The Competitor Who Refused to Make Sense

The Competitor Who Refused to Make Sense

Many companies build a strategy around the competitors they wish they had. Rational, predictable, easy to beat. Here’s why accepting competitive reality as it actually exists is the only way to win, even when that reality is uncomfortable.

A B2B SaaS company hired us in 2023 to explain why a competitor was winning deals with what they considered an “obviously inferior” product.

The leadership team had done the analysis. Their product had more features. Better performance. Cleaner UI. Higher G2 ratings. Lower price.

“They shouldn’t be winning,” the CEO said. “Their product is significantly worse. Customers are making irrational decisions.”

We ran a primary competitor analysis, including some win-loss analysis. Interviewed fifteen prospects who’d chosen the competitor.

Here’s what we found: The competitor’s product was worse. Customers knew it. They chose it anyway.

They did this because the competitor had offices in every region where they sold. Local account managers who spoke the customer’s language. Implementation teams in the same time zone. Support that answered in minutes, not hours.

The “inferior” product came with superior service infrastructure.

My client’s product was better. Their company was worse at being a supplier. Customers chose the complete package, not just the software.

The CEO’s response: “That’s not sustainable. Customers will eventually realize they need better product.”

Two years later, that competitor has 3x the market share. Their “unsustainable” model is working fine.

They appear to be still waiting for the market to become rational and reward superior product features.

Why We Lie to Ourselves About Competitors

Many (or is it most?) create versions of their competitors that fit their preferred story.

“They’re winning on price, but customers will regret buying cheap.”

“They’re winning on features, but their architecture is bad so they’ll hit scaling problems.”

“They’re winning on brand, but we’re building better product and quality wins eventually.”

These may well all be true. Or they might be comfortable lies you tell yourself to avoid harder truths.

The competitor winning on price could have figured out how to profitably serve a segment you’re ignoring.

The competitor winning on features may never hit those scaling problems because they’re building for different use cases.

The competitor winning on brand may hold that advantage for a decade while you’re waiting for “eventually” to arrive.

You can’t beat competitors by wishing they were different. Only by understanding what they are and finding real advantages against that reality can one.

How Competitor Reality Breaks Your Strategy

Most poor strategies fail because they’re built on false assumptions and wishful thinking about competitors.

You assume competitors are rational profit-maximisers. Then one starts subsidising pricing with VC funding to grab market share before their next raise.

You assume competitors care about product quality. Then one ship’s broken features constantly, but it iterates so fast that they learn faster than you do.

You assume competitors will respect market segments. Then one adjacent player decides your segment looks attractive and brings resources you can’t match.

You assume competitive advantages are durable. Then commoditisation happens faster than expected, and your moat evaporates.

Every assumption about how competitors “should” behave is a vulnerability when they act differently.

What Accepting Reality Actually Means

Accepting competitive reality doesn’t mean giving up. It means seeing clearly.

We are constantly told by prospects that they dont know anything about their competitors. They find it hard to differentiate themselves from them, as they don’t know how they differentiate. How they sell and how their products work.

If your competitor wins on price and you can’t match their pricing, don’t build a strategy around “customers will eventually value quality over cost.” Build a strategy to identify segments in which quality actually commands premium pricing.

And if they win on features and you can’t match their development speed, don’t build a strategy around “we’ll catch up.” Build it around being simpler, easier, or more focused on specific use cases.

If your competitor wins on brand and you can’t match their marketing budget, don’t build a strategy around “building a better product.” Build one around channels where brand matters less. So, word of mouth, community, and technical evaluation. Reality creates constraints; constraints drive creativity; creativity creates your advantage.

Wishful thinking just wastes time.

The Intelligence That Changes Everything

At Octopus Intelligence, we’re a UK and US-based competitive intelligence agency built by former British military intelligence analysts. We’ve spent twenty years serving companies like Mercedes, Samsung, and European governments.

