If there is a dominant competitor in your market, then you must decide if your company is aligned with them or opposed to them. Market Positioning 101 (and a great chapter from 'Getting Real' by 37 Signals) tells us that the most interesting approach is to "pick a fight" with the market dominator: stand in opposition to them. Ask yourself: what wouldn't they do?
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It gives you 4 easy steps to find and validate a humble product idea.