Competition Derangement Syndrome: How Competition Ends High-Potential Companies & How To Cure It With Strategy Therapy

Your biggest competition is thinking you have competition.

Arrrrr! 🏴‍☠️ Welcome to a free edition of Category Pirates. Each month, we publish “mini-books” that share radically different ideas to help you design and dominate new categories. From time to time, we make mini-books free to all subscribers. Thank you for reading, and please forward this mini-book to anyone who you think needs to hop aboard the Pirate ship.

Note: We now have a way to cure yourself (and your company) of CDS forever by creating a simple, honest, “Be Different” strategy—it’s called Strategy Therapy. You can check it out here.

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Dear Friend, Subscriber, and Category Pirate,

In 2005, the beer industry was locked in a price-slashing battle. 

It began when Anheuser-Busch, the Category King, dropped its prices in an attempt to stop Miller Brewing Company from gaining more market share. Miller attacked back. The company's executive vowed to "adjust any relative price gaps where competitor discounts have impacted…sales." One by one, other beer companies followed suit, each slicing into their margins to keep up in a race to the bottom they neither wanted nor could afford. 

The race to the bottom was on! 🏎️

Prices spiraled.

Profits sank. 

The aftermath was as predictable as it was tragic. For a full year, the beer industry's profits evaporated like spilled beer on a hot summer day. This wasn't just a loss for Anheuser-Busch or Miller. It was a self-inflicted wound across the entire sector, all because of a single competitive maneuver.

At the heart of this debacle wasn't a corporate rivalry—it was a chronic disease.

The board at Anheuser-Busch finally had enough, but they didn't know how to stop the fight. 

So, they decided to ask for help. Anheuser's board members included a number of CEOs and senior executives from Emerson Electric, Enterprise Rent-a-Car, and Purina—all legendary St. Louis companies. Each person said they had a great experience with The Cambridge Group (Pirate Eddie’s old firm), which was the best of the best at identifying new demand vs. competing for old demand. The firm asked Pirate Eddie to lead the work at Anheuser-Busch.

It was one of the strongest cases of Competition Derangement Syndrome (CDS) he had ever seen. 

For example: 

• Miller had launched an “energy drink beer.” Anheuser knew it was a bad category design, but they still went to a brand manager and said, “Here’s a few million bucks. Go kick their asses.”

• One of the senior executives called Pirate Eddie and asked for the address, date, and time of The Cambridge Group holiday party, so they could send 40 cases of Anheuser-Busch beer to ensure no one consumed a competitor's beer.

• Anheuser routinely bought numerous Super Bowl advertising slots years in advance, because they wanted to make it as hard as possible for any beer competitor to get air time. 

There was a high degree of skepticism and a desire to revert back to CDS. After all, Anheuser had the world’s best-selling beer and a portfolio of 50-60 different brands…

…until Pirate Eddie created and presented a seminal category science slide. 

(Category Designers are always looking for data. Especially weird data. That's often when legendary breakthrough ideas to drive revenue and innovation hide.)

The weird data at Anheuser was an 'international bitterness unit' (IBU), which is the quantity of hop resin or alpha acids in a beer. Pirate Eddie plotted all of the top brands of beer by market share on a spectrum of IBUs. As he presented this slide in St. Louis, he shocked the Anheuser executives with a few facts: 

1. 68% of US beer volume was between a narrow range of 6 to 10 IBUs. 

2. CDS led them to focus on competitors that were only 1 IBU away…

3. …yet virtually most import/craft beers had +60% higher IBUs

(In Category Design, we call data like this a “missing” hiding in plain sight.)

This slide also explained why the company's most recent new product launch, Budweiser Select, failed despite spending $100 million dollars on marketing and having Jay-Z as the ‘brand manager.' The IBU chart showed that from a bitterness perspective, Budweiser Select tasted no different than Bud Light. (And also because the category makes the brand. Categories are about customers—their problems, needs, wants, and opportunities.) 

Now, Anheuser-Busch had some of the greatest marketers Pirate Eddie had ever met. 

They had a $1.5 billion marketing budget per year. They had world class distribution into 550,000 retail outlets. Their marketing created culture. 

You might remember a few of these campaigns:

• Frogs

• Wassup

• Swear Jar (Pirate Eddie’s personal favorite)

But no matter how great the marketing, it could not help them with the fact that Bud Light was only 1 IBU different than Miller Light. (Translation: Bud Light was not different.)

Anheuser realized they had a severe case of CDS—and the only cure was brutal honesty and radical courage. 

Pirate Eddie and the team were brutally honest about the company. 

• Product: “All your beers are wedding caked on top of each other taste-wise.” 

• Competitors: “Miller and Coors aren’t the problem. Wine and spirits are.”

• M&A: “You can’t buy your way into wine/spirits. Integration is too hard.”

• Taste: “You have to accept that taste matters as much as image.”

But the Anheuser team also needed to be radically courageous.

• Innovation: “Innovation can work, but it has to be radically different.”

• Strategy: “Compete with spirits via a beer business model.”

• Brand: “Mega-brand Bud Light into a sweeter, spirits palate.”

• Pricing: “Price the mega-brand +30% higher.”

