Creating Competitive Advantage – What is Competitive Advantage?
Creating competitive advantage may be the single most important and least understood concept in emerging growth technology companies. This post is part of a series that links competitive advantage to developing and executing business growth strategies and company development strategies.
In my last post, I introduced the concept of creating competitive advantage to business growth strategies and company development.
This post addresses the question “what is competitive advantage”?
Competitive Advantage Results
If you have a competitive advantage over your competitors, you will be able to win more than your fair share of customers in your target market without resorting to price competition.
Competitive Advantage Defined
Creating competitive advantage in your product market boils down to two things:
- Creating something different than your competitors
- Creating something that your target customers perceive as much more valuable than their alternatives (including your direct competitors’ offerings, a home-growth solution, or doing nothing)
Net net, if you create and offer high unique value in the minds of your target customers, you have created competitive advantage.
Many people get perplexed by the concept of competitive advantage. I believe it is because they hear a lot of confusing terms like “sustainable competitive advantage” or “long-term competitive advantage”. These terms simply mean you created competitive advantage to (most likely) maintain your lead for a long period of time. Though everyone would agree it’s good thing to create competitive advantage that lasts for long periods of time, it still boils down to doing something different and ensuring that those differences are perceived as more valuable by your target customers. The longer you can maintain these differences, the better!
Real World Examples
Examples of competitive advantage are everywhere. Just pick your favorite product or company and examine it from the standpoint of uniqueness and value to you. Some of my examples include:
- Porsche — They have a uniquely styled 911 series, great performance, and fits all 6′ 3″ of me (very few others do)
- Virgin America — I wrote about them previously
- Zappos — They are the Nordstroms of online products, with GREAT customer service (supported by their company aspirations)
- Google — Allows me to very, very quickly find what I am looking for and just works
- Central Desktop — Allows the people in my firm to share documents and run meetings unbelievably easy. The real advantage for me is the ease of setting up and changing things. (note: it is also a portfolio company)
- Facebook — In my experience, it has one of the easiest and best user experiences and also continues to collect all of my old friends and help reconnect them to me (the more of my friends they have, the more unique value to me).
What is your unique value?
What unique value can you create for your customers? If you can clearly articulate it, you have taken the first step toward creating more competitive advantage! All you need to do is answer your prospect’s question “why should I use your product?” and your answer should resonate with your prospect.
In my next post in this series, I will address the question, “What are Business Growth Strategies?”.