Is there a problem with being too much focused on competition?

Is it worth paying so much attention to the competition? It goes without saying that it is important to understand who your competitors are (both current and potential), the level of rivalry in your industry, as well as trends that will inevitably cause changes to happen. But what if too much focus on competition saps your energy and takes away resources intended for your customers? Suddenly, your customers are not your primary stakeholders anymore, and a passive and reactive mode of strategy ensues. It is a huge risk. Therefore, a more balanced approach is needed - the one in which the needs and wants of customers will remain a primary concern (maybe even become an obsession), while at the same time you will keep an eye on your competitors' actions and overall trends in the industry.