This category strategy therapy session shook the Anheuser team. However, it created the foundation for the Bud Light mega-brand strategy and an entirely new category. Rather than write a billion-dollar check to a legacy spirits brand, Pirate Eddie and the team suggested Anheuser:

1. Launch Bud Light Lime, appealing to a sweeter palate

2. …as a bridge to launch Bud Light Lime Lime-a-Rita, a Margarita mix

3. …and do this all via a beer business model of cans/bottles

4. …leveraging the world’s biggest and historically macho brand

Bud Light Lime was a first—a new and different category. Different forces a choice, while "better” forces a comparison. And category leaders do not compare. Others compare themselves to Category Queens.

But Anheuser's revenue prevention department was out in full force. 

(In some companies, the revenue prevention department is meaningfully larger than the revenue production department.)

Anheuser's head of innovation was told, “If you ever utter the words Bud Light Lime again, you’ll be fired on the spot!” The head of brewing said, “You can’t put Bud Light Lime in a clear bottle!” The sales force said, “You can’t break line pricing and make this +30% higher!”

Still, the executive team took a risk. 

(It takes courage to be legendary.)

The Bud Light mega-brand strategy generated $1.5 billion dollars of margin accretive revenue within a few years of launch.

Anheuser’s market share went up, margins expanded, and more importantly, the beer category grew significantly. To this day, Bud Light Lime remains the most successful new product launch in the history of the company. 

Let that sink in.

Bud Light Lime remains the most successful new product launch in the history of the company. 

Here’s how Bud Light Lime drove growth quickly after launch. 

And here are the slides Anheuser shared with investors to explain the new Category Design and how it was winning in spirits via a beer business model.

Different wins. Always. 

Anheuser was willing to face brutal honesty and embark on a crazy category design strategy that required massive courage. This cured its extreme case of CDS. Which allowed the executives to be different.

Most importantly, it ended the price battle and expanded the entire beer category.

Competition Derangement Syndrome is a condition in which decisions are made not out of strategic insight or innovative thinking but out of an obsessive, knee-jerk reaction to the competition.

Many CEOs are more focused on competition than customers and categories.

They're stuck in a CDS cycle of thinking: We have to catch up. We need to crush them with a better strategy/feature/product/campaign. They did it, so we have to do it.

To lay the beer price battle blame solely at Anheuser-Busch’s feet would be to miss the larger diagnosis. Like many companies, it was in the grip of Competition Derangement Syndrome. The executives didn't just choose to slash prices; they felt compelled to—driven by a disease that clouded their strategic vision and caused them to act in a way that was contrary to their own and the industry’s best interests.

When a company and its leaders are suffering from CDS, each move is more about countering the other than genuinely breaking new ground.

The fallout? 

It's not just the millions poured into attack ads or the dizzying price slashes. It's the missed opportunities for innovation, the lost chances to lead the market into uncharted territories, and the lost category potential of a radically different new market. When companies get caught up in the CDS cycle, they don't just risk their profits or market share. 

They risk their futures.

OpenAI, the fastest-growing tech startup in history, could have competed with Google in the search category. If the team suffered from CDS, they might have declared they were:

• Better search

• Search 2.0

• Next generation search

Instead, OpenAI declared a new ($45 billion) category called “generative AI.” That category design, plus a truly massive exponential breakthrough product and a freemium (not advertising) business model got the company to $2B in revenue in seven years—less than three years from the launch of its first product. 

OpenAI prosecuted the Magic Triangle flawlessly.

Just like Anheuser-Busch did with Bud Light Lime.

This mini-book will help you break free from competitive strategy.

You'll learn how CDS stunts individual company growth and leads to industry-wide crises, how to spot CDS, and most importantly, how it can be cured. You'll see the common mistakes made in the heat of competition and how to immunize your company against CDS. You'll also understand how category designers reject the premise of traditional competition, focusing instead on creating net-new value and permanently curing themselves of CDS. 

Using the category lens, we'll prescribe a way forward that focuses on creating new value and becoming so distinct that competition becomes irrelevant. 

It's about shifting from being competitors to being category creators. From being players in the game (created by someone else) to being the ones who create a whole different game. 

(Pickleball anyone? 😎)

So crack a cold one, and let's dive into the #1 disease in business.

Competition Derangement Syndrome

Those suffering from Competition Derangement Syndrome often don’t know they have it. But they experience several key symptoms:

• Making decisions (like reducing prices or adding a new product feature) just because a competitor did it

• Holding strategy meetings where the primary focus is benchmarking and best practices

• Striving for “feature advantages” over the competition

• Constantly thinking “What’s my competitive differentiation?” or “What’s my product positioning?”

• Selling out your own innovation by always looking to other category, product, and company templates

• Losing whatever category leadership you might have had in the market

Economics 101 teaches us that if a company makes a profit, competitors will enter until that profit goes to zero. (Most people chase demand. Category Designers create it.) Core economics assumes CDS is a given and that when faced with competition, companies will conduct category violence and self-harm by cutting prices, copying each other’s products, and teaching consumers that every product is the same and price is all that matters. 

(And that's why we can’t have nice things. Arrrrr 🏴‍☠️)

Category Design is the cure for CDS.

Back in the 90s, pre-Tesla, General Motors released the EV1. 

Consumers loved the electric car—from celebrities and environmentalists to everyday folks. But by 2003, GM's multi-year EV experiment had run its course. The company decided there was no long-term demand for electric vehicles. It recalled every EV1 and crushed them, likely a CDS-motivated move to prevent the competition from leveraging the technology. 

The most pirate-y of pirates hid their EV1s to enjoy and learn from the innovation.

