Competition week, part 2

Philip Morgan

Let's start with the 25.8% of y'all who said "yes, competition does concern me".Several of you identified lower price as the main competitive threat you face. Here are a few examples of survey responses that mentioned price:

  • "Only partially, especially if their prices are lower"
  • "Competition from overseas"
  • "I'm afraid competition may lead to commoditize what I do. Too many people can do what I do, if only they want it badly enough, because it's mostly a matter of time and dedication to learn these skills"

These folks all seem to be saying that people who live in places where it's cheaper to live can acquire the same or very similar skills and become lower-price competition.I think they're right to be concerned about that. The Internet and open source software has changed a lot, much for the better. It's also lowered the barriers to entry for lots of kinds of knowledge work. Want to become a reasonably competent software developer? If you've got a computer, an internet connection, free time, and some motivation, there's absolutely nothing stopping you.I think this is a very good thing on the whole. It does mean, however, that those of us living in more expensive areas need to justify our higher cost. I think the best possible justification is to claim and then provide ample proof that you can create more value in some way. I don't mean only those living in more expensive places should do this. I hope we all move our businesses in the direction of ever-increasing value creation. But certainly those of us living in more expensive places will feel the pressure to do this sooner rather than later. There's a tragedy and an opportunity inherent in this. The tragedy is that change is difficult, and not every human possesses the intellectual and cultural tools needed to change fast enough to keep up. The opportunity is that by doing our best to embrace this kind of change, we can improve our individual situation quite a bit.There was another variation on the "yes, competition does concern me" response, which was to see a bright side to it. Those responses tended to be longer, like these:

  • "I think our ‘lizard brains’ (#fightthedragon) often see someone else’s success as taking away an opportunity from us. Specializing has helped a bunch with this. I now don’t really want to do half the stuff sent to me and I can point those leads to better suited consultants. I don’t want to dismiss competition all together though. Personally, it is a driving factor to get better at what I do. So I often ‘compete ‘ with people in the world I see doing cool things and try to do what I can to reach those goals. For example, I think emailing a list on a daily basis is super cool. Your emails bring a smile to my face and I have stayed subscribed even when I was thinking of not consulting. I want to compete with that. So I have challenged myself to email my list everyday about my expertise (today is Day 4). Similarly, I want to compete with Kai in he number of products he has, and Liston in the cool content he has on LinkedIn. That is how I use ‘competition’ to grow myself (when I can beat the lizard-brain away with a stick #fightthedragon)."
  • "My default reaction is to be concerned about my competition - this comes from a place of insecurity. Once I get over my knee-jerk insecurity and fear, though, two things occur to me: (1) I can actually learn a lot from studying my competition, and (2) If I do a good and proper job of specializing and learning deeply about my vertical's jobs-to-be-done, challenges and aspirations, then at that point I think I won't have any REAL competition."

I so admire this perspective on things! I don't really have much to add to it. I think leaning into it, learning from it, and being made better from experiencing it is the healthiest possible response to any kind of fear that isn't actually life-threatening (and so very few really are for many of us).I'll end the "yes, competition does concern me" category with this one. It provokes some very interesting ideas:

  • "It's near impossible to be so unique as to not have any competition. As an example, every music festival has headliners, there can only be one headliner per stage. All the other twenty acts play music, yet only one is "unique" enough.Who you going to watch? You can't be at three places at once.  This year's lineup:   The year I went 2001:"

Part of what is probably in the background of your thinking when you answer the question "are you concerned about competition" is the deeper question: how big is the market in which you are competing?In other words, are you actually competing in a truly global market? If you are positioned as a generalist Rails developer, is your market every single company across the face of the planet that is looking for a Rails developer?What we're getting at is whether you're competing in what economists would call an efficient market: one where information that buyers and sellers would use to set pricing is perfectly available throughout the market.I can't think of a definition that is further from the reality of buying and selling professional services. It is in almost no respect an efficient market! More than half the time buyers think they know what they want but don't really know what they need, and they certainly aren't going to look at every single option available on the supply side to determine which one is the best. If RedMonk is anywhere close to right about the number of software developers worldwide (~35 million: and even 10% of them are self-employed, then someone shopping for a developer for a project would have to look at literally MILLIONS of options to make up their mind. No way in hell does that ever happen.My point is that the market you are competing in is a tiny subset of the global market, and the boundaries of the market you are competing in are very fluid and fuzzy. Here's a by-no-means-exhaustive list of what defines the boundaries of the market you are competing in:

  • The sophistication of the person shopping for your services (do they understand the differences between Upwork, Toptal, and someone who has written a book for OReilly?)
  • The prior experiences of the person shopping for your services (were they burned from a developer who happens to live in the same country as you or talk like you or look like you?)
  • The amount of time the buyer has to make a decision
  • The buyer's professional network and any peers that might be able to refer somebody to them
  • The buyer's willingness and ability to do research on the options out there
  • The buyer's willingness to work with devs outside their own timezone
  • Shared language
  • The buyer's ability to define and understand their own needs for the project or business problem they're trying to deal with

I'm not at all trying to overwhelm you here, and I'm not saying you need to consider these factors when you're deciding how to specialize. Instead, I'm making the very simple point that your market is almost never a global market, even if you'd happily jump on a plane or do a Skype call at 3am in order to work with a client. It's a subset of that global market, and its boundaries are defined by all kinds of wacky factors.In the face of that situation, I think you need every possible advantage working in your favor. I happen to think that specializing lets you recruit several advantages to work in your favor, but you know that about me I'm sure :)Alright, that's it for today. Tomorrow I'll dive into the "no, competition isn't a concern" responses and offer some thoughts on those.In the meantime, would you like to attract better clients? Identifying a strong market position is step #1. Learn how here: