Unique Competitive Advantage

It seems to me that the one of the biggest mistakes entrepreneurs make is not understanding and therefore not being able to communicate their unique competitive advantage or value proposition.

Many entrepreneurs set out to be just like their competition only "better" but rarely is better even well defined.

There is a great book called "The Discipline of Market Leaders" by Michael Tracey that helps businesses understand at least which business model to adopt. Tracy considers only three business models:

  • Operational Excellence which is all about providing the customer with lowest total cost and ease of service or use, in other words a low cost standardized solution
  • Customer Intimacy which is all about tailoring your service or produce to meet the customers exact needs, i.e. a high margin custom solution
  • Innovative Product which is all about being the only one with this product or service because it is so unique or technologically advanced etc. i.e. you can only get this here.

It is therefore helpful for entrepreneurs to figure out which one of these models is the predominate business model for their business. Is it about being the lowest cost? Then be the lowest cost in the market. Is it about providing unique custom tailored solutions? Then get to know each of your customers very well indeed. Is it about being on the bleeding edge of your technology, product or service? Then continuously champion the latest and greatest offering that no one else has.

Why do customers buy my product and service over other such products and services on a consistent basis? If you as an entrepreneur can answer this question clearly and consistently, then you are well on your way to defining your unique competitive advantage. And once you know that - well then this forms the basis for your marketing and your service delivery model.

Below is Simon Sinek's incredible TED talk on the importance of "why" and indeed why defining your company's "why" may be the single biggest determinant in understanding your unique competitive advantage.

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