It's no surprise that GM continued experiencing symptoms of CDS. It created (and then discontinued) its Chevy Volt, a hybrid car that was $20k cheaper than the Tesla Model S. Same story for the Chevy Spark EV and the Chevy Bolt.

Each time, the company cited reasons that amounted to the same spineless strategy:

GM didn’t believe it could be a leader in EV manufacturing.

It wasn’t because GM didn’t know what it was doing. It wasn’t because Tesla was inherently better than GM. It was advanced CDS. 

This reminds us of an old pirate fable…

A long time ago, cordwainer / cobbler boats would sail the coasts of Europe looking for customers who wanted new shoes and/or to get old shoes fixed. The “shoe boat” captains chased each other from port to port, in a battle to catch shoe demand. As demand increased, more and more boats entered the business. The European cordwainer / cobbler category got super competitive. 

Prices and margins dropped. 

Then, two leading shoe boat captains (Capital Will and Capitan Quill) decided to expand their horizons in hopes of tapping demand in faraway lands. 

The two chased each other further and further afield. One day, Captain Will came upon a country he’d never seen or heard of. Captain Quill was in hot pursuit. When Will docked, he was shocked at what he found. No one wore shoes. 🤔 Notta one. Shit! Failed experiment. So, Will did what wise merchants do—set sail for ports in places he knew (for sure) people wear shoes. 

When Captain Quill arrived, he was also shocked. 

But Quill had cultivated his different mind. 

Quill was a pirate (Will was not). Witnessing the exact same facts (no one wore shoes!), Quill saw what Will could not. With a twinkle in his eye and a snarl in his voice, he hollered to his crew, “Let’s teach these people why they need shoes!”  

Captain Quill became the Category King of shoe boat captains. 

Captain Will’s CDS got him fired for missing his forecast. 😉🏴‍☠️

If you’ve been on board the Pirate Ship with us for a while, Competition Derangement Syndrome will feel familiar to you.

We've written about competition in previous mini-books like The Better Trap, Missionary vs Mercenary, and the No Ocean Strategy. We've called it the "status quo" and "the premise." But these are all alter-egos of Competition Derangement Syndrome. 

To help you really understand CDS, let's start with the downsides of this disease.

3 Risks of Competition Derangement Syndrome 

Competition Derangement Syndrome not only squashes innovation but can lead companies into revenue-hostile waters.

Here are four key risks of CDS to watch for:

1. You're shackled to the way it is.

Most people are so focused on the way it is, they can’t see the way it could be.

Kids in kindergarten are taught to create and play. As we grow from children to adults, our teachings shift from creating to competing. We are taught to think of competition, competition, competition. 

Many CEOs have a competitive mindset because that’s what they've been taught. Of the 20,000+ business books on Amazon, a meaningful percentage are about “beating the competition.” Startups are no exception. Everybody loves to think of startups as blazing innovators and corporate companies as old fogies. But when we researched and compared prominent Silicon Valley and Fortune 500 companies, we saw that Silicon Valley is one-third category creators and two-thirds competitors. On the Fortune 500 list, that becomes 5% creators and 95% competitors. 

You might be thinking: "Okay, Silicon Valley still wins, right? They do creative things. They’re behind all the cool new apps."

Hold on. 

In the early 1990s, Geoffrey Moore named, framed, and claimed the phrase “crossing the chasm” and wrote a book of the same name. His central thesis was that companies that want to sell to their biggest audience should pick a target market, position their product, and choose the right distribution and pricing strategy. 

(We respect the hell out of this book, but it launched a decades-long case of CDS.)

For the better part of 20 years, every startup has pontificated about how their strategy is going to cross the chasm. And they all followed the same strategy. Except they didn’t see it because they were so convinced that their company would be the "next big thing." 

Human nature leads us to become enslaved to what is.

2. You’re stuck chasing tiny increments. 

We all know someone who starts work at 9 am, leaves at 5 pm, and makes incremental improvements at the same job, year after year, for tiny hikes in their salary. There are plenty of people like that. There’s nothing wrong with any of them, especially if their job focuses on the incremental. 

(Although we'd argue every career can benefit from category design. ARRRRR!!)

The trouble begins when founders and CEOs focus on the incremental. 

• “Let’s keep iterating step by step.”

• “Let’s introduce one new feature and analyze how it does.”

• “Let’s not put all our eggs in one basket.”

No one legendary incrementalized their way to success.  

The gal who comes in and does the same desk job every day is not going to incrementalize her way to CEO. If you want to become a category leader, you have to take a risk. You can’t bat singles and win the game—you need at least a few massive home runs.  

But you never will if you're suffering from CDS.

CDS-addled companies can't see that most industries are a winner-take-all game. 

You have one category leader who dominates up to 76% of the market share, while the rest fight over the remaining 24%. It’s a comparison game. Flaunting about how they’re cheaper, sexier, faster, cooler, whatever. There are ups and downs, sure. Some brands will have higher seasonal sales. Some will have pre-functional websites. And sometimes, one of them will go out of business, which leaves a little more for everyone else. 

But on average? You’re going to make peanuts. 

Category creators don’t care about comparison. They don’t make big announcements about why they are different from the competition. Because for them, there is no competition. 

Here's a story we love. 

Intel is well-known for leading Central Processing Unit (CPU) technology, which acts as the "brain" of a computer. 

When you run video games on your computer, you need purpose-built microprocessors that can handle the graphics. Historically, CPUs handled all of the graphics renderings in video games, like pixel colors, shading, and light effects. Games had to work within the confines of what a CPU could handle, for both processing power and memory.

