Good Competition, Bad Competition Holding the line between discipline and destruction.
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We hear it all the time: competition is good for business. It forces efficiency, drives innovation and cuts waste. Until it doesn't. Push it too far and it does the opposite. When rivalry gets too heated, it starves the cash that pays for quality, people and the next product. At that point it no longer builds better companies, it destroys them.
As a founder or CEO your job is not to worship competition, it is to use it. The goal is pressure that sharpens but doesn't suffocate. Enough margin to build, not just survive. That is the Goldilocks zone. Too little rivalry and incumbents coast. Too much and subtraction becomes the only "innovation". Thinner materials, lighter QA, shorter warranties, slower support. Efficiency on paper but expensive in practice.
The flip to bad competition
The flip is a strategy failure. You stop competing on outcomes and drift into feature parity with a copycat. From the outside, quality becomes hard to see, so buyers default to the loudest signal, price. If you fund wins with discounts rather than improvements, you create a feedback loop you cannot outrun. The discount results in lost margin, which leads to pressure to cut costs, which decreases product quality and erodes pricing power. Repeat it for long enough and brand credibility and organisational capabilities are hollowed out.
We see this happen to companies of all sizes. Carillion, the now defunct British construction and services company did the same at scale. It underbid to win public contracts, hoping to make margin later. But the cuts came first. Corners got trimmed, payments delayed, and capability drained. The business collapsed with £7 billion in liabilities. They won the race, then collapsed at the finish line.
Leaders sometimes tell themselves they can cut price now and fix it later. Sometimes that works. Mostly it is hope masquerading as strategy. Teach clients that your advantage is the lowest number and they will keep chasing a lower one. Let your team think that winning matters more than margin and they will keep selling margin. Show suppliers that you won't protect the specification and they will protect their cash and hand you the risk.
Compounding this, some markets such as the UAE are structurally price-led. Buyers ask for top quality, then squeeze suppliers to the bone whilst simultaneously pushing the liability back on the supplier or down the line to their own teams. In that mix, quality is hard to verify, price becomes the only signal, and the race to the bottom does the rest.
Compete on outcomes, not parts
The solution is to make quality visible and to price the outcomes you will stand behind. If the market cannot see quality, it will not pay for it.
Put proof on the table. Show what matters. Publish third-party tests that map to the failures that actually happen in your category. Price uptime, life, safety and energy use, whatever actually drives the customer's economics. Back it with a long warranty and penalties that hurt if you miss. Align incentives so sales protect the spec that protects the brand. Tie a slice of pay to margin and retained performance, not just volume. Below the floor you do not bid. Not to hit target. Not to fill capacity. If a rival refuses that transparency, call it out. Silence is a signal.
Some players are irrational, subsidised or chasing market share. Matching them is not discipline, it is self-harm. Reframe to outcomes, narrow who you serve, solve cash pain with terms instead of spec cuts, or walk.
Don't blame the market
Leaders do not blame the market. They compete hard, keep the engine intact, and show customers what quality really looks like in the flesh. Put cash behind your promises and refuse deals that require you to lie to yourself. Good competition funds the next product and the next warranty claim. Bad competition eats both.
Five moves to combat bad competition
- Make quality visible: Publish specification, third-party tests and real work examples.
- Compete on outcomes you will back: Extend warranties and self-apply penalties that show customers just how serious you are and make it difficult to match.
- Address customers' real economics: Price on uptime, energy use or time savings.
- Solve the real pain: Fix working-capital pain with fast pay, milestones and consignment, not spec cuts.
- Be disciplined: Set a hard floor for pricing and walk when the price forces a cut to a non-negotiable.