The most valuable service we provide isn’t telling clients what competitors are doing. It’s forcing them to accept what competitors are doing, even when it contradicts their preferred narrative.

We run systematic competitive intelligence:

Mystery shopping that shows you what competitors actually deliver, not what their marketing claims.

Win-loss analysis that reveals why customers actually choose competitors, not why you assume they do.

Market research that shows you what customers actually value, not what you wish they valued.

Competitor analysis that shows you what strategies competitors are actually pursuing, not what makes sense to you.

We’re not trying to make you feel good. We’re trying to make you accurate.

• Sometimes that means telling a CEO their competitor isn’t going to fail despite bad unit economics.
• Sometimes that means showing a product team that customers don’t value technical superiority.
• And occasionally that means proving that a competitor’s “unsustainable” advantage is perfectly sustainable in their business model.

The truth might be uncomfortable. It’s also the only foundation for strategy that works.

The Questions That Force Reality

Here’s how to test whether you’re seeing competitors clearly or wishfully:

Question 1: Has this competitor been succeeding with this approach for more than a year?

If yes, it’s not a temporary anomaly. It’s their model. Stop waiting for it to fail. Start planning in a world that continues.

Question 2: Are we regularly losing deals to this competitor?

If yes, they’re doing something that works for customers even if it doesn’t make sense to you. Your job is to understand what they’re doing right, not to explain why customers are wrong.

Question 3: Have we predicted this competitor would fail or change course, and were we wrong?

If yes, your mental model of this competitor is broken. Update it based on what they actually do, not what you think they should do.

Question 4: Do we have a clear explanation for why this competitor wins that isn’t “customers are making mistakes” or “it’s not sustainable”?

If no, you’re in denial about competitive reality. Find the actual mechanism that drives their success, even if you don’t like it.

What This Looks Like in Practice

A project management software company approached Octopus Intelligence in 2024, convinced that their main competitor was winning through aggressive discounting that couldn’t last.

We ran competitive intelligence. The competitor wasn’t actually discounting more than the market average. They were winning on implementation speed—customers went live in 48 hours, versus my client’s 6-week implementation.

Our client didn’t want to hear this. Their implementation process included thorough customisation and training. They considered it a strength. “Customers need that onboarding to get value.”

We showed them the data. Customers who chose the competitor consistently mentioned “fast time to value” as the deciding factor. The competitor’s minimal onboarding wasn’t a weakness. It was a feature.

Our client had two choices: accept this reality and either match the implementation speed or find segments that appreciated customisation, or keep insisting that customers were making mistakes.

Their win rate improved in two quarters. Not because the market changed. Because they stopped fighting reality and started working with it.

The Market That Doesn’t Care What You Think

You know the market doesn’t care about your product vision. Competitors don’t care about your strategy. (chances are, they haven’t even worked you out) Customers don’t care what you think they should value.

They care about solving their problems in ways that work for them.

If a “worse” product solves their problem better. Maybe because it’s easier to deploy, or integrates with tools they already use, or comes with support they trust, it’s not actually worse. Your quality definition doesn’t matter.

If a competitor pursues a strategy you consider unsustainable, but it works for three years while you’re waiting for them to fail, you’ve wasted three years.

If customers choose based on factors you consider irrational (brand, relationships, risk aversion, political context), those factors are still real. And you still need to account for them.

The market is what it is. Competitors are what they are. Your job is winning anyway.

Why MENA Markets Demand This Even More

Octopus Intelligence recently expanded into MENA through our Dubai office, specifically because these markets punish wishful thinking harder than Western markets.

Competitive forces in MENA often don’t match Western playbooks. Local competitors use different business models. Customers evaluate differently. Relationships matter in ways that don’t show up in product feature comparisons.

Companies that try to import Western competitive strategies, lacking an understanding of local realities, consistently fail.

We’ve spent twenty years developing intelligence methodologies that work in markets where your assumptions might be completely wrong. Where the competitor you think is irrational is actually perfectly rational within local market forces, you don’t understand.

