The title of this article is only half of the story. Not only is it important to thoroughly and realistically understand why you will win, but it is also equally important to understand why others will lose. Potential investors will ask this question. Prospects, before they become customers, will also indirectly ask this question. They will ask it in the form of why they think you are a better choice than the alternatives. Independent of who or how the question is asked, you need to address it with believable, logical, and succinct answers.
A few answers which will cause instant loss of credibility are: “Our people are smarter than theirs” or “We have a lead, and they won’t be able to catch up” or “They don’t understand the market the way we do” or “We have a patent that will protect us”. All of these reasons and many other similar ones are based on inflated egos, wishful thinking, or both. Although there are many other reasons, winning strategies are based largely on one of these five simple factors or some combination of them.
Focus: You have a laser beam focus on a market segment with a unique product that others have decided not to address either consciously or unconsciously.
The unconscious aspect by others could be due to you truly finding a unique application or problem that needs to be solved now that others, including customers, may not be aware of. This actually happens rarely, but as soon as you are successful, you can bet that others will find out and then consciously decide to address it or not. Winning strategies based on unconscious awareness are short lived.
Companies quite often decide not to address a particular market. You may think you have an original idea only to find out later that someone else thought of it before. Some things that appear to be new can be very old. The cellular telephone network concept was first described by Bell Labs in 1947. Wireless LANs were commercially available in the late 1970s. Large companies routinely decide not to introduce products for a variety of reasons. The market may be too small or fragmented, there may be other higher potential opportunities for them to pursue now, the introduction of the product may adversely impact other portions of their business, or the product or service may not fit within their desired core competencies. All of these are valid reasons for the lack of focus on a particular area.
Execution: The ability to execute, including the ability to develop, supply, and support a product or service, can be a significant differentiator. Fast execution or responsiveness can be highly effective when competing with large, well-established companies. Although this can be an indictment on their bureaucratic culture that has expanded over the years, it could be caused by their size and the need to serve an entire segment. As an example, a startup could follow an epicenter model and sell only locally and slowly expand to a region and eventually serve the entire country. A large company may need to serve the entire market with the initial product launch. As an example, consider the challenge that Apple faces with the simultaneous launch of a new iPhone in thousands of retail outlets around the world. Compare that to the launch of a new product in your suburban location.
Risk: The risk tolerance of companies varies dramatically and can have a major impact on competitive positioning. When, for example, was the last time you heard of a class action lawsuit being filed against a startup? And, how many class action lawsuit plaintive solicitations have you heard on television commercials? Large companies are naturally more risk averse than startups who understand that success is not at all guaranteed. There is another, much more personal reason for the different risk tolerance levels. In large companies, most managers and executives “like” where they are and what they have attained. Naturally, they do not want to lose it by taking undue risks. Entrepreneurs and most people who are attracted to startups are motivated by the prospects of winning instead of the fear of losing.
Resources: Virtually every company from the Fortune 500 to the single entrepreneur feels strapped for resources, which could be either money, people, or both. In fact, in many large companies, finding money and resources to fund new initiatives may be more difficult than the single entrepreneur. Even if found and allocated, the overhead cost and process burden placed on a supposed startup group within a large company may be too burdensome for it to be effective.
Responsiveness: In new markets or with new applications, seldom is version 1.0 or release 1.0 adequate. Being able to realize that a change is necessary, deciding to actually do it, and then making the change and introducing it to the market can be a significant differentiator. These capabilities have more to do with a company’s culture than it has to do with its size.
Although the above list included five discrete areas, the reality is that most of them are interrelated. For example, with more resources, a company could become more responsive. The important take away from this article is that a company has to carefully consider the competitive environment and understand precisely how they will win when faced with competitors that are doing the exact same thing. It is no value to understand precisely why you lost after the fact. The seeds of victory as well as seeds of loss are there; you just need to examine them objectively.