An early-stage company wants to convince investors that its product is better than those of all its competitors — so they create a competitive analysis.This is a standard process. And Steve Blank, serial entrepreneur and author of Four Steps to the Epiphany, thinks it’s completely wrong.
In a recent blog post, Blank argues that competitive analysis most often leads to feature overload, and sometimes even startup death.
“Instead of optimising for a minimum feature set (that had been defined by customers) a competitive analysis drives a maximum feature set. This is not good,” Blank writes. “[Customers] don’t buy features, they usually buy something that solves a real or perceived need. That’s the comparison you and your investors should be looking at.”
When a startup is so focused on building a product that strives to be everything its competitors offer plus some, they can end up forgetting about what features their customers actually want.
So how can a startup make a competitive analysis that is actually useful?
If you’re entering an existing market, focus your competitive analysis on how you’re “better or faster on those metrics that customers have told you are the basis of competition.”
And if you’re entering a completely new market, your competitive analyses should “[highlight] the product features that show what customers could never do before. It compares your company to groups of products or services.”
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