If you want to be a bad product manager, create a strategy based only on beating your competition. You want to have the best product possible, and the way to do that is to focus intently on what your competition is doing and to it better than them. The most successful product in a category wins and you want that to be your product. You’re in the category/industry you’re in for a reason — there’s obviously profits to be made there — and the best product in that category will grab the most market share and be most profitable.
If you want to be a good product manager, create a strategy based on defining your own place in the market. By focusing everything on the competition, you’re resorting yourself to a slug-fest between your product and theirs. It means that you’re only concerned with splitting up the pie of the potential market with your competition. By creating a strategy based on unmet needs, you can identify new markets and opportunities that you wouldn’t see if you were just trying to just out-do your competition.
Tom Chappell, Cofounder and President of Tom’s of Maine, said that “Success means never letting the competition define you.” Truly breakthrough products and companies in recent years — Amazon, eBay, the Blackberry, and more recently the Wii — have all succeeded because they didn’t base their entire strategy around doing what the competition was doing but doing it better. They have shown that there is greater success in “creating uncontested market space,” in the words of the excellent book Blue Ocean Strategy. Good product managers can identify unmet needs in the market and use that to their advantage, creating their own place in the market and making the competition irrelevant.