Esusu or Ajo
Piggybank
Saving under a co-operative.
So, how do we analyze?
We plot a table for each of these companies, ranking how well they meet the specific accounts with comments on each section. Please note that your actual customers or customer review should inform your analysis. To make the analysis objective, you can rank based on a review or simply check if things exist by using a checklist but what’s most important is that you add comments after analyzing each outcome.
What you want to know is, what outcome is being met and how well it is being met. Then you need to figure out how your product can win even if it exists in a bloated market.
Get the template to work with here.
So, do we dismiss market-based competitive analysis?
No, you don’t but the valuation or pricing of a company should not bother you unless the outcome of your analysis is to come up with the value of your product based on what exists in the market.
Market research is useful for getting a nice macro view of how players are performing in the market but you should be more concerned with how micro players (actual users and customers) feel about your competitors and alternatives.
I would love to hear what you think about my premise, please share and engage.
Related Materials:
https://strategyn.com/outcome-driven-innovation-process/competitive-analysis/
https://strategyn.com/outcome-driven-innovation-process/
https://www.toptal.com/designers/ux/jobs-to-be-done-framework
https://medium.com/lean-startup-circle/competitive-analysis-using-jobs-to-be-done-aa2687379649