University of Utah alum and medical entrepreneur Brett Burton shared ideas on how to explore your competitive landscape in a recent workshop provided by the Lassonde for Life program —an alumni program open to all University of Utah graduates that provides free, lifelong entrepreneurial instruction and support.
Brett is an entrepreneurial-minded bioengineer with experience in early-stage medical device innovation, development, and leadership. He obtained a Ph.D. in bioengineering in 2018 while also developing an understanding of medical device startups and venture capital. He is involved with multiple medtech startups and serves on the boards of Second Heart Assist and CUBE Therapeutics while also serving as the VP of R&D for Second Heart Assist (a left ventricular assist device company).
There is no winner without competition. Competitive awareness and strategy are essential in growing and developing a profitable and sustainable business. In his presentation, Brett described the process of exploring the competitive landscape as “forming a company strategy based on your understanding of your competition” and urged that companies extend their analysis beyond direct rivals. Exploring your competitive landscape should include an understanding of the three natural laws of economics, an analysis of Porter’s five forces, and a process for identifying invisible threats.
Brett applied Adam Smith’s three natural laws of economics to competition and explained:
- The law of self-interest: people/companies competing with each other to fulfill their own self-interests.
- The law of competition: people/companies competing with each other by trying to differentiate themselves through cost reduction, improved product, or both—make decisions that ultimately benefit the consumer.
- The law of supply and demand: if companies can’t compete or make decisions that keep them in the market, they will not survive, and competitors will be able to grow their share of the market.
Brett warned that many factors complicate competition and encouraged entrepreneurs to enhance their strategy. During his discussion, he shared his experience with various companies, as both an investor and employee, describing how each of them had a plan and how all of them encountered competitive forces and subsequent unpredictable challenges.
Here are highlights from Brett’s presentation that may provide insights into understanding your competition along with questions you should ask yourself when exploring your competitive landscape:
What is a Competitive Landscape?
Brett explained that a competitive landscape refers to the existing market for your product or service. It represents every product a consumer could choose over the product you offer and can indicate a company’s position in the market while simultaneously influencing that company’s business strategy as they seek to improve that market position. He warned, “There are a lot of things influencing how you operate, and the competitive landscape is influenced by more than just your direct rival.”
When analyzing your competitors, Brett recommended focusing on their market position, business strategy, and ability to innovate. It’s critical to analyze these variables and use this information to develop your own strategy. He said, “If people can’t innovate in this modern market, they’re not going to survive. You’re not just looking at the here and now; you’re looking at what it’s going to be.” It is common to analyze how competitors are doing today, but we must anticipate how our competition will change and evolve.
Brett referenced Porter’s five forces as a framework to begin an assessment of your competitive market. The forces include:
- A review of direct rivals competing for your customers
- Threat of substitute products that fulfill the customer’s need
- Threat of new entrants replicating your idea or product
- Supplier bargaining, where producing unique products may shift leverage to the supplier
- Buyer bargaining, where price might be threatened and lowered in response to competition
Who is Competing for Your Customer?
Brett used his work experiences to illustrate companies that faced each of the competitive threats described by Porter’s five forces. In some cases, such as one of the companies, Atrispec, where there were no direct rivals, the company still faced competition in other forms. Atrispec is an ECG analysis tool that assesses the risk a patient has of developing atrial fibrillation—a cardiac condition in which the upper two chambers of the heart (the atria) beat erratically. Detection of such risk before surgery would allow doctors to provide prophylactic treatment, thereby reducing the occurrences of atrial fibrillation post-surgery, which would reduce hospital length of stay and associated costs.
Although Atrispec was a new solution to an old problem with the potential to be very effective in detecting the risk in patients of developing this cardiac condition post-surgery, the company fought an uphill battle as it had to compete with what Brett called “the status quo,” or the process that physicians are currently using to treat post-surgical atrial fibrillation. When considering direct competitors, we should not only look at similar products, but we should ask ourselves what our customers are doing to solve their problems today and consider that competition.
What Other Products Fulfill Your Customer’s Need?
The threat of substitutes was prevalent for a popular rideshare company (Lyft) that Brett analyzed for investment during his time at the University Venture Fund (UVF). In addition to rideshare competitors, there were many substitutes, such as taxis, public transportation, or simply getting a ride from someone. When evaluating Lyft’s competitive market, the UVF team was able to see enough differentiation to warrant a substantial investment. In reflecting on this investment, Brett said he remembered, during his research, a poll in which Millennials described Lyft as the “cool” rideshare company. With the company’s focus on attracting a specific population of customers and with evidence showing Lyft effectively making gains in this market space, the decision to invest was not particularly difficult, and the return on investment was substantial. If we understand our direct and indirect competitors, we can strategically differentiate ourselves in the market.
