This post is part of a virtual book club series dedicated to The Lords of Strategy.

Yesterday I wrote about competition and how companies used to not benchmark themselves against their competition. Today this is common practice. I’ve never met a business that doesn’t do this to some degree.

Competition is hard but competition makes you better. While companies spend a lot fo time thinking about their competitors, most companies aren’t that scared of their known competitors. You’re known competitors can hurt you for sure but you usually know how to compete against them. It’s the indirect competitors that come in and disrupt the market that you have to be afraid of.

So how do you prepare yourself for the unknown enemy?

First off I hate hearing companies (usually startups) saying that they don’t have any competitors. What they mean is that there isn’t anyone doing exactly what they do the way they do it. At the most basic level anything your customers spend their money or time on instead of on your product is a competitor. But to be more specific let’s look at a few different areas where competition can sneak up on you from.

As a personal example the agency I work at was recently asked to answer an RFP for a large piece of social media work. We found out later (after we won the business of course) that we were up against an ad agency and a business management consultancy.

This was not the first time we had come up against an ad agency for social media work. Comms/PR and Advertising regularly compete against each other. Increasingly both have writers, editors, designers, developers and in this case we both have built large groups dedicated to measuring the effectiveness of the campaigns we put together for clients.

And while this was the first time we had come up against a business management group it was not that big of a surprise. In last years business planning, as we put together our strategy for increasing our social media and business management capabilities we identified several sectors where we knew we would run into companies we hadn’t competed against before, business management was one area as was business intelligence and research firms. And I only expect this competition to increase. Not only are all of these groups trying to grab market share in the emerging social media space many of us are using it as a chance to move into new areas. I soon expect that there will be a few agencies surprised to discover that Waggener Edstrom is now competing in their space.

So how did this happen and how can you predict your future competitors?

Core Competencies

Look for companies that have the same capabilities as you but are in different but related markets. Business management companies are used to pouring over rich data to draw strategic recommendations and benchmarking against their clients competitors. While business management consultants haven’t aggressively tackled social media yet the skill sets needed to analyze social media data and make strategic recommendations isn’t that different from what they’re used to doing.

Solving Similar Problems

Look for companies that are solving similar problems to the ones you are solving. Even if it’s for a different customer. Scratch that. Especially if it’s for a different customer and be the most afraid of those providing cheaper and worse solutions than you do.

Why have PR and advertising always been indirect competitors? Because they are both solving similar problems (and competing for the same marketing budgets). Why is Google worried about Facebook and Twitter? Because people are increasingly finding the answers they would normally do a search for through social media recommendations from their network of friends.

Serving The Same Customers

One of the easiest ways to grow your business is to find new products or services to sell in to your existing customers. You already understand your customers needs and have built up your brand and relationship with that customer. Ask yourself: Who else understands your customer? Even if they don’t have the same capabilities or are in a completely different business nothing is to stop them from acquiring that capability either through acquisitions or investing in building out the capabilities needed to sell against you.

The Unknown Blind Spot

There’s one thing you can’t predict. The unpredictable. Technology is moving at such a rapid rate that anything is possible so you always have to be on the look out. I recommend having people in your company who’s job it is to be on the lookout for future threats and opportunities.

Have regular brainstorm sessions where you try and disrupt your own business. The sky’s the limit, don’t rule anything out. It’s a fun exercise and you often discover new business opportunities you weren’t thinking about.

Photo credit by pasukaru76

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