Competing against incumbents, and Plato’s Allegory of the Cave

Published on 17 June 2019 by Isaak Tsalicoglou.

Competing against long-standing incumbents that have oligopolistically dominated the market for a long time is a daunting task.

For an innovator and truly serious contender, the core challenge of winning market share at the expense of complacent incumbents is to help their customers escape from Plato's allegorical Cave, where the incumbents have been keeping them content with shadow plays for a long time.

Sometime between 380 and 360 B.C., the Ancient Greek philosopher Plato wrote down one of the most famous stories ever: the "Allegory of the Cave". As an allegory, the story's metaphors are meant to be interpreted to reveal hidden meanings and messages about actual issues and situations.

Little did Plato know that, more than 2'000 years later, his story would be serving as a fitting allegory and even guidance for innovators who compete against long-standing incuments in highly concentrated, oligopolistic markets with stagnant product lines and slow-drop "innovation".

But let us start with the story itself.

The "Allegory of the Cave"

The allegory is described in many places around the web — however, to not break the continuity of this article, here's my take on it after reading the story translated into Modern Greek, and its various online summaries. You can also read an English translation here or listen to a reading of the story herePhilosophy Bro also did a funny take on it.

(If you have watched The Matrixit will all sound very, very familiar.)

Here's also an image (original copyright holder unknown; image sourced from tineye.com) to help you imagine the setting more easily.

The Allegory of the Cave, original copyright holder unknown; image sourced from tineye.com


The surface

The surface

Out there in the open, on the surface, there is the real world illuminated by the sun; the truth; a shorter distance to an informed, even enlightened state of knowledge and being.

There is a claimed "state of the art" (technological or otherwise), which is being claimed as feasible by incumbents. There is, however also an actual "state of the possible", which incumbents either pretend doesn't exist, or actually cannot even begin to imagine, let alone turn into reality — because, for decades, they have been making the same stuff in the same way, and feeding it to the same customers.


The trap of the Cave

The trap of the Cave

Prisoners are trapped in a deep underground cave far, far away from the surface, distanced from this state of mind and being. They have been kept there, isolated, for as long as they can remember. They are not allowed to move; they can only look at the cave wall in front of them.

Long-term customers of complacent incumbents are prisoners of the incumbents' approach to bringing new value propositions into a (deliberately?) slow-moving market. Customers of incumbents have been kept pacified with "slow-drip innovation". Customers of incumbents are often not allowed to change suppliers, either because of misconceptions (often deliberately shaped by the incumbent's marketing)—or, they don't dare to do so, because of their own fear of breaking with the past. "Better the devil you know...", etc.


The shadows on the cave wall

Shadows on the cave wall

On the wall of the cave, fuzzy shadows are cast, but to the prisoners they are not shadows; it is all they know. The prisoners have no idea about anything other than their cave experiences so far. In fact, the shadows are not even the objects that cast the shadows themselves. Not only are the shadows just a vague, incomplete, inaccurate abstraction of the objects, but they are not even faintly representative of the truth that lies on the surface. Yet, that's all the prisoners observe, consider as "known truth" and extrapolate upon as their "reality".

Long-term customers of an incumbent have settled into a comfortable and familiar pattern of consuming the incumbent's marketing messages and pretense of "cutting-edge technology" and "innovation" with much undeserved fanfare. These incumbents use FUD (Fear, Uncertainty, and Doubt) to make new alternatives that actually leapfrog their offering seem risky. Sometimes, customers haven't even tried an alternative for decades, out of fear of losing the comfort and familiarity that the incumbents have lulled them with. Some customers might even have been so utterly convinced by an incumbent that nothing significantly better can ever be developed. Oligopolistic incumbents like to treat what they know as what is actually possible and pass it off as such; not as a temporary state of knowledge that can always expand.


The procession of the guards

The guards

Behind the prisoners and out of their sight, a procession of guards is passing all kinds of objects in front of a source of light (a fire); these are the objects that cast the shadows that the prisoners observe. Whenever some of the guards in the procession speak, their voices bounce within the cave; these distorted echoes are promptly perceived by the prisoners as the voices of the shadows.

Not only are the incumbents' claims of technological superiority not real, but often their own understanding of what is actually feasible and what could be developed as a superior offering is distorted by the echo chamber of their own organization, and sometimes that of the larger industry in which they operate. The echoes reverberate outside of the incumbents' organizations and reach the audience in events, conferences, and sleepy, lukewarm posts on social media, keeping long-term customers misinformed—partly deliberately and partly by chance.


The distortion of reality

Cave hallucinations vs. cave reality

The prisoners are entirely convinced that everything they perceive in their unenlightened state is entirely real. But what would a prisoner think, if he were to get a hint that there's something going on besides the shadow play he has been fed seemingly forever? This prisoner would probably first treat all revealed hints as hallucinations; there would be no reason for him to consider anything as real, except for the shadows and sounds in the cave. After all, for years (or even decades), his own "reality" has been shaped by the constant diet of inaccuracies the guards have been feeding him; at worst, knowingly and deliberately.

Some customers of the incumbent might have been so utterly convinced that their choice of equipment is "bulletproof" in eternity, that any suggestion to the contrary would cause intense self-doubt and cognitive dissonance. After all, for years, the market's perception has been shaped by the incumbent's marketing activities regarding what is currently available as a value proposition vs. what is considerably feasible for the incumbent.


The exposure to reality

Cognitive dissonance

If this released prisoner were to persist in understanding the nature of his cave experiences so far, he would grow surprised to gradually discover the truth. Increased exposure to more information inconsistent with his cave experiences would not necessarily be considered welcome; more likely, it would be a source of enormouscognitive dissonance and distress. Every step away from the cave and towards the surface would cause growing bewilderment and apprehension. Even upon arriving to the surface, exposure to the actual reality would initially cause frustration and denial.

If such a customer were to explore the possibility that the incumbent's product offering isn't, in fact, the best that could be achieved, the first steps towards the truth would be met with trepidation on the customer's end. Every exposure to new information from new market entrants showing hitherto unseen value propositions so far considered impossible, would be met with skepticism. And even if this customer were to receive an actual demo, some hesitation to let go of the prior misperceptions shaped by the incumbent, would persist.


The probability of escaping

Back into the cave as a prisoner or as a liberator?

Gradually, a released prisoner would, perhaps, come closer to a grasp of truths, as well as to an understanding of the vast unreality of the experiences of himself and of his fellows trapped in the cave. Or, another released prisoner could possibly crawl back towards the cave, past the flames, guards and objects, and back in the cave alongside his fellow shackled prisoners. In fact, there is a high probability that the latter prisoner might not just crawl back into the cave, but even join the procession of guards, himself proudly casting shadows and helping to drown his prior cognitive dissonance with the deception of himself and of others.

Of those long-term customers of an incumbent, not all would manage to fully digest the implications of the knowledge that they have been tricked by the incumbent for years. Some would indeed see this as an opportunity to try out the new industry player's product offering, evaluate its new value propositions, reconsider all the misconceptions implanted by the incumbent, and leave the stagnated past behind them. Others would take offense at how they have been played by the incumbent for years, and choose to deal with this emotion by returning to their comfortable long-held beliefs that the old way is still the best way — and that there's no way the incumbent could have ever broken their trust to that extent, no matter what the hands-on proof provided by the new, innovative market player and contender strongly implies.

The attempt to convince

If a now-free ex-prisoner were to go back underground, he would have a hard time convincing most prisoners in the cave that:

  1. All of them are, in fact, prisoners in a cave. — Being a long-term customer of an incumbent who hasn't been pushing the technocommercial envelope represents a long-term risk, even though it may have felt comfortable and safe for a long time.
  2. All experiences in the cave are actually unreal, inaccurate, and possibly entirely fake. — The longer an incumbent remains uncontested by new market contenders that actually innovate (instead of simply inventing), the more its product offering and marketing is likely to represent a distorted view of what is really possible both technically and commercially.
  3. All experiences in the cave are the result of an elaborate procession. — The larger and more complacent an incumbent gets, the more its marketing messages aim to protect its market position by utilizing FUD to mislead and retain customers—and the more their content deviates from the actual, inherent differentiation of its offerings that wears thin by the month.
  4. The procession's objects and sounds aren't even an accurate approximation of reality. — No matter what the incumbent claims on its marketing material or in its sales pitches, complacency is highly likely to have led an incumbent to become disconnected from the possibilities of innovation, as its people grow more complacent and self-satisfied by the day.
  5. The guards of the procession are themselves underground and far away from reality. — After decades of an incumbent doing the same things in the same way, its organization's ability to look for opportunities to improve and do things differently will have atrophied, sometimes to the point of growing entirely disconnected from what customers don't even know they need, or how they can be served with new ideas, both technically and commercially.
  6. The guards are either unaware of the surface-level reality or aware and deliberately orchestrating the procession. — The incumbent's employees are possibly oblivious to the fact that their organization is entirely distant to opportunities and possibilities, or they may even be complicit in keeping the organization and its customers oblivious. Note that the procession of guards is, itself, undeground, and needs an enormous fire to cast shadows, as the sun is nowhere to be seen underground.
  7. Every step away from the cave is a step towards the actual reality, even though for some this will be a bewildering possibility to entertain. — Though not every customer of the incumbent will end up adopting a new market entrant's product offering at the same rapid pace, everyone experimenting with stepping away from the incumbent (even for a product trial) stands to benefit from having his eyes opened to possibilities long presented as impossible.
  8. There is a way out of and away from the cave. — An incumbent may have kept everyone asleep and complacent with downplaying recurring problems and pain points for decades, but new product offerings by serious contenders make it possible to explore new avenues and possibly adopt things that work better than ever imagined before.
  9. Out there in the open there is an actual reality that can be experienced, by casting doubt on everything the prisoners hitherto "knew" as "real" and "settled". — Regardless of incumbents' FUD-based marketing, their ongoing exploitation of a leading market position, and the trepidation of their customers to consider new and superior alternatives, there will always be people out there pushing the envelope of technology and/or business, and watching it bend.

The most lenient and harmless treatment the freed prisoner would receive would be to get scoffed or ridiculed for even entertaining just a few of the list of thoughts above. To even begin leaving the cave, therefore, requires luck, chance, curiosity, and openness to new possibilities.

  • To start climbing out of the cave takes skepticism against the guards and their procession, and the willingness to entertain the thought that the cave has been a comfortable self-deception, but a self-deception nonetheless. — Organizations must cherish those innovators, early adopters and mavericks who are skeptical of the status quo and eager to challenge how things have been done for a long time.
  • To gradually approach the surface requires perseverance in the climb and persistence in the face of internal doubt. — Whether we call this grit, stubbornness, perseverance or courage, innovators, early adopters and mavericks must display it, and their managers must recognize the underlying motivation and provide the necessary space for experimentation and ultimately adoption of what's on the surface.
  • To consider and absorb the truths and newfound knowledge on the surface requires the desire to learn and the openness to reconsider everything you were misinformed in the cave by the procession of the guards. — Everyone in the cave, from a procurement manager to the end-user of a new product/solution by a new market contender/non-incumbent, aids the organization to get unstuck by demonstrating those values instead of always staying on the beaten path.
  • To go back down to the cave and attempt to free others requires conviction, courage, and persuasive abilities. Very likely, it also involves dealing with frustration at the guards and their antics, whether these have been innocent (e.g., due to incompetence, lack of knowledge, or lack of imagination) or deliberate (e.g., due to incompetence, malice, or mere laziness/comfort at the cost of the organization.) — Managers of these innovators, early adopters and mavericks must understand the frustration of their team members and help them to divert it towars productive conflict and persuasion for change and improvement, e.g. for questioning the status quo of the incumbents, and picking new solutions that stray from what has been comfortable, but also ultimately outdated and inefficient, or even ineffective.

Business as usual, for incumbents

As widespread impressions go, large incumbents in highly concentrated markets are typically not the paragons of innovation, let alone of disruptive, radical innovation that generates double-digit revenue growth in one fell swoop.

Without getting too deep in the details of the statistical validity of such impressions, we can simply follow logic: why would large incumbents in oligopolistic market situations want to pursue such modes of growth, anyway?

In oligopolistic markets they don't have to; there, competition doesn't happen predominantly thanks to an offering with a set of superior value propositions, but based on a rich mix of competitive advantages scattered across the entire business system. In extreme cases, users and buyers both might be simply OK or even indifferent towards the product offering of both incumbent A and incumbent B. In fact, in such a market, all incumbents' business systems can be so similar to be nigh-indistinguishable from each other, with the exception of their actual products; these may differ on just a few modalities that reflect subjective customer preferences. However, some customers might still prefer to buy from incumbent A due to non-product-related perceived advantages of the latter's business system. For example, with regards to repair and maintenance, delivery times, geographic closeness, personal relationships within distribution channels, etc. Examples from the real world include most mid-market Android smartphones, most of the automotive industry's products (vehicles to just take you from point X to point Y), and the vast majority of consumer electronics (most laptop PCs, Bluetooth speakers, etc.)

In fact, for people deep in the cave and enthralled by the shadows cast on the wall, the business-system advantages claimed by incumbent A or B might be perceived as actual differentiators — even though a new market entrant with presence in other categories might not only match the capabilities of incumbents A or B, but even far surpass them thanks to experience in other markets; or, especially thanks to a more customer-centric and less complacent organizational culture and go-to-market approach. Such is the strong power that the incumbents' "procession of guards" holds over their large market and mind share.

Alternatively, incumbent A might differ in terms of portfolio structure and product architecture, creating minuscule advantages against incumbent B, with commensurate disadvantages, and vice versa — thus creating a situation in which these incumbents compete for the same core set of customers, with each incumbent also catering to its own side-market with strong preference of fringe benefits of A or B over B or A, correspondingly — yet also with either incumbent offering products with stagnant technology and slow-drip, tiny additions and improvements developed and launched infrequently, yet hailed by the incumbent as massive upgrades over their prior releases and that of their equally slow-in-lockstep incumbent competitor.

In fact, any perceived advantages can be factually slight, and the result of very little differentiation between A and B, to the point that the preference of A over B is a matter of subjective taste, acquired over time, or simply a result of the power of habit, either personal or organizational. One example is when incumbent A is a supplier with an existing, stakeholder-managed entry in the ERP system, whereas bringing B "into the system" would incur some data management and lots of persuasion effort towards those with personal relationships within incumbent A's business structure. In large incumbents, such examples of a thriving bureaucracy at the expense of the purchasing decision that would be the best for the organization's future are less rare than one might imagine.

Is that, however, bad per se? Not necessarily; there is value in sticking with something, even with an incumbent, for a while: for example, there is less effort involved in evaluating alternatives, less personal risk for those making the decision to switch, and less hassle for switching from one solution to the other—initially, at least, and for a while, anyway. However, this does reduce the probability that an incumbent will pursue differentiating value propositions that serve the customers' jobs-to-be-done in new ways, e.g. with new technological and commercial options, such as novel product variants with new, groundbreaking technology, or novel business models with new, value-oriented mechanisms.

The lock-in to an existing operational value stream / business system that can only admit a certain type of development value streams is a reality — it's what many of us have observed at companies claiming that "that's not how we do things here", "we've never done this that way before", "we've never done anything like this before", "nobody else in the industry has ever tried that" and a host of other rationalizations for why an incumbent creates its own stagnation, while also keeping the market prisoner to its inability to innovate or adapt to new threats or opportunities and trends.

Therefore, while there is value in sticking with an incumbent for a while, there is also the increasing risk of being at the end of a deal that sours in terms of opportunity cost as time passes. Especially in niche markets with a couple of large players and a large fragmentation in the long tail of alternatives (most of which with similar and similarly lackluster offerings), many customers have been firmly placed in large caves for many, many years.

It's easy to identify whether you are caught in this situation; if so, you will answer all of the following questions with an emphatic "yes":

  • Can you identify the 2-3 incumbents that seem to be synonymous with a specific product category?
  • Have all of these incumbents seemingly been there "forever"?
  • Do all of these incumbents rely chiefly on this impression of "forever" to brand and position themselves in the market?
  • Do most of these incumbents offer products that are basically the same, except for tiny variations that may as well be subjective?
  • Are all of these incumbents launching products infrequently and with minor changes compared to past generations, especially with minor and incremental improvements compared to the products offered by their also-incumbent competitors?
  • Do these incumbents tend to be unresponsive to your customer feedback and slow to respond with addressing chronic pain points?
  • Do these incumbents offer you massive discounts whenever you consider switching away from them, especially towards a new contender?

Just don't rock the boat, OK?

Incumbents in such environments have over years finetuned their business systems to engage among themselves in a dance of incremental improvement. Now, this doesn't mean that the incumbents collude, but it does mean that they have split the market between them by throttling their innovation drive, so that none of the handful of large players can gain a significant differentiation over the other — lest the slow-and-steady ratcheting of specifications of well-known solutions be forced to be disrupted by the need to develop an actual step-changer (product or business model) that finally addresses customers' chronic pain points.

However, industry competitive dynamics can play as much a role in these developments as specific aspects of the product offering. For example, caught in a prisoner's dilemma, nobody among the incumbents might dare to shake things up, lest the other side decides to retaliate. And since incumbents in such markets tend to "de-skill" over time by neglecting their innovation capabilities, retaliation between incumbents would tend to be on the operationally commercial end of the business system, rather than on the fuzzy front-end, e.g. with R&D or product development. That is because cracking the whip with the hints of even a remote possibility of a fight on price bears the risk that the other side will bring all players down with it into a downward spiral of eroded profitability. Why waste a good, comfortable oligopolistic market built around a handful of mature and creepingly improving products within stagnant technologies, buttressed on the backs of long-term customers soothed to sleep by defensive marketing and meek tit-for-tat commercial moves?

