Taking Down the Giant: Make Your Competitive Advantage Your Competition’s Achilles Heel

November 10, 2011 by

This is the first post in a three-part series that will highlight a few ways smaller startups and expansion stage companies can win against big competitors. To read the intro to the series, click here.

In early 2009, while the US economy continued to sputter, respected author and strategic adviser Peter Bregman penned an article for Harvard Business Review that must have given small technology companies a boost of confidence.

Small is the new big, Bregman wrote. Sustainable is the new growth. And trust, a virtue that smaller startup and expansion stage companies should find easier to develop, is the new competitive advantage. That was more than two years ago, but I think Bregman’s advice rings true today:

You don’t have to be big to be successful.

In fact, if you’re able to identify, create, and communicate your competitive advantage – whether it’s trust, agility, responsiveness, or product specificity – then you can win against the behemoths of your particular market.

Bregman uses the example of Passlogix, which at the time of his post was a privately owned 100-person software development company that had just received more than two million dollars in prepaid commitments from two different customers.

Guess which companies Passlogix beat out to win those accounts? Computer Associates and IBM. And in October of 2010, guess which company decided Passlogix was valuable enough to acquire? Oracle.

So what allowed Passlogix to beat – or at least threaten – those market giants?

According to Bregman, a big part of the company’s competitive advantage was the capability of its product. But another significant piece of it was Passlogix’s company-wide commitment to customer service and its distinct value proposition. For example:

  • Even as the business grew, Passlogix CEO Marc Boroditsky would answer client calls personally. That, of course, allowed the company to develop a highly trusting relationship with its customers and create some serious brand loyalty.
  • The company’s product wasn’t entirely unique. But Passlogix did make its value very clear: Compared to its competitors, its product could lower a customer’s cost of ownership from an average of $150 per user to just $15.

The bottom line is that Passlogix understood its competitive advantages and created a plan to leverage them.

As Bregman suggests in his post, small companies that are capital efficient, possess strong senior leadership, have a small number of highly committed employees, boast personal client relationships, and sell products that address specific industry pain points may actually have the secret weapons to fight their market giants – particularly in this economy. They just need to identify that competitive advantage, commit to it, and create a visionary roadmap that will take them where they want to go.

So what’s your competitive advantage?

It doesn’t have to be something from this post. But you absolutely must be able to identify, leverage, and commit to it if you want any chance of beating the big guys.

Because believe me, you can!

 

Stay tuned for my next post in this series, which will explain why becoming an industry thought leader can help smaller startup or expansion stage businesses stand out in a crowded market.