True Differentiation

Jack Welch offered lots of great advice as the celebrated CEO of GE but one particular bit stands out:

If you don’t have a competitive advantage, don’t compete.

In other words, don’t step onto a level playing-field. At least when it comes to business. But I think this is true for many things. Government programs, non-profit endeavors, even a softball tournament. Until you really understand your strengths relative to the challenge you face, and devise a way to use those strengths to your advantage, you shouldn’t enter the fray.

But how do you find a competitive advantage?

In the tech world, there is a writer named Ben Thompson who continually impresses me with his reading of the tea leaves. Like a military historian, he is able to explain past maneuvers on various fronts as an interplay of punches, counterpunches, and shifting battlefields. The competitive dynamics bring deeper color to the events — even if those dynamics weren’t totally understood at the time — and help him generate a few Newtonian-like rules for play. It makes for fun reading and allows us to build some armchair predictions of what’s to come.

And it all centers on the perpetual search for competitive advantage. Some players use network effects. Some use the power of convenience. Others use luxury…