When yours is not a competitive advantage
A list of useless competitive advantages
Competitors. Competitors everywhere!
In 1980 Michael Porter published his “Competitive Strategy — Techniques for Analysing Industries and Competitors”. In this work he identifies five elements (Five Forces Model) that influence a Company state and survival:
- customers
- suppliers
- substitutes
- potential entrants into the industry
- direct competitors
The most important thing you must to realize immediately when you fit the market, is that your competitors are not only people who sell your same product/service.
Competitor is anyone who can obstacle your sells, or your activity improvement and achievement. This mean you can have direct competition and indirect competition and despite of the distinguish, effects are the same, so you have to put attention your indirect competitors as well as the direct ones.
In fact, you can have:
- A customer who self-produce things he needs: his autoproduction is substitute of your product/service and he can start a smarter, more local and cheaper business, selling what he produces to people next to him.
- Suppliers with too much bargaining power, especially if you have only a few suppliers, or if there are too much high changement supplier costs. So they can fix the price, or other conditions, or sell the product directly at better conditions. You suppliers can become your worst competitors.
- New entries on your market can become direct competitor. A new entry can take more curiosity, practice lower price of your same product, or come from a direct experience from your own, or similar company. Especially startups are usually agile and have a smart organization and strong eterogeneous skills team. So if there aren’t entrance barriers to the market, other people can start your similar business, or use your similar technology and design and you know, we live in an open system, in an open source environment, so we can say, in the most of market there aren’t entrance obstacles.
- Substitutes are products different than yours, can solve the same customer’s problem you want to solve. Technology market is full of theese examples. If you want to listen to music, you have so many way to do it today, that actually cd and online playlist are became direct competitors.
We live in a so open source environment that it’s difficult to distinguish between direct and indirect competition.
So the question is: what are you doing today, to save your company when others will copy you? The only thing can save you is your Competitive Advantage. Is not a casuality if five years after “Competitive Strategy”, Porter wrote: “Competitive advantage — Creating and Sustaining Superior Performance”. You have a pdf here.
At first, the title suggest an important message: you not only have to conquer but also mantaining your position.
This is a quote from Bill Bradley. Bill Bradley was Golden Medal at olympic gme as basketball player, senator, author, radio speaker, CEO.
I really appreciate this sentence. More difficult to gain a position, is to preserve it day by day. In this article we don’t want totalk about how to conquer the World, but how to stay in it.
So the most important thing to protect your position is to know it. The most important thing to protect your competitive advantage is to know which is yours. If you search the definition of Competitive Advantage on web, you can find something as a condition that allow you to sell something at a lower price, or with a more desiderable fashion for your customer, so you can have more margins than your competitors. This is correct, but doesn’t fit perfectly the reality. So, let me try to design a more deep pic of the matter.
In this other slide you have the best Competitive Advantage definition I’ve ever met.
“A real unfair advantage is something that cannot be easily copied or bought” — Jason Cohen, founder of WP Engine and Smart Bear Software.
Yours is a real advantage if has two characteristics:
- No easily copied
- No easily bought
The most important difference you can find from other definitions, is that Cohen doesn’t talk about effects of your competitive advantage, it doesn’t say if it’s about something that let you gain more money, or have more margins, or surpass your competitors and be the number one. Cohen talks about intrinsic property. And this because stay in the number one position is terrible and wearing, and trying if it isn’t related to your own nature. A competitive advantage is strong if ingrained, deep-seated on your features.
Aren’t necessairly unfair advantages
- Product/service
- Be the first mover
- Channels
- Tools
- Application, Resources
- Slogan/Payoff/Communication
- Technology
- Design
- Skills
- Idea/Vision
- ecc
When a feature is an unfair advantage
- SINGLE OBSESSING FEATURE. When you’re ready to invest all your resources on a single feature. When it’s your unique mission, obsession. When you make a product there is a pay-off among its characteristics: design, price, efficacy, customer care, ecc. This because we doesn’t have unlimited resources, so we have to choice how to allocate them. There are some companies that are obsessed with a unique feature and they bet on that feature most of their efforts. Notice that when we say “obsessed”, we mean devotion: you refuse to lose your supremacy on a feature hard to copy. Think about Apple design: you can say the Apple unfair advantage is the price, or tech support? Be honest. Design is the thing Apple does best. Now, Apple is a success company, while the “unique value choice” isn’t generally the initial choice of a startup. Generally the early stage in a market is use to explore and discover what are your strenghtness and what your are good at, or what customers prefer. You have to develop iteratively your product to discover what you can do at your best, if you want bet on a feature, because it have to be a sustainable choice. You maybe start in a market and finish to serve a different one. So in a Lean Startup logic, the unique obsessing feature is not a predetermined path, but a consequence of customers’ needs.