In the late 90s, games (and gamers) began to demand more graphical power. 

Most companies suffering from Competition Derangement Syndrome tried to compete with Intel and offer products with better, faster, smoother CPU capabilities. Gaming companies created custom chips designed specifically for handling graphics (like the Video Display Processor in the Sega Genesis and the Picture Processing Unit in the Nintendo). 

But Nvidia, a small startup in the graphics processing industry, didn’t compete. 

It created a unique category point of view. 

In 1999, Nvidia introduced the GeForce 256, the world's first Graphics Processing Unit.

Nvidia didn't waste time trying to create better, faster, smoother CPUs. They cared about designing a breakthrough new way to compute. So they designed, named, framed, and claimed a new computing category—graphic processing units (GPUs). GPUs took over the heavy lifting for graphics processing, freeing up CPUs to handle game logic, physics, and other tasks and allow for more complex, immersive, and expansive gaming worlds. With the growth of generative AI, GPUs have a whole new paradigm of applications beyond video games. 

As a result of creating a new and different category, Nvidia had the fastest-ever growth to a $2 trillion market cap in history (growing from $1 to $2 trillion in 180 trading days).

Category Designers don't focus on battles—they design breakthroughs.

3. You don't play the long game.

You can see this CDS symptom most clearly in Mark Zuckerberg, and the side effects are getting wild. 

Zuckerberg, sitting atop the vast Facebook empire, swoops in and buys Oculus. Oculus, the cool kid on the virtual reality block, created its niche in VR headsets for gamers who want an immersive thrill.

Here’s where the plot twists.

Fast forward a few years, and Apple launches the Vision Pro. Apple is very clear, this is not a VR headset—it's a whole new category they call "spatial computing." 

This is intentional Languaging. Apple steered clear of the gamer-centric jargon and instead painted a picture of a world free from the "tyranny of the screen." They shared a scenario where you don't just look at screens, you exist amidst them. Think Minority Report meets your day to day.

What does Zuckerberg do in response?

He goes on Instagram (not Threads 🤔) and lays out a side-by-side, feature-by-feature comparison of Oculus versus the Vision Pro like he's ticking off items on a grocery list. His 3-minute CDS-fueled rant is about how "Quest is better for the majority of things that people use mixed reality for." He's not setting the pace. He's panting behind, trying to keep pace with Apple's stride. Within the first 30 seconds, he says:

"I don't think that Quest is better value. I think that Quest is a better product, period."

🤮🤮🤮

zuck

A post shared by @zuck

Here's what many people miss: Zuckerberg inadvertently sets Apple up as the new gold standard. 

By comparing Oculus to Vision Pro, he's not showing how Oculus leads. He's underlining how it follows. He's essentially shouting, "Apple's got the vision. But we've got better tech!" And just like that, he’s not the Category King anymore.

Zuckerberg has managed to do what seemed almost impossible: He took himself out of the race to define the future of our digital experiences. He got jittery knees when a competitor dared to dream a bit bigger and fell into the "better" trap. It’s textbook CDS—chasing the competition so hard that you forget to create a new and different future. Which is exactly what happened to Blackberry.

Designing new categories with a long-term view is where the magic (and market share) happens. 

So what's Apple's been up to while all this is going on?

Apple recently acquired Canada-based DarwinAI, a startup that enhances manufacturing efficiency with vision-based tech. A lot of people thought the acquisition was a move to compete with Amazon and AWS. But if you look through the category design lens, you see a different perspective. Instead of competing with Amazon, Apple is investing in its long-term AI strategy. 

Notice how Apple, unlike Microsoft and Google, hasn’t released GenAI features yet.

Some people might think generative AI is not part of Apple's strategy, which for a lot of brands would ring major alarm bells. 

"Oh sh*t. We don’t have a GenAI offering yet, everyone’s going ahead of us. What are we going to do?!"

But one of DarwinAI’s specialties is developing explainable, robust AI models. This approach helps create a more practical, reliable, effective, and ethical product. It's a key feature for applications where reliability and precision are must-haves.

Perfect for iOS. 

You see what we’re getting at. 

We don’t know exactly what Apple’s AI strategy will look like. But when Apple does release its GenAI, you can be damn sure it’ll be a smart, deliberate, and proactive choice. One that has nothing to do with what the others are doing.

Now that you know the risks of CDS, let's break down how to pinpoint its presence.

Diagnosing Competition Derangement Syndrome 

To diagnose CDS effectively, pay attention to the following signs.

Symptom 1: An overemphasis on competition. 

A sure sign of CDS in others (or yourself) is muttering phrases like:

• “Competitive advantage”

• “Competitor analysis”

• “Better product”

Listen in on any corporate boardroom meeting, company earnings call, or startup founder huddle, and these phrases are guaranteed to be pitched as a "solution."

In the beer pricing battle, both Anheuser and Miller were overly focused on competition. Anheuser-Busch slashed its prices because it saw Miller taking a few points of market share, even though Anheuser is clearly the Category King. But instead of ignoring the competition and acting like a category leader, they lashed out. 

If a strategy is obsessed with beating the competition, you know it's a serious case of CDS. 

Symptom 2: One-upping, instead of innovating.

One-upping is asking, How do I make myself look better, even though I’m exactly the same as everyone else?

How do I one-up myself against the main competitor?

