According to a study conducted by John Horn, the author of the book Inside the Competitor’s Mindset, between 30% and 40% of executives believe that their competitors act irrationally over half of the time. Often, this perceived irrationality actually masks an inability to put oneself in the competitor’s shoes. Yet this is an essential skill to increase your capacity to anticipate the competition’s moves instead of being subjected to them.

To achieve it, two avenues deserve to be explored. The first consists in actively engaging in what is known as “cognitive empathy”. Concretely, this means suspending your judgment and putting yourself in your competitor’s position, trying to understand why they think what they think and decide what they decide, factoring in the information they possess and their positioning within the market. The key is to start from the principle that what they do is perfectly rational from their point of view and then piece together the logic of their actions.

A second, complementary approach consists in using artificial intelligence tools to create predictive analyses. By looking at the data, can we discern how a given competitor responded to price increases in the past? Is there a recurring pattern that could provide us information about their potential response to our next offering to hit the market? An excellent way to stimulate a dynamic view of the competitive game and stay a step ahead.

Source:  Author Talks: How cognitive empathy can help you predict the competition’s next steps, interview of John Horn by David Schwartz, McKinsey, June 2023.