Wait! Before you answer . . .

Think quickly now: Whos your biggest competitor?

Most people answer with the name of one of their market rivals. A few take the next step and try to anticipate which of their current rivals -- though small today -- might be their major competitor tomorrow. But while either answer is technically correct in the short term, in the long run your laser focus on a firm or firms that sell products just like yours could become a blind spot. Your real competitor may be a force or forces beyond the scope of market-limited thinking.

I got thinking about the nature of competition and the real identity of our competitors after lunch with a friend who works at a greeting-card company. Over a glass of wine, we talked about the Internet and how it might affect our respective industries. When I asked whether he viewed digital communication as a threat to his companys printed products, he replied with the answer that the CEO of his company always gives to questions about competition. According to this CEO, his companys greatest competitive nemesis is neither the industrys market-share leader nor the Internet. His biggest competitor, he says, is forgetfulness.

How so?

Purchases of greeting cards (or social-expression products, in M.B.A.-speak), my friend explained, are driven largely by guilt and obligation; i.e., if I send you a card on your birthday, you then feel obliged to send one in return. This means that every card that any firm in the industry can convince me (or you) to send in turn expands the market by creating another social obligation. On the other hand, every time you or I forget to send a card, the market contracts by not one but two sales. So the major competitors for any firm in the social-expression industry are never their commercial rivals, but instead forgetfulness and declining standards of etiquette.

So far, so good, I said. But what about the Internet?

Traditional greeting cards, he continued, are purchased almost exclusively by middle- and senior-aged females. But Internet social-expression products have younger, male buyers -- a demographic that no greeting-card company has successfully cultivated before. And each time one of these new customers sends an Internet greeting, he creates another social obligation -- one that is likely to involve the purchase of a printed card. So even though the companys sales on the Internet pale in comparison to those of its more traditional products, the market development spurred by these Internet transactions is vital to the entire firms growth -- both for its new customer base and for the interaction (i.e., obligation development) of that base with the companys traditional clientele. My friends company sees the Internet not as a threat to its print product base, but as a major weapon in its battle with the industrys real 800-pound competitor: forgetfulness.

So before you forget how we started all this, Ill ask again: Whos your biggest competitor?

Send e-mail messages to John Brandt at [email protected]

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