Over many years, the competitive moats of incumbents go up in terms of all aspects of their respective business systems except with regards to actual, meaningful product or business-model differentiation. The latter sources of differentiation can, in extreme cases, remain almost deliberately ignored by an incumbent's organization.

As a result, the pie ends up being split thanks to lukewarm competition, e.g. in terms of distribution channel access, jiggling the specifications of tenders favorably in a multi-round game of tic-tac-toe, reacting to competitive threats with massive discounts to take alternative options out of the table, creating FUD regarding new market contenders who bear significant differentiation to existing incumbents' offerings, and other such defensive and usually reactive moves. In other words: creating an allegorical, industry-wide Cave in which all customers are jointly held prisoners, while also portraying those who dare to consider climbing out of the Cave as odd and irrational.

The flip side of this coin is that the pressure among the incumbents to seriously innovate with new value propositions (technical and/or commercial) gradually decreases. After all, attempting to innovate is equivalent to assuming risk. In mature product categories with thoroughly-researched technologies at the top of their respective S-curve, and with business models featuring well-known mechanisms, diminishing returns and an overbearing emphasis on mitigating risk dominate the thinking behind every new proposal brought forth by innovation-minded people within the organization. Creating something new that will grow market share at the cost of existing product lines and the other incumbents requires "step changers"; these are expensive and uncertain — and bigger companies are also pretty bad at killing runaway projects; therefore, step changers are treated as problematic and thus remain rare. Certaintly, in the short term it's less uncertain and more controllable to pursue mild competitive options like the ones listed above. And, if the case for step-changers is available, it makes more short-term sense to sacrifice margin by blocking access to newcomers, or even to acquire newcomers and (willingly or inadvertendly) extinguish, water-down, or mess up commercialization of their technologies and business models that threaten to disturb the slumber of incumbents' customers and of the incumbents' employees themselves.

The allegorical Cave deepens, the procession of the guards gets strengthened, and the shadows cast on the wall become darker and even less defined.

It's no wonder that incumbents' product categories often stagnate technologically. In the rare pursuit of new product development under the constraint of risk minimization, incumbents can end up playing tic-tac-toe through the gradual ratcheting of technical specifications over multiple product generations; +10% this spec, -10% that spec, +5% better spec X compared to competitor incumbent Y's most recent product, etc.

For those engineers among us who have seen this happen in action, this approach can end up farcical in its naivety. You see, very often, the combined ratcheted specs, requirements or target financials are in a technologically or commercially infeasible part of the current design space. This subspace of options would only become "unlocked" and reachable through either serious technological innovation with a step-changer (unlikely, as explained earlier) or a serious rethinking of the entire business model surrounding the well-known, predictable cash cow the incumbent has been milking. In many cases, this subspace is unreachable due to the laws of physics (when it comes to technology and its trade-offs) or mere arithmetics (when it comes to evaluating a business case and its trade-offs). After all, if technology-driven attempts to innovate are deemed risky by an incumbent, market-driven attempts to innovate by involving changes of the operational value stream across functions are likely to be deemed thousands of times riskier by comparison.

Those prisoners internal to the incumbent are thus likely to be beaten to submission by the internal procession of guards, either never reaching the surface, or cursing the moment when they decided to come down and bear the message that there is a surface that looks nothing like the cave or the shadows cast upon its walls.

In their respective operational value streams, incumbents in such markets place great emphasis on a) long-term incremental improvement of undifferentiated, industry-favored business systems and technologically-stagnant solutions, and b) short-term defensive actions against potential new entrants. So, it's also no wonder that incumbents' business models (and operational models) stagnate commensurately to their mature technologies, and/or become differentiated in small ways that matter little in the bigger picture, beyond providing marketing campaigns with tired brand-building fodder or generic buzzword-laden messages that cater to everyone and no one in particular.

The procession of guards makes use of an increasing number of objects passed in front of ever-larger flames to cast ever-longer and fuzzy shadows, keeping the prisoners in the Cave occupied with placating messages and illusions about what can actually be achieved, e.g. in terms of performance, cost, productivity, profitability, or end-customer value.

