Smugness kills the leader

Smugness Tarlunt
June 16, 2017

“Long is the way and hard, that out of hell leads up to light.” True words uttered by John Milton in his 17th century poem Paradise Lost. In more contemporary words: getting yourself out of a hole is harder than digging it. Probably this is a universal truth and definitely applicable to companies. There are many examples of companies that seemed virtually invincible, yet managed to fall from grace and where hardly or not at all able to scramble out of the hole again.

To provide some context: only 71 companies remain today from the original 1955 Fortune 500 list. Others don’t show a shimmer of what they once were: Kodak, Nokia, Blockbuster, Hummer, etc.

We strongly believe that companies can remain successful if they offer products demanded by the market and manage to make a margin on them that is equal or larger than that of their best competitor(s). And although it is a good habit to rely on the own strength, it is also of great importance to monitor closely how the efforts of your organizations relate to those of your competitors. A very successful method for this is spider mapping.

Spider mapping is a type of graphic organizer that is used to investigate and enumerate various aspects of a single product, e.g. cost, features, quality, brand, etc. By carrying out such an analysis not only for your own product, but also for that of your direct competitors, you will obtain a very precise understanding of how your product compares to that of competitors. This can yield interesting insights:

  • How does your cost price compare to that of your competitors?
  • What are the strong points of your products, which ones are weaker?
  • Is this score coherent with the way this product is positioned and/or perceived?
  • How does your product relate to competitor products on the different dimensions or attributes? Where do they overlap, where do they differ?
  • Does this competitor analysis illuminate what the relative strengths and weaknesses are of the different companies? Does this provide insight in where catching up is required or where leads must be defended?
  • Does the analysis unveil gaps in the product portfolio: is there room for extension of the product portfolio or, conversely, are there product variants that must be phased out to avoid cannibalization?

In practice, it proves to be hard for organizations to conduct such analyses themselves. Due to psychological phenomena like selective perception and cognitive dissonance, it is difficult or impossible for own staff to conduct an objective analysis of the own product towards competitive products. For this reason it is advisable to have an external party carry out such an analysis. This ensures a fresh pair of eyes that can do an unbiased comparison of competing products.

Tarlunt is specialized in such analyses. Starting-point for this is the tear-down. In our laboratory we disassemble both your product and that of your competitors. By means of reverse engineering, we compose very detailed bills of material for all products. Subsequently we make a should-cost calculation for the different products, to reveal how the cost prices of the different products relate to each other. Based on the selling prices, we can then make a substantiated estimation of the product margins of the different suppliers.

Next to that we map the functionalities and features of the products, assess the quality and, depending on product and client demands, we carry out additional analyses. The result of this is a research report with a detailed comparison of the competing products, conclusions and recommendations. This invariably leads to some kind of ‘Wow experience’ among our clients: “is that really true?”. “We didn’t realize that…”, “…but know that we know, what if we would…?”

In short, this approach can be of help in avoiding lurking dark holes and the need to travel the long and hard way back to light.

Interested in having your own and your competitors products plotted in one spider map? Please contact us.

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