Competitive Intelligence To study competitor failures
Most people focus on copying what their competitors do well. But you can often learn more by looking at where they went wrong. Here’s how you can get ahead by learning from your competitors’ mistakes before you make the same ones.
They put $3 million into engineering, planned for eighteen months, hired a VP of AI, and did all they believed was needed.
But they never stopped to ask, “Has any competitor already launched AI content features?” If they had, they would have found out:
“Yes, three of them did last year.”
“How’s that working for them?”
Long pause. “We haven’t really looked at that.”
Spend your time looking deeply at these launches
If they had spent a few weeks looking into those competitor launches, trying out their AI features, scanning customer reviews, talking to prospects who had tested those features, and following public discussions and support forums,
They would have seen that all three competitors launched AI content generation with a lot of hype—press releases, conference demos, and big sales pushes.
Eighteen months later, less than 8% of customers were using these features. Review sites were full of complaints: “The AI writes generic content that needs complete rewrites.” “It’s faster to write from scratch than edit AI output.” “Our brand voice gets lost.”
All the competitors made the same mistake. They built AI that created content nobody wanted. And they focused on speed but ignored quality and brand consistency, so the results weren’t useful.
They were about to make the same $3 million mistake themselves.
But their competitive intelligence work changed their strategy. Instead of building AI to generate content, they built AI to improve human-written words for SEO, readability, and conversion, while keeping the brand voice.
This was a different problem and a different use of AI, and they learned it all from watching competitors. The feature launched six months later at just a quarter of the first development cost. In the first quarter, 64% of customers adopted it, making it the second most mentioned feature on sales calls.
They didn’t avoid failure because they were smarter. They avoided it by looking at what had already failed and learning from those mistakes.
Why Competitor Failures Could Be More Valuable Than Competitor Successes.
Every company studies competitor successes.
“Competitor X grew 200% with product-led growth. We should do that too.”
“Competitor Y raised a huge round with their vertical SaaS positioning. Let’s verticalize.”
“Competitor Z is winning with AI features. We need AI.”
Copying what works for others can seem like a shortcut. But you only see the results, not the context, skills, or conditions that made it work for them, which might not apply to you.
Competitor failures are different. They show you:
What doesn’t work even when well-executed?
Sometimes strategies fail not because they were done badly, but because the basic idea behind them was wrong.
What requires specific capabilities or conditions you might not have?
A strategy that failed for Competitor X might have worked if they had different resources, better timing, or a different market position.
What customers actually reject versus what they say they want.
Challengers often build features that customers ask for, but then those features go unused. This shows the difference between what customers say they want and what they actually use.
What traps exist that aren’t obvious until you step into them?
The first companies to try something often run into hidden problems. You can learn where these problems are by watching what happens to them.
At Octopus Intelligence, we’re a UK and US-based competitive intelligence agency built by former British military intelligence analysts. One of the most valuable services we provide is systematic analysis of competitor failures. Not to mock them, but to extract lessons that prevent our clients from repeating expensive mistakes.
The Types of Competitor Failures Worth Studying
Not all failures are the same. Some show problems with strategy, while others focus on how things were done.
Here’s what we look for:
Type 1: Well-Resourced Failures
When a competitor with plenty of money, skilled people, and time still fails at something, it means something important.
If a competitor raised $20 million, hired a team of experts, spent two years building, and still failed, that says something about the market itself, not just how well they executed.
They tracked enterprise collaboration software competitors in 2022-2023. Three companies with significant funding tried to build “Notion for Enterprise.” All three failed to get meaningful traction.
Why? Enterprise buyers didn’t want flexible document tools. They wanted a structured workflow with compliance and security. The “Notion for Enterprise” positioning was solving a problem enterprise customers didn’t have.
This helped them and others avoid making the same expensive mistake.
Type 2: Repeated Failures Across Multiple Competitors
When a number of competitors try the same thing, and all fail, it usually points to a bigger problem, not just bad luck.
Five different project management companies tried to add time-tracking features between 2020 and 2023. All five saw low adoption. All five eventually de-emphasised or removed the features.
This pattern showed that project management users and time-tracking users have different needs and ways of working. Trying to combine both led to a poor experience for everyone.
Competitors kept adding time tracking because their customers asked for it. But when it was available, those same customers didn’t use it. This showed a gap between what people say they want and what they actually do.
Type 3: Reversals
When competitors launch a strategy with certainty and then change direction, it’s a sign that something important has happened. We followed a competitor who announced a big move into the enterprise market in 2022, hired more people, expanded their sales team, and reorganized their product plans.
Eighteen months later, they quietly changed back to mid-market. Laid off the enterprise team. Stopped talking about enterprise positioning.
What happened? We interviewed people who’d left that company. They tried enterprise, discovered their product architecture couldn’t meet enterprise security requirements, found that rebuilding would take 2+ years, and retreated.
Our client was considering the same upmarket move. That competitor’s failure saved them from a two-year, multi-million-dollar strategic dead end.
Type 4: Feature Launches That Disappeared
When competitors ship features with fanfare, then quietly deprecate them, you learn what seemed like a good idea but wasn’t.
We tracked SaaS competitors across multiple categories. Common pattern: Competitor launches AI feature with big announcement. Six months later, it’s buried in settings. Twelve months later, it’s removed from marketing materials. Eighteen months later, it’s deprecated.
This pattern shows that some features sound good in meetings but don’t solve real problems or end up causing more trouble than they’re worth.
How to Extract Intelligence from Competitor Failures
Here’s the process we use to analyse competitor failures for clients:
Step 1: Identify Failures Worth Studying
Not every competitor failure deserves deep analysis. Focus on failures:
- In areas you’re considering investing in
- By competitors with similar resources or market status
- That seems surprising (well-funded, well-executed, still failed)
- Repeated by multiple competitors
Build a list of the 5-10 most relevant competitor failures from the past 2-3 years.
Step 2: Reconstruct What They Actually Did
Document the competitor’s approach:
- What exactly did they build or try?
- How much did they invest (team size, timeline, resources)?
- How did they position it to customers?
- What customer problem were they trying to solve?
Use press releases, product announcements, archived website versions, LinkedIn hiring patterns, and customer-facing materials to reconstruct their approach.
Step 3: Identify Why It Failed
This is the critical step. Don’t assume you know why it failed. Investigate.
Customer interviews
Talk to people who evaluated or tried the failed initiative. Why didn’t it work for them?
Former employee intelligence
People who worked on the failed project often have clear perspectives on what went wrong.
Usage and adoption data
Look for public signals—customer reviews, support forum discussions, and feature mentions that decline over time.
Financial or operational signals
Did the competitor cut resources, lay off teams, or reallocate budget away from this area?
The goal is to understand the root cause, not just the surface symptoms.
Step 4: Extract Generalizable Lessons
Some failures are execution problems specific to that competitor. Some reveal wider market truths.
Distinguish between:
“This failed because Competitor X executed poorly” (less valuable—you might execute better)
“This failed because the underlying assumption was wrong” (very valuable—you’d make the same mistake)
“And this failed because it requires capabilities/conditions Competitor X didn’t have” (valuable if you can assess whether you have those capabilities)
Step 5: Test Whether the Lesson Applies to You
Just because something failed for a competitor doesn’t mean it would fail for you.
Ask:
- Do we have different capabilities that might change the outcome?
- Are we serving different customers who might respond differently?
- Has market timing changed in ways that make this more viable now?
- Did they fail for reasons we can avoid?
Sometimes the lesson is to avoid the approach. Other times, it’s to try a different way.
Real Examples of Learning from Competitor Failures
Example 1: The Freemium Model That Didn’t Work
A B2B SaaS company was planning to launch a freemium tier. “All our competitors have freemium. We need it too.”
We analysed those competitor freemium offerings. Found:
- Three competitors launched freemium 2-3 years ago.
- All three had 15%+ conversion from free to paid users in Year 1
- All three were now below 3% conversion.
- The three were quietly limiting free-tier features or considering shutting down the free tier.
Why the decline? Free users attracted tire-kickers rather than qualified buyers. Support costs for free users exceeded revenue from conversions. Free tier became a competitor’s selling point: “Unlike them, we don’t have a crippled free version.”
So, the lesson here for this client was that freemium works at first, but over time, it attracts the wrong users and increases support costs.
Our client skipped freemium. Offered 30-day trials with high-touch onboarding instead. Higher conversion rate, better customer fit, lower support costs.
Example 2: The Mobile App Nobody Used
A project management company planned to invest $2M building native mobile apps.
They found:
Six competitors had mobile apps
Average rating: 2.4 stars
Common complaints: “Missing key features,” “Syncing issues,” “Slow and buggy”
Most telling: Competitors weren’t investing in mobile improvements despite low ratings
They investigated further. Interviewed customers who’d downloaded competitor mobile apps.
Mobile was for quick checks and updates, not real work. Users wanted lightweight read/write access, not full feature parity with the desktop.
Competitors built mobile apps with too many features for mobile use, but still too limited for serious work. It was the worst of both worlds.
They ended up building a minimal mobile app focused on notifications, quick updates, and task checking. 1/4 of the development cost. 4.2-star rating. 80% of users who downloaded it were still active six months later.
They avoided failure by understanding why their competitors’ approaches didn’t work.
Example 3: The Enterprise Push That Failed
A marketing software company wanted to move upmarket to the enterprise market.
We analysed three competitors who’d tried the same move in previous years:
Competitor A
Hired an enterprise sales team, failed to close deals, and laid off the team after 18 months
Competitor B
Rebuilt product for enterprise, existing customers complained about added complexity, and had to maintain two product versions.
Competitor C
Acquired an enterprise client base through M&A, couldn’t retain acquired customers, wrote down the acquisition
Three different approaches. All failed.
But why? We interviewed enterprise prospects in this category. They had established vendors (Marketo, Eloqua, Adobe) and weren’t looking to switch unless forced by those vendors failing or being acquired.
The market wasn’t actually open to new enterprise entrants in marketing automation. The window had closed 5-7 years earlier.
Our client stayed mid-market and dominated that segment instead of chasing enterprise deals that weren’t actually available.
The Questions That Reveal Failure Patterns
When analysing competitor failures, these questions reveal the most valuable intelligence:
1. What did customers say they wanted versus what they actually used?
This reveals stated versus revealed preferences. Competitors build what customers request in surveys, only to find that nobody uses it in practice.
2. What seemed like a good idea in planning that broke down in execution?
This uncovers hidden complexity or links people didn’t see. Strategies that sound great in meetings often fail because of practical business challenges.
3. What changed between launch and failure that invalidated the approach?
This reveals whether timing was wrong, market conditions shifted, or the approach was fundamentally flawed.
4. What capabilities did this require that the competitor didn’t have?
This reveals whether failure was due to a bad strategy or insufficient capabilities to execute a good strategy.
5. Would we make the same mistake if we tried this?
This is the test. Are we different enough from this competitor that we’d avoid their failure mode, or would we hit the same problems?
How to Get Intelligence on Competitor Failures
Competitor failures aren’t always public or obvious. Here’s how we gather this intelligence:
Monitor Product Changes
Track when features disappear from competitor websites, get deprecated, or stop being mentioned in marketing materials.
Use archive.org to compare competitor websites over time. Features that were prominent and then disappeared signal failures.
Read Customer Reviews Over Time
G2, Capterra, and TrustRadius reviews reveal when customers mention features that don’t work or initiatives that disappointed them.
Watch how reviews change over time. If a feature launches with zeal but reviews later turn negative, something went wrong.
Track Employee Departures
LinkedIn shows when teams get laid off or when leaders leave. Sudden departures often follow failed initiatives.
Connect with former employees who worked on failed projects. They often have a clear perspective on what went wrong once they’re no longer at the company.
Analyse Competitor Earnings Calls and Updates
Public companies discuss failed initiatives on earnings calls, often couched in terms such as “strategic reverse,” “refocusing resources,” or “sunsetting non-core initiatives.”
Private companies reveal failures through funding announcements, layoffs, or restructuring news.
