How to Build Lasting Defensibility and Retention into Your Business
There are 5 major ways of building defensibility and retention into a business. These are brand, scale, embedding, network effects, and IP.
Dangote leverages scale, and below is what you need to know about each of the concepts.
1. Brand
Investing in a consistent “idea” of your business is one of the best things you can do for yourself. It helps you rise above the noise and builds a layer of protection around your business. A good brand has a specific mission, well-defined purpose and values, message repetition, clear visual identity, and wide distribution.
Also, some brands have a reputation for quality and allying with them makes you credible and more trustworthy. Say Andreessen Horowitz is financing you, for example, or you’re using an enterprise software like Salesforce, their established name rubs off on you. People attribute quality and potential to your name.
2. Scale
Also known as scale economies, the idea is to invest heavily to cheapen the cost of production and ultimately the unit cost of sale. Examples include investing in large warehouses across the country like Amazon and Jumia, having the largest cement plant in Sub-Saharan Africa, or the largest, single-train refinery in the world. Scale maximizes value for customers either through cost savings, quick turn-around time, or by providing a variety of unique experiences for them.
3. Embedding
Putting your software into existing brands continually makes you relevant and is one of the ways of building lasting defensibility and usefulness into your business. Examples include payment gateways like Stripe which use APIs to connect to other businesses or embedding your software for logging in like Google, Dropbox, or Facebook
4. Network Effects
There are about 16 different types of network effects each of which is based on a simple principle — each additional user adds value to the overall network.
Contrary to the popular idea of a transactional relationship, you want to be different. You want to find a way for your users to interrelate and add value to each other. This way your business self-sustains, and you may be in the Bahamas someday letting off some steam.
The concept of network effects is interesting, and it is the strongest way of building defensibility and retention into your brand.
5. Finally is Intellectual Property
Having a proprietary idea or formula that works, typical of biotech and pharmaceutical companies, is also a way of establishing a strong framework for your business. An example is the proprietary formula of The Coca-Cola Company which has sustained the brand for centuries.
In general, most businesses combine two or more of these defensibilities to be distinct and remarkable in the marketplace. Which of these are you going to integrate into your business?
☀ ☀☀
#business #people #software #google #brand #nfx #networkeffects #building #dangoterefinery
