Was having coffee with a CEO of a successful venture-capital-backed company in the Boston area the other day. They're in the healthcare IT space, and doing incredibly well, sales forecasts up, counter to many of the other growth-stage technology companies suffering through the recent economic emergency thrust upon most.
We got to chatting about business development, and he brought up something I had rarely if ever heard before. When it comes to the competition, he makes it a point to get to know them. In fact, if there is a competitor that pops up he hasn't talked to, he'll ring them up. As he's CEO, he usually calls the other CEO (if he calls the head of sales, the competitor's CEO might get the wrong idea). "Just the other day, I heard about a company that hadn't been in the mix before, and I called and left a message for the CEO saying that as we were both in the same industry, it would be good to chat and perhaps meet up for coffee."
When I asked my coffee companion the responses he got, he said they varied. Sometimes, the other CEO doesn't respond. Sometimes they respond with a strong overtone of suspicion. However, once they meet, he feels a lot comes out of these meetings.
When I asked him when he started to do this, he referenced a global 2000 company he used to work for, and a customer review he had with his boss. When his boss asked him about several specific competitors and our protagonist didn't know them in the first-person, he vowed to forever more make it part of his SOP to reach out to the competition and meet up to learn more about them.
When I asked him what were the biggest benefits of the practice, he pointed to three:
• Often competitors are pitching against each other at the same client prospect. Sometimes is valuable to compare competitive market intelligence, especially if the vendor is getting the feeling they're being played with some disinformation.
• Ignorance breeds fear: if competitors don't know each other, they're much more likely to slip into badmouthing the other guy. If you get to know them, this is a lot less likely.
• Invariably, at some point one competitor may replace the other competitor's technology. To be able to call the other party and have a bridge already built at senior levels can go a long way in the integration of the new technology, even if it's a bitter pill for the one being replaced. "It just makes the whole changeover for the customer less painful."