Interview Customers Who Evaluated Failed Features
Talk to prospects or customers who looked at competitor initiatives that later failed. They can tell you why they didn’t adopt, what problems they encountered, or why they chose alternatives.
Why Companies Don’t Study Competitor Failures
Most companies avoid analysing competitor failures for bad reasons:
“We’ll execute better than they did.” Maybe. But first, understand if execution was the problem.
“Our customers are different.” Probably not as different as you think.
“Market conditions have changed.” Possibly. But what specifically changed that makes this viable now?
“We don’t want to be influenced by their failures.” But ignoring these lessons means losing out on valuable intelligence.
The companies that succeed aren’t the ones that avoid studying failures. They’re the ones who learn from every failure—their own and their competitors’.
What to Do This Month
List the 5-10 biggest competitive initiatives you’ve seen fail in your market in the past 2-3 years.
For each one, document:
- What did they try?
- How much did they invest?
- Why did it fail?
- What lesson does this teach?
Then think about whether you are planning anything similar? Would we make the same mistakes?
If yes, either change your approach or have a clear explanation for why you’d succeed where they failed.
Learning from your own failures can be costly. Learning from competitor failures is free, as long as you pay attention.
We are Octopus. The Global Competitive Intelligence Consultancy.
Outsmart your competition. Make the unknown known. Octopus helps you gain clarity in complex markets. With clients and tentacles around the world, we deliver sharp, actionable competitive intelligence through a blend of deep primary (HUMINT) and secondary research. If you’re looking to make smarter decisions, beat the competition, and reduce uncertainty, we’re the partner you want on your side.
Frequently Asked Questions
How do I find out about competitor failures if they don’t publicise them?
Track product changes over time using archive.org, monitor when features disappear from their marketing, read customer reviews mentioning discontinued features, watch for team layoffs on LinkedIn, and interview customers who evaluated failed initiatives. Most failures leave public traces—you just need to look systematically.
What if a competitor failed at something because of poor execution, not bad strategy?
Distinguish by examining resource commitment and timeline. Well-funded initiatives with experienced teams that still failed suggest strategic problems, not execution problems. Also look for multiple competitors failing at the same thing—that’s almost always strategic, not executional. If unsure, test with small experiments before full commitment.
Should I avoid everything competitors have failed at?
No. Understand why they failed and whether those reasons apply. Failed initiatives might have been the right strategy, just at the wrong time.ng timing. Or right for different customer segments. Or required capabilities the competitor lacked that you have. Examine the failure mechanism, don’t just avoid the approach.
How recent should competitor failures be to still produce valuable lessons?
Focus on failures from the past 2-4 years. Older failures might reflect market circumstances that have changed. Exception: if multiple competitors have tried and failed at the same thing over 5+ years, that’s a strong structural signal regardless of age.
What if competitors failed because of capabilities I actually have?
This creates opportunity. If Competitor X failed at Y because they lacked Z capability, and you have Z capability, you might succeed where they failed. Validate that the capability difference is real and that it was actually the limiting factor, not a convenient excuse.
How do I get former competitors to talk about their failures?
Approach respectfully after they’ve left the company. Frame as learning, not criticism: “I’m trying to understand what worked and what didn’t in this market.” Offer confidentiality. Many people are willing to share lessons learned once they’re no longer at the company. Compensation for time (consulting fees, gift cards) helps.
Should I share competitor failure analysis internally?
Yes, but frame it as learning, not gloating. “Here’s what Competitor X tried and why it didn’t work” is valuable intelligence. “Competitor X failed, they’re idiots” creates dangerous overconfidence. The goal is to extract lessons that improve your strategy, not to feel superior.
What if my team wants to pursue something despite competitor failures?
Require them to explain specifically why their approach would avoid the failure mode. “We’ll execute better” isn’t enough. Need concrete differences: a different customer segment, a different technical approach, different capabilities, or changed market conditions. If they can’t articulate specific reasons they’d succeed, don’t proceed.
https://www.octopusintelligence.com/competitive-intelligence-to-study-competitor-failures/
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