Who is your competition and how are you differentiated? This is a critical component of both commercialisation and fundraising, around which technology developers have significant scope to improve their current approach. Too often, companies are unwilling to tackle this topic in the depth it deserves. Whether this is due to fear, naivety, arrogance, ‘blissful ignorance’, or inexperience is not always evident. Competition is often seen as a negative. Consequently, people fail to see the learning potential that analysing the competition presents and opportunity that it provides to shape the narrative when speaking to investors and early adopters.
The result is that innovators often fall into one of two traps. The first is saying that there is no direct competition (e.g. we are the only ones), in which case they are admitting that they are addressing a non-existent problem as per pitfall 4 in Dr. Malcolm Fabiyi’s blog on why investments fail. The implication is that if no one else is solving the problem, it probably does not exist, the consequence then being that there is unlikely to be a market for your technology. This represents a failure to recognise that the presence of competition is a form of market and opportunity validation in and of itself. The second is, they create a table of attributes (or matrix) which shows how they are the only one to tick every box (with the nearest competitor rarely being allowed to tick 75% of the criteria). See an example below:
I believe, however, that there is an opportunity for the technologist to choose how the competitor narrative is framed. But in doing so, it is not credible to select clearly irrelevant or bottom-of-the-barrel examples. In his investor pitch academy presentation, Andrew Chung of 1955 Capital (and formerly of Khosla Ventures) outlines a good framework for shaping the competitor narrative and I think his point on thoughtful understanding of competition is an area for improvement for most innovators.
In analysing the competitive landscape, it is important not to ignore adjacent technologies/ companies who may, over time, represent an alternative solution to the challenge or consider entering the market. Think: what else does or could do the same job? This of course will take some research. I often sense technologists see this as a low value activity and are therefore not motivated sufficiently to put the time into researching all the direct, alternative and adjacent solutions. Which leads to more time investment in analysing their performance against key end-user defined performance criteria. Followed by, further time synthesising why their technology is not just better but has a significant moat that it will cost direct and putative competitors excessive amounts of money and time to overcome.
While doing this will be time-consuming, there are several benefits:
- The first is that, with both investors and early adopters, it will demonstrate that you truly know your market and those who purport to address the challenge (the people that you are speaking to are also likely speaking to your competition).
- Second, it will add credence to your claims of differentiation, as demonstrating this knowledge will have a self-fulfilling impact when you then say that you outperform all others for A, B, or C reasons.
- Finally, a by-product of this exercise is that it will help to define the initial applications where you have the greatest advantage or where the competition has either ignored or been unable (to-date) to service the application successfully for a given reason. This is where your opportunity to define the competitive narrative comes into play. Combining this with some market sizing and growth analysis should identify those segments of sufficient size and momentum that can act as catapults into larger segments. Competition in these may be stronger but can be tackled once you have gained enough scale and success in the initial segments.
For companies with new technologies in the AgriFood sector, it is important to recognise that, if your technology is an improvement or an alternative to an existing practice, or use of a fixed asset (such as an irrigation system or heavy equipment), these existing assets are also likely to be a competitor to adoption. It is often underestimated how hard it is to displace the status quo or change behaviour. The same will apply for Watertech.
Lastly, one lens that is often neglected when assessing the competitive landscape is the competition for a share of the customer’s wallet. Whether your solution is going to be used on a farm, in the logistics chain, processing, production or packaging settings, the users of your technology have a limited amount of capital to re-invest in their business and will undoubtedly have more than one challenge (hopefully including the one that you are addressing) that they need to resolve. You therefore need to think about how you position yourself against the multitude of other investments they could make and why they should invest in you. You need to understand who/what you are in competition with, in order to highlight and frame your competitive advantage and differentiation in the right way.
This then becomes a factor of competing financial performances of the various investment opportunities for a customer, along with the influence of additional factors such as regulatory pressure and corporate prioritisation. But again, understanding how investing in your solution compares versus other investments the end-user could undertake provides an opportunity to shape the messaging to both adopters and investors as to why your proposition is compelling and in what scenarios.