As product managers, we often would like our lives to improve if just one of our competitors could disappear. Such events could make the process of creating your product development plan a little bit more straightforward. It’s amazing that this happens. But, often, the reason why the company went under was that they were acquired by one of the competitors. That means we have a brand new, much bigger competition to face. What can a product manager do?
What You Should Probably Not Do
If two of your competitors join forces to create a more significant competitor, virtually every product manager experiences the same reaction at first: “we need to do that.” The assumption is that by buying another company, your company can compete with the new competition.
But, Thomas Keil and Tomi Laamanen are two researchers who examined these kinds of events to warn us that often doing this isn’t beneficial for us in the long run. What they discovered was that those who made their own mergers after rivals were merged ended up performing worse than the rest of the market, and that’s certainly not going to make a good impression on your resume as a product manager.
There were three main reasons for this. The first reason is that any decision taken under pressure tends to be a wrong one. Another reason is that the price of any remaining businesses will rise following the merger being declared. In the end, the first company had the top of the bunch, and the ones that remained could not be as great.
Alternative Responses Product Managers Should Consider
If you think you believe that your gut instinct is not correct, What option is the suggestion of a product manager when the CEO approaches you and asks what your company should do following the merger of your competitors? The positive side is there are three options you can choose that could put your product in a better than a competitive position.
Retreat! If the merging takes place in a non-primary market of your product, you should consider getting rid of it. Because it’s likely to take longer and more energy to contend against an even larger rival and it could be beneficial to slow down and focus on those markets in which you’re confident you’ll achieve dominance and success.
Make a Step To The Left: Instead of reacting to the merger of rivals by your own merger instead, focus on growing your business through the process of innovation as well as organic expansion. There is no way to guarantee that a merger can go smoothly. Your competitors that joined will become distracted by the process of combining two businesses for a short period of time. Utilize this time to figure out strategies to enhance your service better, and you’ll end up ahead in the end.
Start small: Instead of suggesting that your business purchase an organization of the same size as the one your rival bought, opt for the “smaller is better” approach. Find a few smaller businesses that, if bought by your business, will eventually produce the same results that you would have gotten if you purchased a much more significant amount of one company that was larger.
What All Of This Means For You
Being a manager of a product is being in a dynamic and changing environment, even though it wasn’t stated as such in your management job description. Sometimes, our competition can make our lives more complicated by merging and presenting us with fewer but stronger rivals.
In this situation, product managers must be able to resist the instinctive urge to think that they should recommend the merger of their company with a different company. Instead, alternative responses like retreating, negotiating, or even alternative acquisitions might be the appropriate response.
When things change, the worst thing you can do is react too fast. Instead, you should take some time to think about your final strategy: precisely what you really wish to occur. Once you have a clear idea of the answer, you can make sure you take the proper steps to achieve it. Product managers who are able to react appropriately to mergers of rivals are the ones who are the highest-performing.