Competitors can damage your margins, poach your best people, outspend you, undercut your prices and introduce technology that makes your current offer irrelevant. Worrying about them, however, is not a strategy.
The better response is to build a competitive moat before you desperately need one. That means creating distinctive value, stronger client relationships, better delivery systems and advantages that rivals cannot easily or cheaply reproduce.
How Much Attention Should We Pay to Our Competitors?
Leaders should understand their competitors clearly, but they should not allow competitors to dictate every business decision. The objective is informed awareness rather than corporate paranoia.
The intensity of competition depends on the market. In a commodity sector, price and supply capacity may determine almost everything. In a narrow market with only a few suppliers, gaining market share may be extremely difficult. Currency movements, technological disruption, regulatory changes, capital availability and the loss of key employees can also alter the competitive balance overnight.
A rival with hundreds of salespeople may reach far more potential buyers than your team of twenty. A heavily funded newcomer may willingly destroy industry pricing to purchase market share. These threats are real, but constantly reacting to them can pull your organisation away from its own strategy.
Do now: Identify the three competitor actions that could most seriously affect your revenue, margins or client retention.
Why Is Competing on Price So Dangerous?
Price competition is dangerous because a rival with deeper pockets can sustain losses for longer than you can. Once buyers become accustomed to discounted pricing, restoring the previous market rate can be painfully difficult.
Many companies spend years building their prices to a sustainable level. Then a new entrant arrives and offers a similar product for substantially less. The newcomer may not need to make an immediate profit. It may be funded by a parent company, private equity, venture capital or profits from another division.
This creates a zero-sum battle of winners and losers. Smaller firms often cannot match the discount without destroying their own margins. The answer is not always to become cheaper. It is to make direct price comparison harder by changing the value equation.
Instead of allowing an apple-to-apple comparison, create a musk-melon-to-apple comparison. In Japan, premium musk melons command extraordinary prices because buyers perceive them as a completely different category of value.
Do now: List the services, expertise, guarantees or outcomes that could move your offer beyond a direct price comparison.
What Is a Competitive Moat in Business?
A competitive moat is an advantage that protects your clients, revenue and market position from attack by rivals.Strong moats are valuable to buyers and difficult, expensive or time-consuming for competitors to copy.
A moat might consist of proprietary technology, trusted relationships, specialist expertise, exclusive distribution, superior service, faster delivery, a powerful brand or a deeply embedded client ecosystem. In business-to-business markets, the moat may be the accumulated trust created through years of reliable execution.
The irony is that companies usually need to build these defences while business is going well. Unfortunately, good times create complacency. Leaders are busy serving current demand, employees are fully occupied and there appears to be no urgent reason to invest in protection.
That is precisely when the work should begin. Once the crisis arrives, the organisation may lack the time, cash or management attention required to respond properly.
Do now: Ask what clients would genuinely miss if your company disappeared tomorrow. Their answers reveal the foundations of your moat.
Why Do Companies Wait Until a Crisis to Innovate?
Companies delay innovation because the cost and inconvenience are immediate, while the danger of doing nothing appears distant. A crisis suddenly reverses that calculation.
Our experience at Dale Carnegie Tokyo Training illustrates the problem. Business was surging during 2018 and 2019. Revenue was strong, demand was high and the organisation was occupied with delivering training. Everything looked pretty peachy.
Then Japan confirmed its first COVID-19 case in January 2020. Clients began cancelling scheduled programmes, and the outlook changed dramatically. We had no sufficiently developed moat against the disappearance of face-to-face delivery.
Dale Carnegie had conducted virtual training internationally since 2010, but introducing it properly in Japan required curriculum translation, instructor development, producer training and financial investment. Before the pandemic, those barriers encouraged us to dawdle. Once survival was at stake, we found the money, time and determination remarkably quickly.
In retrospect, the capability should have been built before the crisis.
Do now: Identify one strategic capability your organisation keeps postponing because there is no immediate urgency.
How Can a Business Create Value Competitors Cannot Copy?
Distinctive value comes from solving client problems more completely, conveniently or reliably than the alternatives. The strongest advantages often combine several modest benefits into one difficult-to-replicate system.
Leaders frequently believe they already provide sufficient value. The more useful question is: what additional impact could we create for the buyer?
A manufacturer might attach consulting, installation, training or maintenance services to a physical product. A professional services company might add diagnostics, benchmarking, follow-up coaching, digital resources or implementation support. A software provider might reduce risk through stronger onboarding, integration assistance and user education.
Some additions will cost money without producing an immediate, separate fee. That does not automatically make them a bad investment. Real moats are expensive. If an advantage is cheap and simple to introduce, competitors will reproduce it quickly.
The goal is to provide musk-melon value at an apple price—or at a price only slightly above the apple.
Do now: Brainstorm ten ways to save clients time, reduce their costs, lower their risk or improve the quality of their results.
Should We Build a Competitive Moat When Business Is Strong?
The best time to build a competitive moat is when revenue is healthy, clients are buying and the company still has strategic choices. Waiting until sales collapse removes many of those choices.
Good times always feel as though they will continue. They do not. Economic downturns, geopolitical shocks, technological change, new regulations, shifts in buyer behaviour and unexpected competitors can all expose weaknesses that were invisible during periods of growth.
This does not mean leaders should become pessimistic or divert unlimited resources into defensive projects. It means allocating regular time and budget to resilience, differentiation and innovation.
Executives should examine which revenue streams depend on one client, one delivery method, one salesperson, one supplier or one technology platform. They should also test whether their supposed advantages are truly valuable to clients or merely internal beliefs.
Moat building should become part of normal strategy, not an emergency activity launched after the castle is already under attack.
Do now: Review your strategic plan and assign an owner, budget and deadline to one moat-building initiative.
What Should Leaders Do About Competitors Now?
Competitors deserve attention, but obsessing over them will not protect your business. The strongest defence is to become more valuable, more distinctive and more difficult to replace.
Study the market, understand emerging threats and watch for changes in price, technology, regulation, talent and client expectations. Then turn the attention back to your own organisation.
Ask what you can provide that buyers value and competitors struggle to reproduce. Look for ways to combine products with services, expertise with technology and quality with greater speed or convenience.
Most importantly, do not wait for the next crisis. Build the moat while the business is healthy, because the moment when you urgently need protection is usually the worst possible moment to begin constructing it.
Author Bio
Dr. Greg Story, Ph.D. in Japanese Decision-Making, is President of Dale Carnegie Tokyo Training and an Adjunct Professor at Griffith University. He is a two-time winner of the Dale Carnegie "One Carnegie Award" in 2018 and 2021 and received the Griffith University Business School Outstanding Alumnus Award in 2012. As a Dale Carnegie Master Trainer, Greg is certified to deliver leadership, communication, sales and presentation programmes globally, including Leadership Training for Results.
He has written several books, including the best-sellers Japan Business Mastery, Japan Sales Mastery and Japan Presentations Mastery, along with Japan Leadership Mastery and How to Stop Wasting Money on Training. His Japanese-language works include Za Eigyō（ザ営業）, Purezen no Tatsujin（プレゼンの達人）, Torēningu de Okane o Muda ni Suru no wa Yamemashō（トレーニングでお金を無駄にするのはやめましょう）and Gendaiban "Hito o Ugokasu" Rīdā（現代版「人を動かす」リーダー）.
Greg also publishes daily business insights on LinkedIn, Facebook and X and hosts six weekly podcasts. On YouTube, he produces The Cutting Edge Japan Business Show, Japan Business Mastery and Japan's Top Business Interviews for executives and professionals seeking practical strategies for succeeding in Japan.