Incumbent A might offer better product support. Incumbent B might boast shorter turnaround times in product service and maintenance, even far beyond what customers actually need. Incumbent C might be more likely than others to cave in and provide large discounts when pressed. All three end up placing products with weakly differentiated value propositions in the hands of the end-customer, while making something just a tiny bit better, or just a tiny bit faster, or just a tiny bit more convenient, but not altogether better, faster or more convenient or more valuable enough to rock the boat.

The path from the allegorical Cave to the surface lengthens and becomes a maze of twisty little passages, all alike. Fewer prisoners dare to enter the maze, and even fewer reach the surface by making it through the maze.

In other words: undifferentiation and substitutability that favor the previously mentioned organizational habits and whims, instead of purchasing decisions focused on long-term value created for the customer; instead of value captured by the incumbent that could be redirected back towards the development of new value propositions with serious differentiation potential.

For many within the incumbent's organization, the climb from the allegorical Cave gradually becomes unthinkable.

Customers, sleep tight

These dynamics have a chilling effect on an incumbent's willingness and ability to observe or at least listen to customers' needs, the farther one moves upstream in the business system, and especially in the "fuzzy front-end" or in product development endeavors.

Within the realm of product management at such incumbents, customer requests for an improved user experience, solutions to chronic pain points, new ways of product acquisition or similar input remain unheard, unaddressed, or entirely ignored. This lack of responsiveness on the part of an incumbent can be the result of an acquired organizational weakness due to too-long communication pathways from the customer to the product manager. It could be due to an excessive division of labor between locations, departments, or in unhelpful flavor-of-the-month process paradigms shoddily implemented by peddlers of Deft.

Or, unsurprisingly, it can be a deliberate "damping" of customer insights and requests, in order to slow down the pace of product improvements, keep the spec-ratcheting game going, and thus reduce the likelihood of getting carried away with risky attempts at step-changer offerings. Funnily enough, such observations can be rampant while the incumbent is also at the same time running multi-million-dollar global Lean/Agile initiatives that promote fancy big ideas like pull, flow, agility and value streams, or while putting posters on the wall, proclaiming how everyone should play their part in innovation.

Even some of the guardians in the procession start to become prisoners in the allegorical Cave by believing the shadows they are paid handsomely to cast.

Whatever the reasons, technological innovation isn't the only victim in the process: business-model innovation also takes a hit. Why? Exactly because an incumbent's sales force has grown so accustomed to reacting quickly to competitive pressures on price (e.g., with price concessions to win tenders even at a loss), that no product manager of the incumbent ever gets a serious chance to argue for a total rethinking of alternative profit formulas (e.g., rental, subscriptions, pay-per-use) that could provide entirely new options to both the incumbent and the end-customer without eroding the long-term profitability of the former, or impacting the cash flow of the latter. New offerings that would be mutually beneficial and value-creating for both the incumbent and its customer base thus remain a sight unseen.

In other words: short-term, knee-jerk reactions at the very end of the value chain make long-term, mindful, responsive developments at its beginning rather unlikely. The market then remains bereft of new options and over time gets locked into old, undifferentiated practices on both the supply and the demand side.

On the commercial end of such an industry-level innovation stalemate, customers are willingly or inadvertently educated by the incumbents' distribution channels and mealy-mouthed marketing messages to curb their enthusiasm. In their marketing plans, incumbents tend to make such a huge deal out of small and predictable product improvements that anyone entertaining the thought of a bold attempt at larger gains in customer value will most likely be scoffed at as an unrealistic visionary — and the same also goes for everyone who is a participant in or stakeholder of product development, from the product manager, to the salesperson, to procurement managers of the buyer, to the end users themselves.

The allegorical Cave grows to encompass the incumbent itself.

The long-term result of such dynamics is that the incumbents are effectively throttling product innovation across product categories by small-dosing incremental product improvements seemingly with an eye-dropper. Meanwhile, everyone within the products' context — especially customers in that market, but also employees of the incumbent — learns to never expect too much, or is even "educated" to believe that significant improvements are for the incumbent akin to squeezing blood from a stone, and that there is probably nothing to be done but wait for minor, gradual improvements accompanied by a lot of self-congratulatory marketing hubbub by the incumbent's marketing machine.

The prisoners start to control each other for compliance to the "reality" of the shadows on the wall of the allegorical Cave.

