When a new car is released from Lexus, BMW, Mercedes, or Cadillac, the first customer in line to buy is an employee from Ford Motor Company. The car is ordered incognito and picked up immediately when available. It is taken to a Ford test track and multiple laboratories. It is driven hard and every system, subsystem, and component level are evaluated. Eventually, the vehicle is disassembled. Every weld is torn apart, every screw loosened, and every drop of glue dissolved. Within three months, hundreds of engineers will reduce the new car to a pile of parts and fragments in a nondescript test facility. Ford will glean as much information as possible from their competitors’ products, and it will systematically catalog every bit of knowledge it extracts. Few industries are as comprehensive at competitive analysis as the automotive industry.

Likewise, great SMEs study their competitors. They know the alternatives to their own solutions. They identify who serves their market and what products, pricing, distribution, and promotions are employed. They know their competitors’ strengths and weaknesses. And they know their competitors’ people.

Competitive knowledge helps an SME in many ways, but here are two of the most important. First, knowing your competitor’s strengths will teach you how to improve your own goods and services. If a competitor’s product is better than yours in an important dimension, then that dimension is a prospective area for improvement. Great SMEs study their competition so they can identify, refine, and focus on their own progress.

Second, competitors’ weaknesses are the keys to winning against them in the marketplace. The SME who has details about an opponent’s weaknesses knows how to defeat them. As a result, SMEs have greater influence in their organization and in the eyes of their customers, because they know how to improve, they know how to compete, and they know how to win.