A holistic analysis of competition using Business Model Canvas and Jobs to be Done
When was the last time you did a competitive analysis?
Did you just tick of boxes or were you able to provide deep insights about your competitors?
Did the insights enable you to inform your strategy and thoughts on how to differentiate and succeed?
Most of the times a competitive analysis starts and ends with a run through of the competitors’ website and analyzing their social media presence. Even if someone goes a little deeper it is not holistic and does not cover every aspect that needs to be analysed for a good mapping of the competition.
What is a Competitive Analysis?
Competitive analysis helps you identify major competitors and research their products, sales, and marketing strategies and then draw your strategies for your business, products or services. It helps you come up with a strategy to make your business models, products or services more defensible.
Competitive analysis can help frame your own business/ product context and discover other problems your customers have. Done the right way, it will help you move past competitive advantages to true defensibility.
Competitive analysis is not about understanding what features your customers offer or how they are marketing their products and copying those. For all you know, many of them might not be actually working for them.
There are many ways to do a competitive analysis. People have been using different tools, frameworks and methods to do competitive analysis. From SWOT analysis to Five Forces Model there are enough and more tools that can be used for competitive analysis. These tools, while they give you a structure and areas based on which you can analyse competition, but do not give you the insights to define your strategy. It is what you synthesize from these tools and insights that you extract from them, that will help in your strategy.
Most of the tools that have been used for long do not provide a holistic understanding of your competitors business. The tools are oversimplified and do not capture the complexities.
Another aspect of most of the competitor analysis tools is that they do not help you in understanding competition from a customer’s perspective. The customers perspective of competition will give you a true understanding of the competition.
It is very important for any business to understand the right competition (Competition might not be just businesses that are offering products/ services similar to you to solve a similar problem). Once the right set of competitors have been identified getting a complete understanding of their business, what problems they choose to solve, for which customer segment, the value they offer, how do they reach them, their revenue and pricing model etc… is important.
The Business Model Canvas and Jobs to be Done Theory can help plug both these gaps and give a very holistic understanding of the right competition and their business.
Business Model Canvas (BMC) and Jobs to be Done (JBTD)
Business Model Canvas: A business model is the core logic for how a firm is designed to create and capture value for a target market. It expresses the core business logic of how a firm needs to be organized, the revenue model that will enable it to make money, the channels and communications will be used to market its products or services.
Understanding (customer and problem statement), Creating (solution — product/ service), Capturing (how much are customers are willing to pay), communicating (value communication) and delivering (delivering value through product and service) is a core aspect of any business model.
Business model generation is a competitive necessity today.
“If you look at how markets and companies have changed over the last two decades you realise that it isn’t the technology that disrupted the markets, it was the business models that new technologies created that caused the disruption — Gary Fox”
Business models enable companies to create a competitive advantage, generate better returns and improve identification and development of innovative opportunities.
Jobs To Be Done: As Theodore Levitt said, “people do not want a quarter-inch drill, they want a quarter inch hole.” While people might buy a product/ service to get jobs done; the product/ services will come and go the job to be done does not go. The jobs to be done theory has been built on this basic premise.
The Jobs To Be Done theory states that markets grow, evolve, and renew whenever customers have a Job to be Done, and then buy a product to complete it.
“A Job to be Done is the process a consumer goes through whenever she aims to change her existing life-situation into a preferred one but cannot because there are constraints that stop them — Alan Klement”.
A business can be designed for a Job To Be Done, rather around a product that is certain to become obsolete over a period. This way the company will always be focused on creating the solutions that will get the job done best. This will result in longevity, as the company will be more likely to disrupt itself.
Competitor Analysis using JBTD and BMC
Measuring competition only among products/ services of the same type does not give the right picture. They can come from anywhere. You might be a leader in your market, or you might have a monopoly in the market, but some competitor with an alternative/substitute product unknown to you could be taking away your customers.
The Jobs To Be Done model helps you define a market based on the job that has to be done. When applying Jobs To Be Done theory, a market is defined as a job executor and the job that executor is trying to get done. This helps you look at all the different solutions that the job executor is using to get that job done. This need not be only products similar to the one that is offered by you.
For Example: If the job is defined as relaxing after a day of work, a video streaming provider will compete not only with other streaming solutions, but he will also be competing with listening to music, going for dinner to a restaurant etc…
You can list all the jobs that your product/ service is addressing and map the competitors for each of those from Jobs To Be Done perspective. Once you map the competitors you can delve deeper to understand each of their businesses to aid your strategy.
The competitors’ businesses can be understood in a holistic manner using the business model canvas. It helps you to focus on what’s important. It fits together all the key elements of a business. It quickly clarifies and demonstrates whether the pieces fit together.
Similar to how, you build a canvas for your own business, you can build the same for each of your competitors’ businesses. You can build the canvas for your competitors by talking to customers, your prospects, using the competitors’ solutions, understanding their strategies, marketing and branding activities.
Once you have drawn the canvases for all the competitors that you have listed, you can do a comparison of them against your model and also look how they play out against your internal activities and against the market forces.
This approach of identifying your competition and doing a deep dive of their business models using the Jobs To Be Done and Business Model Canvas should help in identifying the right competition and understanding their businesses more completely. It should provide a lot better insights for you to formulate your strategy and more effective than to a comparative list of features offered by your competitors.