Guardians and prisoners of the proverbial Cave

The incumbents have grown large and complacent. They have long organized themselves for efficient exploitation and execution-by-checklist, not effective exploration and entrepreneurial execution; for deliberate and disciplined effectiveness within well-trodden paths; for clarity of reporting structures and departmental budget controlling; for managerial turfs and hierarchical, centralized strategy deployment through cascades of management-by-objectives. Usually, these characteristics are part of an evolved package deal that also contains an organizational culture which favors conflict avoidance in the face of ambiguity, head nods and lip service to corporate buzzword campaigns (Lean, Agile, digital, innovation, transformation, ...), as well as other stereotypical big-company sources of a low likelihood to break with the status quo in a manner that is business-wise significant.

With growing cynicism towards the shadow-casting guardians, some of the prisoners start to see the light and attempt to climb to the surface away from the allegorical Cave, despite the aggravation and discomfort this may cause them.

In organizations in such a state (caught in the Cave), product managers come and go without much difference in the responsiveness of the organization to expressed customer needs and pain points that would require serious investment into fuzzy-front-end innovation attempts. They learn a littany of boring, branding-heavy sales and marketing arguments that have grown smooth and blunt after decades of use and abuse. Cyclically tautological arguments become especially noticeable; for example: "we have been in the market for so many decades because our brand is so strong" and at the same time "our brand is so strong because we have been in the market for so many decades".

In such organizations, product managers do not go to the market that often. Instead, they remain stuck in front of laptop screens, crafting the "perfect" business plan for months, pulling whatever can be salvaged out of garbage-grade market reports and statistics from market research of dubious quality, ratcheting up the tech specs of competitor incumbents' products, and compiling them into endless slide decks with all the safeguards necessary for release in some big-batch decision meeting of a clunky old phase-gate process that should have long been abandoned.

The product managers of the incumbent themselves become part of the procession of shadow-casting guardians.

In organizations caught in their own Cave, development engineers pester product managers to finally define and "freeze" some magical technical specification sheet that they can execute upon. Faced with the need to remove ambiguity under time and budget pressure, development engineers in such organizations will then often take the designs of the last product generation's components and give them a slight polish, hoping to achieve +X% this and -Y% that, regardless of feasibility, meaningfulness, or customer need. Conceptual trade-offs or changes to product architecture remain scarce. When things don't work out despite numerous point-based iterations of wasteful trial-and-error on the same old concept/architecture, the development engineers will shrug it off, claim that they have "optimized" the product, and blame product managers for the wishful thinking on target specs and any gap between target specs and the "optimal" design's performance. Most likely, they will also blame the company's management for the tight budget for technology development, while possibly also learning the useless lesson that actual breakthrough innovation is neither likely nor ultimately rewarded.

The development engineers of the incumbent themselves become part of the procession of shadow-casting guardians.

In organizations caught in a Cave of their own creation, project managers meticulously create and endlessly fine-tune tightly-contolled, Gantt-charted-to-death project plans with zero slack to account for the unpredictability of technologically-innovative R&D work. When things don't work out, they will shrug it off and blame development engineers for the serendipity inherent in explorative development work. And, most likely, they will blame the company's management for the tight time schedule for product development, while possibly also learning the useless lesson that actual breakthrough innovation in that environment is neither likely nor seriously pursued.

The project managers of the incumbent themselves become part of the procession of shadow-casting guardians.

In organizations with so many prisoners and guardians in the proverbial Cave, the sales force grows bored with lukewarm, boring product releases that can hardly be justified as an upgrade compared to the previous uninspiring, incremental product release. They progressively learn that product differentiation and customer value can take the back seat, and instead get used to deploying the incumbent's same old brand-based arguments for which incumbent A is better than incumbent B — thus starting the cycle of shadow-casting towards the market all over again.

The role of the contenders, and their opportunity

In such market situations, plenty of opportunity awaits contenders that operate unlike the top one or two incumbents of the market — and plenty of value waits to be captured by those incumbents' customers who will consider the above and act accordingly by leaving the Cave and trying out the offerings of serious new contenders.

It is, however, still not a straightforward task to differentiate actual contenders from the large number of wishful-thinking small-fry that may have good ideas but also carry risks disproportionate to the value promised through novel solutions that may be inventive but not actually innovative for mutual benefit.

