A True Competitive Advantage can’t be copied and can’t be bought.Asymmetrical Knowledge aka “Insider Information” – Not the kind we hear about on Wall Street, which is illegal, but rather intelligence about the market need that you know that is unknown to others. For example, you may have worked for a very large company that has made the conscious decision to ignore a market that they feel its too small for them to devote resources to, but that you believe, with solid justification, can be built into a $100 million a year company. (I am sure that I do not need to caution you to behave ethically and legally in the use of this information.) In business, having knowledge that is uniquely-available to you is a True Competitive Advantage. An Obsessive-Compulsive Attitude about The One Thing – I’m not talking about washing your hands every 3 minutes or straightening the chairs around the conference table whenever you enter the room. I mean figuring out what you can do better than everyone else, something that matters, and obsessing on ALWAYS doing that One Thing better than ANYONE, including your closest competitor, YOURSELF. For example, Google became the behemoth it is today by focusing on Search – being faster, better, more accurate and relevant than anyone else, and then making it faster and better and more accurate and more relevant again and again and again. By the time their competitors came close to copying their stuff, they were already on to the next iteration. Most of their competitors – who started out before them – are long gone (can you say Alta Vista? Lycos? Excite? Do you even recall who they were?). Google’s search page was NEVER the prettiest. It still looks about the same as in 1998. In fact, it was years before Google returned anything beyond a text-based response. They waited until they could return a page with graphics just as fast as their text-based earlier versions. Faster, better, more accurate, more relevant, rinse, repeat. An OCA is a True Competitive Advantage. Personal Authority – Become known as the Industry Expert – the Go-To Person for anyone interested in your area of expertise which, of course, is the basis for your company (see above, Asymmetrical Knowledge). Attend meetings and conferences related to your intended business area. Make noise i.e. ask questions and start discussions. Take controversial positions. One “trick” I have used effectively works like this: Attend a relatively large conference with a panel discussion covering something relevant to you business; during the Q&A, pick one of the panelists and ask a question that contradicts his position – if he says “it’s white,” you say “my experience shows that many times it is black.” (Does not matter if you are right – just matters that your position is conceivable.); A little active banter back-and-forth (courteous, of course); thank them for their answer and ask them (in front of the audience) for some time “after this session.” Two things will happen: 1) Your target will commit to giving you a few moments of his time during which you will have the opportunity to learn and, with any luck, form a lasting relationship; and 2) Others in the audience who were afraid to ask a question or to take the same position as you will seek you out for your expertise i.e seek to bask in your Personal Authority. Your reputation as an expert will flourish. A Dream Team – Has your team done something like this before? Have they served the target market and hence understand the pitfalls in addition to the needs? If they haven’t, then are their other credentials strong? The team is a prime focus for investors – find a way to present each team member in the best possible (but factual) light. You want your investors to understand that your team is up to the task and understands exactly what needs to happen and when. One caveat – avoid being seen as over-confident “know-it-alls.” Existing Customers – An absolutely True Competitive Advantage. Having paying customers, even if it is for a pre-beta version, is priceless! Especially if these are significant customers in your target market. This validates your business plan and relieves investor anxiety. The less-nervous the investor, the more-likely they are to invest. I hope this is helpful. In our next entry in this series, we will talk about Fatal Error #2 “No one ever said they’d buy it.” Please feel free to add your $0.02 to this discussion. (See “Personal Authority,” above.) – Steve Hogan
BUSINESS PLANNING SERIES Last week, we wrote about a common-but-fatal error to avoid when writing your business plan – Invalid Competitive Advantages – stuff that makes you look less-than-competent and turns investors. This week, we will focus on the True Competitive Advantages your plan should show. If you have one of these, investors will probably read your plan. If you have three or four, you may actually get an audience – that would be good.