When we look at technology we use everyday, the great success stories all have one thing in common: competition. They all achieved their success despite healthy competition, or perhaps because of it.
Know The Enemy
Who would Superman be without Lex Luthor? Who would Batman be without Joker? Every great superhero has one thing in common: a great villain.
When developing a product, one of the key factors is having a concrete competitor. Motivate your employees by giving them a concrete “foe” to strive against. It solidifies your goals and a great competitor defines who you aren’t just as much as they define who you are.
Keep It Real
Competition is a healthy sign that you are addressing a real market. Customers often aren’t interested in buying something unless they know there’s an alternative solution available . People might not even realize you’re addressing a real problem if you’re the only one trying to solve it. Showing a list of competitors and why you’re better than them is a great way to build confidence in your service when you’re trying to get funding.
Competition makes for a better experience for the customer. Competitors keep you from being complacent because if you fall asleep at the lead you’ll soon find yourself at the back of the pack. Competitors spur innovation as you both try to reach the best solution. 
Keep Your Friends Close…
Keeping a close eye on your competitors can be a great source of information. Make their strengths your strengths and avoid their weaknesses. How do you differentiate yourself from them? How do they differentiate themselves from you? What are the threats to their business? These are threats to your business as well, or opportunities for you to grow your market.
Your competitors can be your best friends because they are the people who know the industry you are working in and the problems you face better than anyone. It often becomes a symbiotic relationship where you team up at times to address new opportunities.
There’s much talk about using the Internet to find out what people really think of you product. Don’t forget to do the same level of monitoring for your competition!  
- Customer service via Twitter
- Breakdown of several services like trackur, monitorthis and google alerts
- Performing competitor analysis on the web
But Don’t Close Your Eyes!
The problem with letting your competitors influence your business strategy is that it can cause myopia. History is filled with tales of two rivals competing neck and neck only to be eclipsed by a third company who can see the bigger picture. One of my favorite recent examples of this is the console war between Microsoft, Sony and Nintendo. Microsoft and Sony keep battling for the market of hardcore video gamers while Nintendo found a way to appeal to casual gamers.
Nintendo rapidly soared to number one by ignoring the cutthroat battle of better graphics and faster hardware and focusing on a different approach to a larger market. Knowing your competitors can provide valuable insight, but don’t let it drag you into a game of “me too”.
- Try getting a design win in a big company like IBM when you are the only product in your class. It’s not going to happen. There’s such a thing as being too far on the cutting edge.
- As long as you avoid featuristis. Happy users can find what they want to do.
- Of course, other bloggers aren’t your competition. Relevancy of content is your competition. There are useful tools for identifying relevant blogs in a niche though.
- One of the problems with the fragmenting of conversation is it becomes harder and harder to find out where people are complaining about you. TweetScan is a good bet because Twitter is powered by bitching. Competitious looks like a great app for monitoring competitors and their features.
I know I don’t do this enough. I make the assumption that people will try to contact me through the channels I do monitor.