Competition could arise from the most unexpected quarter. The most pragmatic approach is to look beyond the degrees of competition traditional wisdom would anticipate.
Throughout the twentieth century, scientists around the world explored social networks and the influence of technological development on human connections. Most famously, in 1967, psychologist Stanley Milgram sent letters to 160 different people in the US and asked them to forward the letters to the acquaintances they thought would bring the letters closest to one ultimate recipient, a stockbroker in Boston. At the end of the experiment, Milgram found that each letter made five stops on average. Hence, the phrase ‘six degrees of separation’ that you may be familiar with. The point here is that the world is getting smaller and the connections between us are becoming shorter. This is known as the ‘small world’ problem. If you take this principle and use it to analyse your competitive landscape, then something interesting happens.
Let us explore the 6 degrees of competition through a simple product: coffee. Suppose you are a coffee producer who sells 400 grams of packaged ground coffee beans in the supermarket. With inspiration from Milgram’s experiment, we can now trace the 400 grams of ground coffee beans and explore who or what the competitors are in the first degree, second degree, and all the way up to the sixth degree, and see if we can close the chain and lead the sixth degree competitor back to the starting point—the 400 grams of packaged ground coffee beans.
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Denne historien er fra August 2019-utgaven av Indian Management.
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