Horváth Innovation Insights

The nightmare competitor method: How we can arm ourselves against our worst nightmare

The media often describe the corona crisis in business, politics and society as a nightmare. More and more companies are confronted with a lack of sales at high costs and at the same time are surprised by previously unknown competitors who are more flexible in reacting to circumstances or better able to respond to new needs. However, it does not take a crisis to introduce oneself as an established company to the potentially most dangerous competitor and to develop measures to stand up to him: Exactly this process is reflected in the nightmare competitor method – here you can find out what is behind it.

Nightmare for many, time of glory for a few

We are currently experiencing a situation that has never been seen before and that was previously unthinkable: a pandemic that is paralyzing economies around the world, turning our everyday lives upside down completely unexpected and causing states to issue massive amounts of credit. Many of us find ourselves in our home offices, spending the Easter holidays without our families and especially without our grandparents. Small retailers but also large corporations fear for their existence and we all fight against an invisible enemy. The streets are swept empty... right?

On closer inspection, it becomes clear that the streets are not as empty. They are teeming with suppliers who deliver parcels contactless. It is noticeable that today it is not only the well-known yellow, blue, brown and red vans that park at the houses. More and more often you see vans with new signs like „Flaschenpost“, „Frischepost“ or even private vehicles loaded with orders from local retailers and manufacturers (e.g. „Hopfenkuss“ in Limburg an der Lahn).

„Flaschenpost“ is an online-based beverage store that promises to deliver within 120 minutes after the order and at the same time accepts bothersome deposit. At the end of March, in the context of the Corona crisis, the company announced that it would now also ensure basic supplies for German households in 125 cities by delivering food and drugstore items. Moreover, „Frischepost“ uses its newly established online shop to deliver fresh food from regional farmers to private households within one day – with great success! The classic e-commerce giants are too enjoying unprecedented growth. Amazon, for example, is hiring around 100,000 new employees. All these companies are mutating into "nightmare competitors" for existing retailers, as they use the crisis as an opportunity to exploit the advantages of their business model. This includes, for example, an existing, well-functioning online platform with connected logistics.

A short definition

But what does nightmare mean in concrete terms? At night, things often seem much more threatening than during the day. A nightmare shakes us because it puts us unexpectedly in a terrible and hopeless situation. Even if there is no way out of the nightmare, during the day it is possible to look at things in a brighter light, to take a closer look at the situation and find solutions.

The phenomenon of the metaphorical nightmare is found in the economy in series. Until recently, airlines, for example, could not have dreamed that flying would be so quickly replaced by Microsoft Teams or Zoom. Fitness studios remain stuck with expensive equipment and have to pay high rents for studios in the best city locations, while more and more people are doing sports in front of the screen, for example with the online program Gymondo. This makes it clear: Corona does not stop at industry boundaries.

There are also examples in the past, such as Nokia, which did not count on the disruptive power of the former computer manufacturer Apple, or Quelle, the former largest European mail order company, which significantly underestimated the international competition Amazon. If all these companies had thought about their worst possible competitor earlier, they might have been able to reinvent themselves in time.

Nightmare competitor method

It is precisely this pictorial nature of the "nightmare competitor" that the creative methodology of the nightmare competitor (NC) makes use of. The aim is to create an image as threatening as possible, a hopeless situation. But since a dream is not (yet) reality, the company can react in time to what the nightmare has so vividly demonstrated.

Within the framework of a workshop, employees from as many different departments as possible, possibly supplemented by customers and start-ups, are asked to put aside their everyday life and think about their own company in a completely new way. Completely new perspectives open up in four steps: ​​​​​​

1. Future personas
Like most ideation and innovation processes, the creation of the nightmare competitors starts at the customer's site. What does the customer of tomorrow want? Which needs does he have? Which trends can already be anticipated today? All these questions are recorded in the form of stereotypical personas as representatives of the own target group.

2. Nightmare competitor building
The created personas represent the target group of the nightmare competitor. Now it is important to understand how he manages to inspire exactly these customers with his business model. Which USP does he have? Which strategic partnerships does he enter? Which customer interfaces does he use? The participants describe the nightmare competitor in all its facets with the help of the NC-Canvas.

3. Comparison of competences
After the competitor has been described and imagined in detail, it can be clearly seen what he does better than his own company. By means of a simple comparison of competences, the current strengths and weaknesses of the own company can be revealed and examined.

4. Strategic directions
In a final step, the participants make concrete recommendations to the management. Strategic thrusts are determined, which will lead to a victory over the nightmare competitor. How do you manage to compete against him? Which competences must be built up, which investments must be made? Exactly these directions will be consolidated after the workshop and transferred to the innovation and strategy work.

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There are many examples of companies that have completely reinvented themselves with the help of innovative ideas. For example, Netflix, which has developed its business model from DVD distribution to streaming and in-house production. Or Rügenwalder, which today is one of the most famous vegetarian sausage producers in Germany. These companies have questioned the status quo and set out to find new value propositions – the nightmare competitor method is just one of many that make this search successful.

If you want to leave familiar patterns of thought behind and develop new ideas for your company, please contact us. We inform you about the methodology and successful nightmare competitor projects.