How do I one-up this product in my go-to-market strategy?

How can I stay one step ahead of the competition?

One-Upping = Better. Positioning = Different.

As we wrote about in The Better Trap, being “better” isn’t really going to make you better. Focusing on “better” forces you to fight for scraps with others who are just like you. It’s what keeps you running on the hamster wheel of competition forever.

If a strategy revolves around one-upping, you know it's a serious case of CDS. 

Symptom 3: An obsession with trends.

Today, many major tech companies are drooling over generative AI. 

A simple Google search for "generative AI" gives 817,000,000 results, with hundreds of companies, tools, and platforms gunning to become the Category Queen in the space. Before generative AI, Web3 was the focus. Investors, founders, and executives went crazy over Web3, talking about how it was the next phase of the internet's evolution.

Before that, cryptocurrency was the focus. 

Before that, Big Data was the focus.

Before that, cloud computing was the focus.

Before that, mobile-first was the focus.

Before that, social media was the focus.

Before that, green technology was the focus.

Before that, internet companies were the focus.

Before that, personal computers were the focus. 

And on. 

And on.

See the pattern here?

Each of these trends represents a short period of time when businesses became enamored with a particular technology or concept. This can result in the very same companies rebranding themselves as crypto companies, then Web3 companies, then AI companies. (And you know how we feel about the brand cult!)

Companies infected with CDS pick up, try on, and toss away trends.

Companies compete with each other, trying to make it big with the next "cool" thing in tech. 

“Everyone’s talking about crypto, I’ve gotta hop in on that.” “No wait, it’s AI.” “No wait, it’s generative AI.” At that point, they don’t even bother to ask themselves if those trends are actually good for driving their revenue, category potential, or market cap. They’re just doing it because everyone else is doing it.

That’s when you know it's a serious case of CDS. 

Symptom 4: Afraid to be different.

It’s called “herd mentality” for a reason. There is safety in numbers. 

(Pirates are not interested in the safe present. They are very interested in the possible future. They have a radical disregard for the way it is.)

Our friends at DUDE Wipes know how to do different, playful marketing. (We’ve done some work together, and we’re huge fans of the dudes.) At a recent trade show, they smeared chocolate on a mannequin's butt and invited people to wipe it off…with a DUDE Wipe. 

Try mentioning this kind of strategy to a brand like Cottonelle or Charmin. Their leadership teams would (in our best guess) 💩themselves. Even though wiping butts is literally what their business is about. 

Source: DUDE Wipes Instagram

Most companies are so frightened of doing anything that "crosses the line" that they’ll tie themselves into knots to avoid it. 

Most strategies are purpose-built to win the category. Most strategies are the amalgamation of the lowest common denominator a committee could agree to. Most strategy meetings are about how to invest in competitive differentiation.

CDS does crazy things to your mind.

Symptom 5: Thinking reflexively instead of reflectively.

In the beer pricing battle, Miller and Anheuser acted on impulse.

Anheuser-Busch dropped prices, and Miller acted reflexively. Impulsively. Without stopping to think about the consequences. Anheuser punched back, which led to sinking profits across the entire industry for a year.

Thinking reflexively will (almost) always result in a narrow-minded competitive move. 

• → Your competitor does something that makes you react in a similar way, even if it isn’t ideal for your business strategy. 

• → By deviating from strategy, you change your action plan, which means you change your budget. 

• → Change your budget too much, you erode your profit.

• → Destroy your profit for too long, and you end up bankrupting your business. 

Reflexive thinking is the most harmful side-effect of CDS.

Symptom 6: Over-reliance on consultants.

Management consulting is a $374 billion dollar category globally. There are over 2 million consultants employed in the US alone. There are an estimated 200,000 CEOs in the US. 

Do we really believe the ratio of ‘business experts’ to CEOs is really 10 to 1? 

Of course not.

But companies spend so much on consultants for four reasons: 

1. Speed: Much of the time, companies know the answer but can’t execute the work fast enough. So they hire consultants who they know will work harder and faster.

2. Dirty work: Often companies will hire consultants to help them restructure, re-organize, and cost cut in a way that distances the senior executives from the fact that their decisions got them in a bloated situation in the first place.

3. Minimize risk: Some companies truly don’t know what to do next, but they do know they are too scared to deviate too far from the norm. So they turn to benchmarking and best practices. They default to thinking “no one got fired for hiring XYZ consulting firm.” They know they need to do something, but they want a safe answer that no one would blame them for.

4. Maximize opportunity: Companies might know there is an opportunity, but they don’t know how big or how to unlock it. So they bring in a consultant to help them uncover and unlock the opportunity. (This is where Pirate Christopher and Pirate Eddie have spent the bulk of their careers.) But this is the most rare situation of the four reasons. 

The first three reasons are not only predicated on CDS, they spread CDS. 

CDS perpetuates demand in reasons 1, 2 and 3. 

The first two reasons don’t require any real expertise. The third reason requires the appearance of expertise via best practices/benchmarking that someone without any real business experience can get! The fourth requires deep expertise in Category Design that most in consulting won’t touch. 

The vast majority of consultants were like Pirate Eddie right out of college—no real expertise, aside from some legendary spreadsheet kung fu. 

It takes time to really have true expertise. (For example, Pirate Eddie wrote his first HBR article after his first decade in his consulting career. His book Superconsumers came out in the second decade of his career.) The vast majority of expertise resides in the senior partners, who are maybe 20,000 of the total 2 million consultants. And of the 20,000 senior partner, maybe 1% have something different to say.

