Your strategic plan is missing competitive response
The following is a guest post from Prince Oppong, senior director of strategic finance at PayPal. Opinions are the author’s own.
Traditional planning measures only what we do, not how the market answers. That blind spot is part of why our results keep falling short of our ambitions.
Every planning season, finance leaders build a plan that is internally airtight: targets ladder up from unit economics, initiatives have owners and budgets, the model balances. Then, a few quarters later, we are explaining a variance again. The numbers we promised the board were not wrong because our team failed to execute; they were wrong because the plan only ever described our half of the contest.
This is not an execution problem; it is a design problem. Conventional planning, whether at the level of the annual budget or the quarterly forecast, is intrinsically incomplete: it prices our own moves and holds the rest of the market still. But the market does not hold still. Our competitors plan too, and the moment we act, they respond. The effect we modeled is the one we would have gotten in an empty arena. We never compete in one.
Consider how most plans are built. We size the market, estimate the share we can capture, assign an adoption curve and apply our cost structure. Every variable that drives the result is one we own: pricing, headcount, roadmap, marketing spend — while the competitor, if present at all, is a static “current share” number that politely stays put for the duration of the forecast.
Kim Warren’s work on strategy dynamics makes this concrete: performance is driven by the resources, including customers, we accumulate and the rate at which we win and lose them. Win rates look completely different with a competitor in the picture than without. Plan against the “without” curve, and you will overstate what your initiatives deliver.
Why it hurts most when you share a user base
The blind spot is expensive in any market, but acute when you and your rivals serve the same customers. On a shared user base, growth is substantially zero-sum: the customer you win is one a competitor lost, which guarantees a reaction. Cut your price to drive conversion and you hand your competitor a reason to match it. The modeled lift evaporates and you have traded margin for a stalemate. Launch a feature that wins switchers and you start a clock on how fast it gets copied.
In that world, an internal metric in isolation is misleading. “We grew sign-ups 15%” says nothing about whether you gained ground; the real question is whether your share of the contested pool rose faster than the response it provoked. This is why FP&A leaders who are close to the commercial teams, who understand the competitive dynamics, not just the financial model, are the ones who catch this gap before the variance materializes.
Consider this case study, where a mid-market SaaS vendor planned a 10% list-price increase, modeling $4 million of incremental ARR on the assumption that churn ticks up only modestly. What the plan omits: the nearest competitor, serving the same buyers, reads the new price list within a week, holds their own price, and launches a “switch and we’ll cover your migration” promotion aimed at the vendor’s renewal base. Six months later, new logo win rates have fallen, mid-size renewals have defected and the realized number is closer to $1 million than $4 million.
Now run the same situation through a competitive response lens; before committing budget:
Exposure: 35% of ARR renews in the next six months, concentrated in mid-market accounts with a credible migration alternative. That is the contested pool.
Impact: Three scenarios — low (competitor ignores the move); medium (competitor holds price); and high (competitor holds price and actively promotes migration) produce ARR outcomes ranging from $1 million to $3.8 million. The point estimate of $4 million sits above the best case.
Response: Pre-approve a counter before launch — an early-renewal incentive for mid-market accounts and an accelerated onboarding program to reduce migration appeal, which costs $300,000. Residual ARR under the high scenario rises from $1 million to $2.4 million.
The result is not a more pessimistic forecast. It is a more honest one, and a team that is ready to move rather than react. That is the difference between pricing your moves and planning your contest.
Reframe the outcome as a contest, not a calculation
The fix starts with how we write the equation. This applies at two moments in the cycle: when you set the annual budget, competitor response should be built in as a scenario range, not a point estimate. And at each forecast update, new competitor signals should trigger assumption revisions — not wait for the next offsite.
Realized outcome = our move ± competitor response ± customer reaction
Most plans populate only the first term and treat the rest as noise. The missing discipline is to forecast the other terms on purpose; to ask, before committing budget, what our two or three closest rivals will plausibly do when they see this, and what our result looks like after they do.
Pricing the second term does not require espionage. It requires treating competitor signals as a standing data feed. Most of what you need is observable: price and packaging changes, win/loss records (your highest-signal source), product release notes and job postings (which describe the capability a rival is building), coded churn reasons and earnings calls that telegraph where a competitor intends to spend and defend. The goal is to designate ownership and set a refresh rhythm faster than your planning cycle, so a competitor move is noticed in weeks, not at the next offsite.
Translating moves into impact and response
Raw intel is inert until you convert it into a number that touches your plan. For each material competitor move, work three questions: exposure (how much contested revenue sits in the path of this move?), impact (the realistic hit to win rate, churn, or price realization, as a range rather than a point), and response (your counter, its cost, and the residual effect after you deploy it).
This is also where the scorecard must change. Alongside the internal metric that measures effort, pair a market-backed one that measures standing — share of the contested segment, competitive win rate, relative price position. It is entirely possible to hit every internal target and still lose the market.
None of this means abandoning the strategic plan. It means finishing it. A plan that models only our own moves is built for a world without rivals, and that world does not exist on a shared user base. The missing ingredient is competitive response: a quantified expectation of how the market will answer, built into the budget before we commit and tracked against relative metrics at every forecast update.
The organizations that do this are not smarter strategists; they are the ones who stopped grading their own homework. They assume the competitor will respond, estimate how, plan their counter and keep score against the field rather than their own ambitions. Do that, and the gap between what you promised the board and what the market delivered starts to close, not because you execute better, but because you are finally planning for the contest you are actually in.
