The Power of Unfair Advantage

How to Create It, Build It, and Use It to Maximum Advantage

by John L. Nesheim (14800)

When a company has an unfair advantage in business, it’s no longer required to compete against everyone else on a level playing field. Instead, it loads the dice in its own favor, and makes success more likely. Unfair advantage is the “magic elixir” or the “secret sauce” of the business world. Entrepreneurs live for it, venture investors scour the world looking for it, the top employees are attracted by it, the media love covering it and investors pay handsomely to get a part of it.

Quite simply, everyone and every organization needs an unfair advantage in order to stand out in this intensely competitive world. Finding, enhancing and then harnessing an unfair advantage is the holy grail of the business world. It is the engine that drives the growth of business start-ups and turns them into world class enterprises.

The Power of Unfair Advantage

Swim with the Sharks without Being Eaten Alive

(13900)

Outsell, Outmanage, Outmotivate and Outnegotiate Your Competition
Harvey Mackay

Determination + Goal-Setting + Concentration = Success

This is the magic formula for success. It’s easy to explain but difficult to execute. You can add your own extra dimension with vision, backing your own judgment or a host of other personal factors.

No one has the only game in town–there’s a never-ending a cycle of change and destruction inherent in the capitalist society. New opportunities are continually being created for those with determination, goals and concentration.

You don’t learn to swim with the sharks in a single outing. High-stakes challenges demand practice and perseverance.

Swim with the Sharks without Being Eaten Alive

Pinpointing: Noticing External Change Before Others Pick Up on It

(21802)

Savvy leaders stay ahead of the curve and act before their competitors even start to respond. They pick up on changes in the environment early and adjust for what will work in the future, not what worked in the past.

Hone Your Senses

A second aspect of know-how is your ability to “connect the dots”–that is, to pick up on all the clues that come in daily about ongoing changes in the marketplace and assemble them into sound judgement about where your business needs to be in the future.

To do this effectively, you need to be able to look at your business and industry from the outside in. You need to be looking at everything that is happening in the general business community as if you had no vested interests. If you can pick up on changes early on, you’ll then have time to try new ideas, run some real-world tests, apply your resources and if necessary reposition your business more advantageously.

External changes can be cyclical or structural. As a rule of thumb, cyclical changes need to be managed and can be deferred to some extent, whereas structural changes are long term and therefore require permanent corrective actions to be taken. Being able to see pending external changes before they occur is more an exercise in pattern recognition than anything else. Those who are skilled in pinpointing change are typically very adept at detecting patterns in the external environment. This competency then allows them to act confidently and decisively while others are still bogged down sorting, sifting and analyzing the data.

Angles of Observation

To pick up on emerging patterns, there are seven reasonably straight-forward questions you need to be able to answer:

What is happening in the world today?Look at all the changes that are taking place and try to get a complete mental picture. You’ll need to fill in the gaps and decide how changes in one area will have likely flow-on effects elsewhere.

In terms of my personal frame of reference, what has worked for me and which aspects have not?People with know-how have the ability to engage in some self-reflection. You need to evaluate why you may have failed to pick up on some clues in the past and then do something about it.

What are the potential responses from those who are most affected?Savvy business leaders evaluate all potential responses. They look through the eyes of different groups and make an informed judgment about what is most likely to happen. You must learn how to do this.

What will changes in the big picture mean for my organization and its strategies?Once you have the big picture issues in place, you can then determine what the flow-on effects will be on your own enterprise. You can then develop workable strategies that will allow you to seize any and all new opportunities.

What would need to happen for new and exciting opportunities to open us for us?Spend time getting a feel for the prerequisites that will need to fall into place first. You will then be able to differentiate what level of certainty there is, and how far along the sequence of unfolding events are.

What can we do to play a role in making those respective changes happen proactively?This generally means reorganizing your business to be positioned for the new opportunities. You may also need to look at your leadership pipeline, management structures and other practices.

What can and should we do next?Once you’ve assimilated all this information and processed it, you then need to go ahead and move. There’s no use accurately anticipating change but then sitting back and doing nothing worthwhile about it.

Keep Your Eye on the Big Picture

It’s easy to become so immersed in what you’re doing that you develop a form of myopia to everything else. Those with know-how are always busy becoming better at what they do because they can see their own business model in the context of the big picture. To enjoy those same advantages, you need to become skilled at pinpointing the changes coming soon and placing your business in an advantageous position. This is important because the world is changing all the time.

Know-How

Positioning: Finding an Idea That Meets Customer Needs and Makes Money

(21801)

Positioning is the central idea of your business. Leaders with know-how learn how to position and then regularly reposition their enterprises where they can make money. If you don’t get this right, the foundation of your business can fade away into irrelevance.

Correct Positioning Makes Money

It’s actually quite easy to determine whether or not you have your positioning right. If people like what your business has to offer and you can sell things at a profit, you’ve probably got things right. If people are confused about what you do and therefore reluctant to buy, you probably have your positioning wrong. Over timee, you have to keep adding different things and deleting others to keep your positioning relevant to the changing and evolving marketplace.

Take the example of the newspaper industry:

For many years, the way to make money in this business was simple and straightforward–run as many ads as possible combined with information that people will pay to read.

Then along came the Internet and search engines like Google that in effect allowed the customer to personalize their information gathering activities. As more consumers have turned to the Internet for information, the amount of money advertisers have allocated to print rather than electronic media has steadily declined.

To respond to these new competitive changllenges, newspaper can’t retain their past positioning. Instead, they need to figure out where the new sources of revenue will be, what the new cost structures are likely to be and what they need to do differently to make money. This is difficult because it requires looking at the marketplace in a broader context.

Newspapers may make available news and information that is continuously updated and then broadcast to an iPod or other handheld device. The market may fragment into a much larger number of smaller segments, each of which will need a different approach to packaging and delivering news and information. Successful leaders with know-how engage in this kind of mental gymnastics and develop viable positioning alternatives all the time.

Positioning Is an Ongoing Battle

Positioning is very much an ongoing battle rather than a one-off activity. And just to make the positioning challenge even more interesting, different players in the same industry will adopt radically different market positions. Moves by any individual player will also have flowon effects on the positioning other competitors can reasonably adopt.

When should positioning be modified?

So how can you tell when your positioning will need to be updated or modified? There are various leading indicators to watch for:

When an entirely new market niche emerges and grows

Whenever new competitors start to enter your industry and make nonconventional offerings

When a key competitor radically changes their own positioning

When new technologies come along that dramatically alter consumption patterns

When it becomes clear customers are defecting away from your offerings towards others

When new customers enter the marketplace

When you suffer a significant loss of market share

Whenever new business models or management models take root within your industry

When there is greater-than-normal pressure on your profit margins

When you suffer an unexpected declinein operational cash flows

When there is an obvioius decline in customer satisfaction.2 keys to positioniing know-howMany of these early warning signs for the need to change your positioning will be small in magnitude and easy to miss. You need to search for the right sources of information to pick up on these signals.The two key elements of positioning know-how are generally the mentality to dissect the market and find the spots where the best money can be made and the psychological inclination to confront reality and act sooner rather than later.

Know-How