So unless you’re hiring the 1% of senior partners who have something different to say, overreliance on consulting is a big tell for CDS. 

Now, these symptoms might seem too dramatic. 

They are, and they are not. CDS can destroy companies and careers. We hope this grabs your attention, shakes you awake, and makes you realize the long-term damage CDS can do. Now, let's go one step further.

If you tested positive for one or more symptoms of CDS, you're not alone. 

Hundreds of businesses and leaders have it. Yes, even the super-ding-dong-successful ones. You can spot their CDS-clouded lenses by observing the actions they take.

• When HR spends too much time poaching people from competitors, that’s CDS.

• When Marketing attacks competitors, that’s CDS.

• When R&D keeps copying competitors’ products, that’s CDS.

• When Sales operates based on competitor prices, that’s CDS.

• When Finance focuses on benchmarking and forces people to fight for budget, that’s CDS. 

• When Design creates a home page with a product feature comparison designed to convince customers to pick you, that’s CDS.

Make no mistake, the leaders encouraging these behaviors have CDS too. They set Google alerts and run to their marketing team every time the competition sneezes. They get red-faced every time they see a competitor's brand. And they focus the majority of their strategy on catching up to or crushing the competition.

If anyone mentions something good the competition has done, they break out in hives. 

At some point, suffering from CDS becomes like stalking your ex. You can’t help it—you have to know what they’re up to. But it harms you more than it helps.

Worst of all, this constant comparison mode is contagious.

The R-Naught Effect

You might have heard of the R-naught value (RO) during the COVID-19 pandemic. 

In epidemiology, the R-naught helps health officials understand how quickly a disease might spread through a population. A virus with an R-naught greater than 1 will spread quickly, infecting a lot of the population unless countermeasures are put in place. For example, measles has an extremely high RO of 12-18, while the seasonal flu has an RO of 1.3 to 1.8.

Competition Derangement Syndrome has an extremely high R-Naught value.

Think of the 'R-naught' of CDS in terms of exposure time and intensity. 

The more time you spend around people who have CDS, the higher the likelihood of 'catching' the same mindset. This is especially true in companies where short-term competitive victories are prioritized over long-term innovation and strategic positioning. You’ll soon forget there’s anything outside of competition.

Just like a biological virus, CDS can quickly spread from person to person within a business. 

It can infiltrate the minds of people within a company or industry within days. Its 'infectiousness' depends on how closely team members align with the attitudes and behaviors of those exhibiting CDS symptoms. (For your first order of business, we want you to run a competitive analysis…cough, cough.)

It's easy to spot CDS if you know what you're looking for. 

Pirate Christopher recognized CDS in a B2B startup he used to advise. The company started with a strong and unique POV, was missionary about their work, and started to see the positive impact of implementing a category strategy. But, the executive got scared. They saw competitors coming after the new category (the 18-36 month category battle) and fell into a comparison game. They became focused on competitive differentiation, competitive pricing, competitive strategy. One day, Pirate Christopher noticed the languaging on their website changed. Instead of declaring their unique category POV, they switched to sounding exactly like the old category.

Soon after, the company's position as the category leader started to slip…

If you want to design and dominate a new category, you can't submit to the competition. 

You can't let CDS get you in a chokehold and cloud your vision. 

If it does, the fight is over. When you’re in a competitive mindset, you lose your ability to think different and end up fighting a fight without consequence. You tweak the look of your product. You run a sale. You get a prettier logo. Of course, to stay in lock-step with you, your competitors one-up you to make themselves look better. 

You have to break free from CDS and do whatever it takes to ensure you have a different category strategy.

We’re going to be upfront, it’s not easy to cure CDS.

Everyone falls victim to CDS at some point—it’s almost impossible not to be infected.

We read the same classic books about competitive differentiation. We're constantly surrounded by competitive tactics brands that blast the other brands and promote a "better" strategy. We get algorithm-optimized ads every time we open anything online, prompting us to BUY THIS, BUY THAT. 

But as a Category Designer, chances are you have only a benign case.

You're reading Category Pirates, which means you know implementing a competitive strategy is the fastest way to sink a category ship. You value critical thinking, a long-term category vision, and innovation over reactionary competition.  

Now, you need to know exactly how and what to change.

Curing Competition Derangement Syndrome with Strategy Therapy

Strategy therapy is how you move from a competition strategy to a category strategy.

Unlike typical strategy planning, strategy therapy is an internal, emotional exercise that forces leadership into deep category design discussions about what makes the business undeniably different. This method requires you to embrace simplicity, honesty, and courage—the key elements often missing in traditional strategy planning. As a result, you learn how to demystify (and simplify) strategy.

With a dose of Strategy Therapy, you’ll know how bad you have CDS.

Too many executives fall victim to the competition strategy planning ideology that’s been sold to us through MBAs, strategy consultants, and years spent climbing the ladder. Most can’t explain "why" when pressed about initiatives for next year, without using the market and industry competitors to drive their reasoning. And when forced to be brutally honest about the difference the company is making…? 

S i l e n c e.

They don't know how to stop competing and find what makes them different.

Oftentimes, decision-makers at market-leading companies act like trust fund managers. 

They’ve inherited the business and rarely delve into the core “why” behind what they do. Instead, they point to the market to determine strategy instead of soul-searching to find what truly makes their business special. Similarly, executives at non-market leading companies are stuck in a comparison game. These leaders tend to underestimate their strengths and overestimate their weaknesses as they relate to market competition. In both cases, leaders struggle to be brutally honest about what makes their business special. 