If you’re competing in MENA or other markets where your standard playbook doesn’t seem to work, the problem probably isn’t the market. It’s that you’re still fighting the market you wish existed instead of the one that does.

What to Do This Week

Pick your main competitor. The one that frustrates you most. The one that’s succeeding in ways that don’t make sense to you.

Write down why they shouldn’t be winning. All the reasons their approach is wrong or unviable.

Then, investigate whether those reasons are actually true or just what you wish were true.

Test their product. Interview their customers. Analyse their actual business model. Look at how long they’ve been succeeding with this approach.

If they’ve been winning for more than a year with a strategy you consider unsustainable, it’s sustainable. Your perception is wrong.

If buyers consistently choose them for reasons you consider irrational, those reasons are rational within customer decision-making even if they’re not rational to you.

Update your mental model. Build a strategy for the competitive reality that exists, not the one you wish existed.

It’s the only way to win. Accept what is. Then figure out how to beat it.

If you need help seeing competitive reality clearly, that’s what we do at Octopus Intelligence. We force companies to look at what competitors actually are, not what they wish competitors were.

Get in touch. Tell us which competitor frustrates you because they’re succeeding despite doing everything “wrong.”

We’ll show you what they’re actually doing right that you’re not seeing.

Then you can build a strategy that works against reality rather than hope.

We are Octopus. The Global People-Powered Competitive Intelligence Agency.

Outsmart your competition. Make the unknown known. Octopus helps you gain clarity in complex markets. With clients and tentacles around the world, we deliver sharp, actionable competitive intelligence through a blend of deep primary (HUMINT) and secondary research. If you’re looking to make smarter decisions, beat the competition, and reduce uncertainty, we’re the partner you want on your side.

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Frequently Asked Questions

How do I know if I’m seeing competitors clearly or through wishful thinking?

Test your predictions. If you’ve predicted a competitor would fail or change course and they haven’t, your model is wrong. If you can’t explain their success without calling customers irrational or their approach unsustainable, you’re not seeing clearly. Reality-based models precisely predict results even when they are uncomfortable.

What if a competitor really is doing something unsustainable?

Track how long they’ve sustained it. If they’ve been “unsustainably” burning cash for two years and just raised another round, their investors disagree with your assessment. Plan for a situation in which they persist with this approach for at least 2-3 more years. Hope they fail, plan like they won’t.

Should I change my strategy every time a competitor does something unexpected?

No. But you should update your perception of what’s possible in your market. Unexpected competitor moves reveal that market forces differ from your assumptions. Investigate why their approach works instead of rejecting it as anomalous. Adjust your mental model, not necessarily your entire strategy.

How do I balance having a strong vision versus accepting market reality?

Vision sets direction—where you want the market to go. Reality determines tactics—how you get there, given actual market conditions. Strong vision with denial of reality fails. Acceptance of reality without vision leads nowhere. You need both: clear direction and brutal honesty about current conditions.

What if customers are genuinely making suboptimal choices?

They might be by your definition of optimal. But they’re solving for constraints you don’t see—budget cycles, internal politics, risk tolerance, implementation capacity. Their “suboptimal” choice is optimal for their actual situation. Your job is either serving customers in their actual situation or finding customers whose situation matches your product.

How often should I reassess my understanding of competitive reality?

Review quarterly with hard questions: What did we predict competitors would do? What did they actually do? Where were we wrong? What does that tell us about the market forces we misunderstood? Most companies never do this exercise—they just move to the next quarter without learning from prediction failures.

Can competitive intelligence help me see reality more clearly?

That’s its primary value. Good CI agencies like Octopus Intelligence force you to deal with what competitors actually do versus what you assume they do. We test competitors’ products, interview their customers, and analyse their business models. We present evidence that either confirms or contradicts your assumptions—then you decide whether to update your model.