Decoding Market Moves: How Competitive Sensemaking Drives Business Strategy
"Go beyond basic analysis—understand how your company's interpretations shape success."
Ever wonder why some companies anticipate market shifts while others are caught off guard? Or why competitors in the same industry can have wildly different interpretations of the landscape? The answer lies in something called 'competitive sensemaking.'
Competitive sensemaking is the process through which companies perceive, interpret, and respond to the actions of their rivals and the broader market. It's a socio-cognitive skill that goes beyond simple data analysis—it shapes how businesses understand their relationships, spot opportunities, and ultimately create value.
This article dives deep into the concept of competitive sensemaking, drawing on research to explain the cognitive processes that drive strategic decision-making. Learn how to enhance your company's ability to 'read' the market and turn insights into a competitive advantage.
The Four Cornerstones of Competitive Sensemaking
According to research, four key cognitive processes underpin effective competitive sensemaking:
- Mental Time Travel: It is the ability to analyze past trends and project them into the future.
- Comparability: It involves identifying key similarities and differences between market actors and products.
- Counterfactual Reasoning: It explores alternative scenarios and 'what if' possibilities.
- Storytelling: Storytelling weaves these elements into a cohesive narrative that guides action.
Sharpening Your Competitive Edge
Competitive sensemaking isn't just an academic concept—it's a practical skill that can be honed and applied. By understanding these underlying cognitive processes, businesses can equip themselves to better anticipate market shifts, outmaneuver rivals, and create lasting value. Whether it's through scenario planning, war gaming, or simply encouraging more diverse perspectives, the key is to cultivate a culture of mindful interpretation.