The Two-Path Trap in Competitor Analysis

The Two-Path Trap in Competitor Analysis: Weekly Winning Strategies

Most competitor analysis treats business problems like coin flips—two sides, one choice. The companies winning right now see problems as prisms with dozens of refracting angles, and they're capturing opportunities everyone else is missing.

Question: What is the third-path strategy in competitive intelligence?

Answer: The third-path strategy in competitive intelligence involves rejecting false binary choices—such as "compete on price or features"—and uncovering overlooked approaches that address the real customer problem. Gain an edge by identifying unexpected opportunities through customer insight, adjacent market analysis, and challenging assumptions.

Summary: Winning companies don't settle for binary decisions. They find and act on overlooked paths by understanding deeper customer needs and blind spots in their competitors' strategies.

Like that marketing automation company, which imploded in 2021 because it saw its strategic problem in binary terms.

They had two options:

Compete on price

Or compete on features

They chose features. Built a product with 847 different capabilities. Lost to a competitor with 12 core functions priced 40% lower.

The real problem wasn't their choice. It was assuming only two paths existed.

While they debated features versus price, their actual competitor was building a community. They created a network effect through integrations, user-generated templates, and a marketplace that turned customers into stakeholders.

Third path. Nobody saw it coming.

Why Binary Analysis Kills Companies

Every business problem looks binary when you're moving too fast to think properly.

Build or buy. Expand or consolidate. Invest or cut costs. Hire or automate.

Competitive intelligence can paralyse companies with these false choices. The analysis becomes a cage.

Berlin eye opener

Still, this situation is better than what I experienced at a recent conference in Berlin on competitive intelligence. Big corporations presented how they are using AI and secondary data for competitive intelligence. However, few could explain where their data came from, how they validated it, or, most importantly, what they did with it and what decisions they actually made based on it.

I spent three days surrounded by Power BI dashboards, AI-driven summaries, and executives addressing rooms full of analysts on how they were utilising "granular data" to gain an edge.

The Berlin Reality: Data Without Context

Worse still, several presenters admitted their market intelligence work relies heavily on assumptions. One said they use AI and their secondary-based competitive intelligence to "prove" their own hypotheses about competitors. Another admitted their system "pulls everything public" and then "summarises it beautifully" in dashboards. Totally missing the Humint route.

So, most of these individuals have no idea if they are on the right path, let alone the right one.

The Multi-Path Reality

Real competitive advantage comes from seeing paths your competitors don't know exist.

Take a look at the streaming wars from 2019 to 2024. Everyone framed it as a binary choice:

Netflix vs Disney+. Content volume vs content quality. Subscription vs ad-supported. Global vs regional.

Apple said "none of the above" and built Apple TV+ as a loss leader bundled with hardware and services.

Amazon made Prime Video a retention tool for e-commerce.

YouTube challenged the entire premise by staying free with ads.

Five different paths to the same market. Only one company (Netflix) was actually playing the game everyone thought they were playing.

How to Find the Hidden Paths

Stop asking "which option is better"

And start asking, "what problem are we actually solving?"

Reframe the Customer Problem

Most binary thinking starts with product-centric questions. Flip it to customer-centric framing.

Instead of:

"Do we add feature X or improve performance Y?"

Ask

"What job is the customer hiring our product to do?"

We consulted for a project management software company in 2022. They were stuck on the question: "Do we build better reporting or better collaboration tools?"

We interviewed customers. It turned out that the real problem wasn't reporting or collaboration. It was "how do I prove my team's value to executives who don't understand our work?"

The third path of developing stakeholder visibility tools that translate project data into business impact metrics.

All resulting in a different problem, a different solution, and a different competitive position.

Map Competitor Blind Spots

Your competitors are likely trapped in the same binary thinking as you.

When everyone sees two paths, the third path is wide open.

Consider the food delivery sector from 2018 to 2020. DoorDash and Uber Eats in the US fought over restaurant selection and delivery speed. Binary competition—more restaurants or faster delivery.

Then COVID hit. Suddenly, the market needed: contactless delivery, family meal options, grocery integration, and restaurant survival tools.

The companies that had been exploring non-binary paths (DoorDash Kitchens, Uber Direct) were ready. The companies stuck in the delivery speed versus restaurant selection debate had to rebuild their entire strategy.

We spoke with Deliveroo before COVID (thinking about it, it was actually well before COVID, probably in 2018). The UK head was primarily interested in identifying the restaurants their competitors had and how they could persuade those restaurants to sign up with them. (and seeing how cool they could have their London office interior) How the world changed.

