The problem with competition is that it takes away the requirement to set your own path, to invent your own method, to find a new way.
This brings to mind the staircase question, in that making the rules and the playing field is a core tenet for doing innovation. At least of the breakthrough kind.
Take the iPad versus the other tablets. Apple went beyond phones, net pc and failed mixtures, into something different. Big as a magazine. Not for stuffing in your pocket on the go, but for sitting back on the couch at the end of a long day. It redefined an unknown need.
As long as you are doing benchmarks or competitor analysis, you will stay in the shallow end of the pool, playing with the other kids.
Then one day you strike out, start to swim, and discover a world filled with islands, beaches and enjoyment.