So they create strategies based on benchmarking and best practices and focus on fighting for demand to produce an incremental result. 

But this approach is for cowards.

The more you challenge yourself to define what makes you special (really special), the more you guarantee long-term success. 

The only way to do this is through honesty and courage. 

It’s excruciatingly painful to admit when something isn’t special. But brutal honesty leads you to discover what makes you different, and this becomes your strategic focal point. 

Let’s go back to what Pirate Eddie and his team at The Cambridge Group pushed Anheuser-Busch to do in order to solve the beer price battle. Anheuser's challenge wasn't about beating the Millers and Coors of the world. It was an internal tussle with Competition Derangement Syndrome—they obsessed over competitors instead of paying attention to what drinkers actually wanted. 

Anheuser-Busch is a story about the honesty and courage you need to go beyond the familiar shores of "what we’ve always done." The company's strategy therapy session wasn’t just about adding a twist of lime. It was about injecting fun, daring to be different, and, most importantly, listening to what Superconsumers actually want.

Here’s how Keith Levy, the former CMO of Anheuser, tells the story.

Honesty isn't just a virtue. It's a necessity.

The first and most important step of strategy therapy starts with honestly answering three questions: 

1. Where are we now? Understanding your current position in the market.

2. Where do we aspire to go? Defining your ambitious future goals.

3. How can we credibly get there? Crafting a realistic pathway to your goals.

Much like real therapy, strategy therapy forces you to have uncomfortable internal conversations around these three questions. The purpose is to reframe your thinking and determine the one true strength of your products, company, and category.  

Most executives struggle to be honest when answering "Where are we now?" 

They default to answers like: 

• “We’re the market share leader in the space.”

• “We’re the fastest growing company in this space.”

• “We have the lowest cost structure, our revenue is X, our product is the best.” 

However, performance metrics or technical prowess sidestep the question. 

Answering “Where are we now?” with real honesty starts with two fundamental sub-questions:

• ​​What’s the one thing that makes your business special? 

• How truly special is that one thing? 

Most executives are naturally delusional about how special their ‘one thing’ actually is. More often than not, product specialness isn’t that special, neither is sales force specialness, nor cost structure specialness. And even if it is special, it’s not guaranteed that specialness is going to stick around. 

To answer these questions, you have to dive deeper:

• Price Elasticity: If you were to raise the price of your products or services by 25% right now, how confident are you that your customers will stick around? Will they look for a more affordable competitor to replace you? 

• Marketing Mix Modeling: Does a dollar of marketing spend yield more than a dollar of gross margin? What’s your advertising-to-sales ratio? Why do you have to spend as much as you do to prove how special you are? 

• Source of Volume Analyses: Are you adding new customers or simply benefiting from the competition losing theirs? If it’s the latter, what makes you confident that you aren’t just as substitutable? 

If these questions make you sweat, your ‘one thing’ isn’t as special as you think. 

Do you want your success to depend on stealing customers from your competitors? Is beating out the competition going to drive exponential growth? Is the energy you spend focusing on market competition preventing you from innovating? 

These questions can be excruciatingly painful. 

But facing the pain upfront makes the entire strategy process go faster, smoother, and easier because everyone is honest and on the same page.

Courage is built by following the "Be Different" strategy we wrote about in the Category Design Scorecard.

Honesty helps you answer "Where are we now?" Courage is about answering "Where do we aspire to go?" 

There are three approaches you can take:

• Be The Winner: The least courageous yet most common strategic approach. This strategy isn’t about outrunning the bear, but outrunning the slowest person by being better, faster, cheaper.

• Be the Best: A strategy slightly more courageous than aiming to being the winner, but limiting as only one company can truly claim the top spot. This strategy is outrunning the bear, but it’s a seemingly endless chase. 

• Be Different: The most courageous, most lucrative, and most underutilized strategic approach. Companies that take this approach are solving problems and articulating a radically different point of view, while predicting and designing the future of their space. 

Companies that follow a "Be Different" strategy benefit from creating new categories by capturing up to 76% of the market. These Category Queens and Kings take risks to find new solutions to unanswered problems so they're not just competing in an existing market. They're designing a new category entirely. And they start not by looking at the competition or the market, but rather by looking internally and challenging what makes them different through brutal honesty. They then build the courage necessary to ‘Be Different’—which means everything from their products to distribution to business model is unlike any other company.

"Be Different" is the only way to design and dominate a category.

To understand which strategy you default to for annual planning, we’ve developed an original framework. 

The Strategy Chessboard

The Strategy Chessboard is a powerful tool organized by company divisions (rows) and strategic ambition (columns). Finding your place on the Chessboard tells you what strategy you follow and objectively reveals: 

1. If your actions tie into your strategy

2. If your actions and strategy make sense long-term

Upwards of 90% of Fortune 500 companies reflexively adopt a "Be The Winner" strategy. 

Companies that default to a "Be The Winner" strategy live in the left-hand column and generally fit in the bottom left two boxes: Sales / Retail / Distribution and Manufacturing / Business Model. They focus on themselves as they relate to the competition, instead of focusing on and prioritizing their customers. They settle for a strategy that revolves around:

• Better/faster/cheaper products

• More reach and efficiency

• Better retail execution and price promotions

• Lower costs and more SKUs

Around 9 percent of Fortune 500 companies follow a ‘Be the Best’ strategy. 