2. SKILLS. When you and your team have a mix of unbeatable skills perfectly matched. So: creativity, programming, design, mobile analytics, ecc are not unfair advantage, because there are many other people with theese skills. So the real competitive advantage exists when your team has the right persons, with the right skills, because their mix create a powerful, untouchable force: you have the Dream Team. So, think about your strenghts, and weaknesses. Study a serious SWOT analysis and work about your best features. Take time to learn who you are. Self-awarness: think about your skills, knowlege, experience and your business features. You can discover your mix of skills, experience and knowledge. You can realize to be an expert in your area, simply because is the result of different matter. Everyone is an expert at something, we only understand why we are special. For example. Have you ever spent your time to fix your knowledge?
Focus on what you can do. The Venn Diagram can help you to visualize your capabilities. Put each of your different knowledge area in a circle and think how they build you professionally, thanks to their mix. We built one with some Gary Vaynerchuck’s skills, because his interdisciplinary competences.
Always respect art and science, math and creative equally: their friction creates a diamond. — Gary Vaynerchuk, for Inbound.
The part in which his competencens meet, make Gary Vaynerchuck a very rare person. Intersection of his skills is a unfair advantage for him. So, “what areas of your knowedge can combine to make yourself unique?” — Josh Steimle Invest on what you’ve learned about you, to preserve and improve who naturally you are today. It’s the only sustainable way.
3. PERSONAL AUTHORITY. Building your personal autority and credibility isn’t simple. It needs time. During my studies, my corporate governance professor said: “Reputation is what you decide not to earn today, to earn more in the future.” It’s difficult to earn immediately from an activity if nobody knows you or believes you. Authority is an unfair advantage because it cannot be purchased and requests years of effort and time dedication. So what’s the secret to increase your authority? Patience, persistance and efforts. Think about this blog. We don’t have entries, it’s an investment for us. Our goal now is let you know us and develop our credibility and autority showing what we do, and how we work. Why we need this? Because Personal Authority works like a flywheel: if you do well and seriously it expands positive effects of your projects and ventures.
4. CELEB MENTOR. A notorius figure who believes in your project. Because of difficulty to believe in something, or someone we don’t know, to have a sponsor is a boost. Everytime a celebrity mentor shares one of your social media posts, you gain reliability and through word of mouth running people start to follow you and being interested in your product/service. Advertising always uses Stars and Celeb to its spots. The same happen to you. So you can
- Offer to try your product/service
- Start follow his social activity and establish a contact with him
- Write a one-to-one e-mail talking about your project and try to get his attention
- Ask to a common contact to introduce you
This is time-consuming and requests dedication as well as other competitive advantages, but its in their nature: their are expensive and hard to achieve, but if you want to protect your placement, you have to know where focus your effort without waste time and resources in something everybody can take you away.
5. YOUR CUSTOMERS. Community of existing customers: is more expensive to gain a new customer, than preserve the existing ones. Your customers trust in you yet and they are a signal: they like your product. Think about a restaurant. Any information: you’re only walking and notice that one restaurant is full of people and the restaurant next to it only has two clients. What do you deduce? For some reason, restaurant with more people is better than the second one. Number of your follower/ time of permanence on social media is a signal. We always try to read what our follower say, or post before the others and they’re slowly increasing. So take care of your existing customers.
6. LARGE NETWORK, SEO RANKING. They are hard to conquer, because they need time and a day by day work. We’re trying to gain them and we notice that every single sharing, “reccomend”, view, click is the result of a system of efforts, for this reason they are a competitive advantage: because our day by day choices aren’t imitable and so, yours. So be constant, patient and confident.
Conclusion
Now it’s time for you to review your capabilities: you have to decide how to allocate your efforts and resources. Put on sheet your strenghs, make a list of your features, study how they match. Think about your team capabilites, start to networking seriously and build solid relations. Your mindset and your culture have to become your best asset. Invest time, don’t be afraid to lose hours, days in your self-awarness. Discover who you are and what you can and can’t do. It’s the single thing that is really important for your outcome and your future life. Don’t think about your past errors. Begin today. Everything is so fast and possible that what you do today will have results for the next years. Figure out who you are. What are you actually good at? Are you actually in a position to be successful? Assume the risk to invest on the best asset you can ever have: you.
