Understanding your competitive advantage is inherent to the competitive advantage itself. In other words, to truly exploit your competitive advantage, you must understand what it is. Quite often, people and organizations move through the motions of business without putting their competitive advantage forward, meaning they do not take advantage of the opportunity to pad the value of their product or service, and foregoing additional returns. Further, individuals assume that their uniqueness is an advantage itself. But then you fall victim to the adage, “be unique, just like everyone else.”
Let’s start with the actual definition of a competitive advantage: a condition or circumstance that puts an organization or country in a more favorable or superior business position than competitors.
Now to extrapolate from the definition and apply it to small businesses and startups. There are a few things to note. First, competitive advantage is not about the individual, nor do you want it to be about the individual. Next, it is about a superior business position, so you must understand the demands of your market. Lastly, it is crucial to evaluate your competitors, as you will not be able to define an advantage if you do not know your competitor’s capabilities.
People are important in teams.
While attracting great talent is important, allowing a competitive advantage to fall on an individual poses a risk –the moment that person is gone, you’ve lost a competitive advantage. Harness a competitive advantage through the team or teams in your business. Establish a culture of creativity, innovation, and positive conflict. Skills will come and go, but culture stays. Also, it is easier to mimic or copy skillsets, processes, and designs, yet culture in teams is built overtime and much more difficult to replicate.
Every market is different.
Yes, it is possible for a startup to disrupt nearly any market at this point. But a competitive advantage in one industry or market does not necessarily apply to another. Being vague doesn’t help you either. Technology and data is not a competitive advantage. It is what you are doing with that data or allowing customers to do with that technology which poses a competitive advantage. Be specific. TrueCar uses data and mobile technology to create price transparency when consumers purchase cars in a specific location, while also developing an online and mobile sales platform for car dealers. Consumers in the auto market definitely see value in price transparency, as they gain leverage, and dealers adopt the platform as users flood the app and website.
Be friends with your competition.
It’s okay to talk about your competitive advantage with your competition –they will figure it out anyways. The idea is to always be ahead of your competition. Also, they are more likely to share what they are doing, if you hadn’t already pointed out their advantage. Regardless, study your competition and know what they do to stand out. TrueCar did not venture to create another auto classifieds app. AutoTrader already mastered that, and no form of new design will sustainably disrupt their business. TrueCar elevated a market need, which was arguably ignored by online auto classifieds, and addressed it by creating a network of users who share their sale price. TrueCar is more appealing to consumers in the market.
Overall, startups have two advantages to start with. First, they are small, more agile, and flexible. Second, while large organizations may focus on operational efficiency to be more competitive, small businesses can be more innovative and creative (look at how SaaS shook things up.)
Write down your competitive advantages and have a dialogue with your team. Even though you think you know what they are, it doesn’t mean your people do. Competitive advantages are the basis to your marketing strategy.
Profit on your competitive advantages –send us a note to get started.