You can identify serious contenders worth your organization's time and consideration by answering many of the following questions with an emphatic "yes":

  • Has the contender developed a new technocommercial offering that factually puts incumbents' offerings to shame in different dimensions simultaneously (e.g., raw performance, user-friendliness, affordability) while also resolving chronic pain points that the customer segment has been having with incumbents' legacy offerings?
  • Is the contender using sales arguments that focus on what is now finally possible and the value that the offering delivers, instead of just waxing lyrical about the technicalities of their solution?
  • Does the contender boldly challenge incumbents' long-standing and tired brand-based arguments with fresh insights about the hidden long-term costs of "staying in the Cave"?
  • Does the contender have a proven track record of launching new products frequently, either entirely new or with bold improvements compared to past generations, especially compared to the products offered by the incumbents?
  • Does the contender demonstrate the readiness to listen to your feedback and consider improvements to the product offering, while also showing a healthy readiness to stick to a clear product vision and concept instead of turning the offering into a camel (i.e., "a horse designed by committee")?
  • Does the contender demonstrate responsiveness to your feedback, and offers clear arguments for decisions for or against new features instead of the hand-wavy excuses of the incumbents?
  • Does the contender consider multiple aspects of product differentiation instead of just technical specs-ratcheting, including new business-model options for getting access to the product affordably and benefitting earlier from the higher value it generates?
  • Is the contender's marketing messaging crisp, to-the-point, and unapologetic, with a willingness to tell you that their offering is not what you are after, if that is indeed the case?

If so, then you are looking at a serious contender in the market, something that does not come along very often, especially in industries that have long been dominated by a couple of long-lasting incumbents keeping everyone in a Cave. And, if this is so, then you can also safely ignore the large number of small inventors who think they can compete with the incumbents just because they improved upon a single aspect of a product in the category thanks to an invention — i.e., by trying to beat incumbents at their own Cave-dominating game.

Thus, if you have identified what seems like a serious contender, and if the time is right for you to reap the benefits of switching away from a chronically-bamboozling incumbent, keep in mind the ultimate set of criteria that will make it very likely for you to indeed reap those benefits.

truly serious contender in an oligopolistic market demonstrates the following ten criteria:

  1. a product offering that challenges incumbents' traditional solutions not only on a couple of metrics, but across multiple aspects of the product and its business model,
  2. a holistic understanding of the chronic pain points that customers have faced for years, and of the technocommercial trade-offs that had to be conquered to address them,
  3. confidence in pitching the product offering with a focus on the value it creates for you, instead of geeking out on a couple of technical specifications in a vacuum,
  4. the guts to tell your people climbing out of the Cave what they need to hear to reach the surface, instead of what their guardians would like to hear,
  5. an unwillingness to confuse you with the same old brand-based and expert-driven "we've been at this for 30+ years" arguments often used by complacent incumbents,
  6. the ability to showcase unambiguously why the product offering is superior to that of incumbents from both a technical and a commercial perspective,
  7. the readiness to listen to and consider your feedback, instead of trying to steamroll you with hand-waving and fancy words like "innovation",
  8. the responsiveness to either act based upon your feedback or to explain clearly and confidently why it will not be considered,
  9. the willingness to step away from a sale if a specific product offering does not solve your problem, and finally
  10. a stubborn reluctance (that your organization's shadow-casting guardians won't appreciate) to provide you with a hefty discount just to get the sale at any cost.

Together, these criteria establish a truly serious contender as the guide of the customer's organization away from the Cave, away from the guardians and their procession of shadows, through the maze to the surface, and back down into the Cave with new, solid arguments and confidence to help their colleagues in the Cave dispel the self-delusions that incumbents have helped them create and maintain, possibly for decades.

The truly serious contender is much more than just a supplier or vendor; they are the key to unlocking value that you have been missing for many years while believing the soothing sweet nothings that incumbents have been whispering into your organization's collective ear.

Therefore, the core challenge of a truly serious contender in winning market share at the expense of complacent incumbents is to help incumbents' long-standing customers escape from Plato's allegorical Cave, where the incumbents have been keeping them amused with shadow plays. This is, indeed, a daunting task. And that's why truly serious contenders are so few and far between, and why you it's worth being on the lookout for them.

What to do next

  1. Look at your suppliers and vendors. Who are the incumbents keeping you in the Cave? What are the shadow plays that their processions of guardians have long used to placate you and your colleagues? What has long been established as "impossible" yet without sensible justifications?
  2. Look at your organization. Who are those ex-prisoners that will help it get to the surface? Who are your internal prisoners enjoying the lull and comfort of the shadow plays at the expense of your business' future? And how much have the shadow plays of the incumbents been costing you every year, possibly for decades?
  3. Look at your industry. Which contenders can even begin to qualify as such? Who is the truly serious contender that will guide you out of the Cave? What do its product offerings reveal about the surface and about the value you have been forfeiting to the incumbents? And how will you engage the truly serious contender to start climbing out of the Cave?

Leave the Cave; it's worth it.

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