These companies are typically found in the middle column. As it relates to the rows of the Strategy Chessboard, these companies land in the Product and Marketing boxes. They rely on pricing power (being able to charge a premium), higher margins, and vertical category growth. They settle for a strategy that revolves around:

• Best benefits

• Pricing power

• Best brand / creative

• Best distribution and retail activation

• Lower costs and unique SKUs

While these companies may be successful in the short term, they only maintain their leadership position as long as they remain “The Best” in an unchanged category. Their "best" position is dependent upon someone else not designing a different future. It's a hamster wheel they can never get off.

Only about 1% of Fortune 500 companies successfully execute a "Be Different" Strategy. 

The biggest difference between companies following this strategy and everyone else is that these companies are in the business of creating new things, not competing over old things. Which is why they take over the entire right-hand column in the Strategy Chessboard

A “Be Different” strategy revolves around radical courage and patience in understanding that designing a new category can take upwards of 6 to 10 years (compared to category battles lasting 18-36 months on average). However, Category Queens and Kings are willing to take these risks to find new solutions and design new categories. 

The reward is capturing up to 76% of the market. 

To be different is to be brave.

The choice to be the winner, be the best, or be different is rooted in a leader’s fundamental belief about whether the world is full of scarcity or abundance.

It's a chase versus an attract mindset. 

Now, maybe want to play safe—competition is something you understand. Dropping this mindset can be daunting. Maybe you're worried you'll fall behind and will never be able to catch up. But in business, playing safe is just about competing for the 24% and ending up with a tiny share of it. 

Safe is not the space for Category Queens.

Overcoming CDS is just the beginning…

Afterward, you’ll still feel a ton of emotions: you’ll be scared, intrigued, frustrated, and excited all at once. You’ll have to build a sense of Radical Resilience, and that’s going to take time.

So, where do you begin?

Ocean Ramsey swims with sharks for a living. She’s made waves when she swam with a great white shark. But she isn’t just a thrill-seeker. She’s made it a mission to debunk the false ideas that people have about sharks—one of which is that most shark attacks are an accident, and if you encounter a shark in the open water, chances are that it’s more scared of you than you are of it, so you should just wait for it to leave.

According to Ocean, that’s all wrong. 

When a shark is coming at you, you have to swim towards it. Then you need to reach out to the shark (gently) and guide it away from you.

No pushing, no harsh movements. 

You guide it gently. 

There are dozens of videos of her doing this successfully. Now, getting up close and personal with a shark is scary. (Just ask Pirate Eddie!) If provoked, sharks can cause serious damage. But Ocean shows how you can overcome your fear if you know what to do and how to manage it.

As you implement a category strategy, your #1 priority is to work to overcome your fear. 

You have to be willing to face the shark, swim toward it, and gently redirect its attention. 

Most of your competitors aren’t big scary monsters. You’ve just gotten used to thinking of them that way. Once you confront your fear of the competition, chances are you’ll realize: “Wow, these guys aren’t worth half the time I spend agonizing about them!” And that’s when you can gently redirect your attention to something else.

If you need more support and guidance, we’ve got you. 

We’ve designed a Strategy Therapy course to help you shift from a competitive strategy to a category strategy. 

The course is full of real-life examples from companies across the Strategy Chessboard, custom AI prompts to help you be brutally honest about your company's specialness, and a step-by-step guide that breaks down the Strategy Chessboard. By the end, you'll have a one-page strategy to lead you toward category dominance.

You can learn more about the Strategy Therapy course and enroll here.

Strategy Therapy, like real therapy, can be an emotional challenge.

It's a truth-seeking exercise with the ultimate goal of complete self-awareness. And it has the tools you need to create a category strategy, as long as you’re brutally honest and courageous enough to take risks, be patient, and open the aperture of your mind to what's possible. 

But if you’re willing to do the hard, gut-wrenching work, you'll see a different version of your strategy (and your business) on the other side. 

Ready to dive in?

One final thought

There’s a famous rock in Waimea Bay on Oahu, Hawaii where people jump in the water. 

It’s important to time the jump correctly, and people usually move pretty quickly in the line to do it. One of our friends, though, she froze in the line. She was scared, and holding up the people behind her. The guy just behind her came up and said, "All right, lady. You have no other options, you have to jump. I’m going to count to 10. When I’m done, I’m going to push you off the rock." 

And he did. 

But she was so nervous she hadn’t heard any of what he said. After he pushed her, she was frustrated—she couldn’t imagine why he’d do that! But the guy wasn’t trying to hurt her, and he wasn’t being mean. 

He was helping her do what she was there to do in the first place.

Source: Hawaii Magazine. Photo by Marvin Rodriguez

When you embark on the path of being different, you might freeze up at certain moments. We're here to lovingly push you off the rock toward a future you might be too scared to dive into, which we guarantee will change your life. 

Remember: Your biggest competition is thinking you have competition. 

Start seeing the possibilities of being different, and you’ll soon be rid of CDS for good.

Arrrrrr,

Category Pirates

Eddie Yoon

Christopher Lochhead

Katrina Kirsch

PS - Want to start with the fundamentals of strategy?

We created the free Strategy Sprint email course to help you get up to speed on the basics. It starts with 5 days of education, then dives into common traps, questions, and lessons from the Strategy Therapy course. You can learn more and join here!