On the same visit, I also attended Autotrader's London HQ, and they had old Minis driving on the ceiling, so Deliveroo's HQ wasn't even the coolest on the day. Anyway, back to the article...

The Intelligence Framework for Multi-Path Analysis

Here's how you could break binary thinking:

Step 1: List the Obvious Paths

Write down the two options everyone sees. This is your baseline. These paths are probably crowded with your competition.

Step 2: Question the Constraints

What assumptions are baking these two options into existence?

"We must compete on price or features" assumes customers choose based on value calculations.

What if they choose based on trust, convenience, or network effects instead?

Step 3: Study Adjacent Markets

How do companies in related industries solve similar problems?

When Airbnb faced the binary choice of "more listings or better quality control," they studied luxury hospitality, boutique hotels, and even cruise lines.

That research led to Airbnb Plus, Airbnb Luxe, and Experiences—multiple paths, rather than a single binary choice.

Step 4: Interview Customers Who Left

Lost customers reveal paths you're not seeing.

A SaaS company we worked with believed they were losing deals to cheaper competitors or more feature-rich alternatives. Exit interviews revealed a third path: customers weren't buying anything. They were building internal solutions using no-code tools.

New competitor category. New strategic response needed.

Real-World Multi-Path Mapping

Let me illustrate this with a 2023 example.

A cybersecurity company came to us with a binary problem: "Do we sell to IT departments or security teams?"

Standard analysis said pick one. IT departments had bigger budgets. Security teams had more urgency.

We mapped the actual buying process across 30 recent deals. Found something interesting.

Neither IT nor security teams made the final call. Legal and compliance teams were driving 68% of purchase decisions due to regulatory requirements surrounding data protection.

The third way

Three additional paths emerged:

Path 3Position for compliance officers, not technical teams.Path 4Partner with legal tech companies that already own those relationships.Path 5Build compliance automation that makes the security layer invisible to end users.

They chose Path 4 and 5 combined. Revenue jumped 340% in 18 months by avoiding the binary choice everyone else was fighting over.

The Competitive Intelligence Discipline

Seeing multiple paths requires different information sources than those used in binary analysis.

Track Non-Obvious Competitors

Don't just monitor direct rivals. Watch companies solving adjacent problems.

When Notion started competing with project management tools in 2020, most PM software companies didn't notice. They were watching Asana and Monday.com. Notion wasn't coming from project management. They were coming from note-taking and knowledge management. Different path. Same customer problem.

Monitor Customer Behaviour Changes

Markets create new paths when customer behaviour shifts.

The rise of TikTok from 2019 to 2021 wasn't just about short videos. It revealed that customers wanted (even if they didn't know it themselves): algorithm-driven discovery, authentic creator content, and participation without production quality barriers. Companies stuck in the "Instagram vs YouTube" binary thinking missed the entirely new path TikTok was cutting.

Study Regulatory and Technology Shifts

New paths often open when infrastructure changes.

GDPR created new competitive paths around privacy and data ethics. 5G is creating paths around edge computing and real-time applications. AI is creating paths around automation and augmentation. The companies that win are those that saw these as new paths, not just modifications to existing binary choices.

Why This Matters Now

Markets are moving too fast for binary thinking.

Companies are currently making decisions without having all the necessary information. Stuck in false choices like:

"Do we adopt AI or protect our existing workflow?"

Wrong question.

The path is figuring out where AI augments humans and where humans add value that AI can't match.

"Do we compete on product or community?"

Wrong question.

The path is understanding what role each plays in customer retention and expansion.

"Do we focus on acquisition or retention?"

Wrong question.

The path is building growth models where retention drives acquisition through network effects.

The Analysis You Need to Run

Stop your next strategy meeting and do this exercise:

Write down your biggest competitive challenge.

List the two paths everyone agrees are the options.

Now force your team to find five more paths. Not better versions of the original two. Completely different approaches that solve the underlying problem.

Interview customers. Study adjacent markets.

Question your assumptions about what business you're actually in.

The third path is where the opportunity lives. The fourth and fifth paths are where you build competitive moats.

Moving Forward

Binary thinking is a cognitive shortcut that may feel efficient, but ultimately costs you market position.

The companies dominating their markets right now—Shopify in e-commerce infrastructure, Figma in design tools, Stripe in payments—won by seeing paths their competitors didn't know existed.

Your competitor analysis should map the entire landscape, not just the two roads everyone else is travelling.

Find the paths nobody's walking yet. That's where you build the business everyone will be studying five years from no

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