Additionally, Brett offered the example of Cube, a company focused on athletic knee brace innovation. While no other companies produced the exact product at the time (i.e., a brace that offers mechanical support alongside heating and cooling features), bigger competitors in the industry could easily attempt to replicate the technology and pursue the same market. These competitors may have more resources and capital to produce a similar product quickly and market it more effectively. This threat exists in any industry and should be considered in your competitive analysis.
Who Will Replicate Your Idea?
Brett compared the threat of new entrants to the gold rush and cautioned, “If you find gold, you get a gold rush. In the same sense, if you find a good business or a good market, you might just end up in a gold rush.” Be attentive to companies in your industry and peripheral industries that may be able to reproduce or replicate your idea or product.
Brett explained how Second Heart Assist (a percutaneous LVAD company) and OrthodontiCell (an accelerated tooth movement company) each had competitors who solved the same problem for the customer and generated similar value, even though they used different methods. Your direct competitor may not use the same materials or technology as you, but they still offer a viable option for your buyer’s problem.
Will Your Supplier Drive Your Costs Up?
Supplier bargaining may also present a threat to growth if your supplier understands the unique value they bring to the business relationship and can leverage their power to drive your costs up. Brett said, “The more people that are supplying you or the more common the materials, the less bargaining power they have.”
Leonhardt’s Launchpads Utah (LLU) was a lab that offered bioelectric stimulation that modulated protein expression. Brett, who directed the lab from 2017 to 2021, explained that each aspect of their pipeline had supplies that were necessary to offer these services. Given the unique process LLU had developed, several materials, supplies, and pieces of equipment were difficult to find for their use case. Similarly, if your product or service requires unique or scarce materials, your costs may rise, and it may be difficult to find a consistent and reliable supplier.
Similarly, Second Heart Assist had over 20 production and design iterations before stabilizing their process — several due to issues with acquiring original materials. In one instance, a supplier that provided nitinol tubing, used to produce the device’s drivetube, was acquired and closed its door to future orders. They needed to be flexible and make changes to continue production, but their new supplier, seeing an opportunity, charged nearly 10 times the price of the previous provider. Suppliers can raise prices or even discontinue access to supplies. Be prepared to pivot your design, diversify your suppliers, or determine alternative resources if your product is not a common commodity.
Who Is Your Buyer and What Will They Pay?
Brett warned that once your product is marketable, you’ll be managing buyer bargaining power and identifying the right price. OrthodontiCell is a bioelectric stimulation mouthpiece intended to accelerate tooth movement. In Brett’s example of their buyer bargaining power, he explained that to sell his product successfully, he had to market to two different “buyers.” First, OrthodontiCell had to identify and propose a particular advantage for the orthodontist, who had to buy into offering the product. Secondly, the product needed to be marketable and desirable to the end user, the orthodontics patient, who would ultimately pay for it (given that the OrthodontiCell product is an elective orthodontic enhancement and not an essential item that insurance would supplement).
Many products may have layers of “buyers” who may not come to mind in your initial competitive review. As you explore who needs to be an advocate for your product in the selling cycle, develop a plan that addresses each individual. Consider any resistance or hesitation to buy in a threat to manage.
In a traditional sense, buyers also know their options, and being aware of what other options may be more desirable, affordable, or effective can influence willingness to pay. Determine how your customer’s next best alternative may impact your prices.
Can You Leverage External Entities?
Other areas to consider, that fall outside Porter’s five forces in competitive analysis, but are certainly present in all business operations, are more external forces. A STEEPLE analysis explores where outside entities and influences may affect your competitive standing. He provided the example of the FDA backing particular medical devices and consequently “marketing” those products with their stamp of approval. Legal or political entities, like the FDA, are not often considered partners or competition, but they certainly influence your competitive landscape and are part of the STEEPLE approach to competitive analysis. If available in your industry, consider how you can partner or interact with any credible entities to market and support your growth and advancement.
If you are looking to expand your scope of research on your competition, Brett recommended several resources. First, he suggested searching market research reports on websites such as Kalorama, MarketResearch.com, Markets and Markets, or Lexis Nexis. He also pointed to industry conferences that may offer value in identifying competitors and learning more about recent innovations during sessions. Current and future investors may also be knowledgeable in and have similar products and technologies in their portfolio that they can offer insight on. Key opinion leaders and other organizational members can offer value and collaborate about competition.
Further resources suggested by Brett include books such as “Competitive Strategy” by Michael Porter and “Blue Ocean Strategy” by W.Chan and Renee Mauborgne, SBA.gov, YouTube University; podcasts and content producers such as Bob Iger’s MasterClass and “The Venture Capitalist Podcast”, as well as other alumni associates.