If you plan to launch a new venture, product, or service in 2016, make it different from those currently available. Different is better than better.
For example, the Apple MacBook is different from Windows laptops: more user friendly, more graphical, more unique tools and applications for publishing, photos, music, and video. Unlike HP, Lenovo, and Dell, Apple developed both the hardware and the operating system and tightly integrated them. Not coincidentally, Apple’s slogan for many years was “Think Different.” Over the years, Apple steadily took market share away from Windows. In 2010, for the first time, the market cap of Apple exceeded that of Microsoft. In 2011, Apple became the most valuable company in the world. Different is better than better.
When I say “better” - the second “better” in “Different is better than better” - I mean quantitatively better than what is currently available. HP, Lenovo, and Dell laptops are each better than the other in some way: a 20% longer battery life, a 15% larger screen, or 25% more storage. Especially for a start-up, such a quantitative advantage is at best tenuous.
Your competitors likely include companies that are larger, better established, and better known than you. In most industries, quantitative improvements in performance and cost happen continually. A purely quantitative advantage is hard for a start-up to sustain.
“Different” means a qualitative advantage using a different approach, design, or technologies that make your product or service the best choice for some important customer set. Being different places you on one or more different dimensions from your competitors, whether the dimensions are customer needs or product features. Besides the MacBook, here are some examples of “different”:
- Other dentists require limited-mobility patients to come into their dental offices. But you make house calls.
- Other electricians and carpenters recommend each other. But you know that so many jobs involve both skills that the two of you use online tools to integrate your scheduling, service delivery, and billing.
- Other call centres allow customers to complete satisfaction surveys after the call. But you ask permission to record calls and use audio processing to measure tension or anger in the customer’s voice, track whether it trended up or down in the course of the call with your agent, and flag outliers.
Your different product or service will not be for every customer, whether consumer or business. That’s okay. If you can earn the loyalty of a small but sufficiently strong set of customers, they will become repeat customers for your product or service; will buy more of your product or service over time; and recommend you to their friends or colleagues, so you will further benefit from word of mouth.
It is possible, with a sufficiently large advantage, to be different along the same dimensions as established competitors, but that is much harder than being different along dimensions without such competitors. A tablet with twenty times the memory of other tablets at a comparable price would enable wholly new usage patterns and applications that exploit the voluminous memory. That’s truly different. Maybe you use a novel memory technology to achieve it. But since memory size is a primary dimension along which established tablet makers compete, watch out: They will work hard to catch and surpass you. (Make sure one or more patents, licenses, or trade secrets adequately protect your novel technology.)
Better means your new endeavour has to fight larger competitors head-on. Different means finding a dimension without competitors that is valued by some set of customers, and excelling along that dimension. If you can identify and excel along two such dimensions, even better. You won’t be competing directly with the established competitors, and you’ll have more time and room to become established yourself.
Being different not only gives you a unique customer set, it also makes it harder for established competitors to respond to you. Harvard Business School professor Clayton Christensen meticulously documented this effect in his classic The Innovator’s Dilemma for the disk drive industry. In the 1980s and ‘90s, established hard disk drive vendors found it hard to shift to new, smaller form factors - first 5.25′′, then 3′′, then 2′′, then 1.8′′ - even though the smaller form factor drives were better suited for each new generation of smaller, more portable computers. The established vendors’ existing customers - mainframe and minicomputer manufacturers - wanted high storage capacity and low price per megabyte. But the new form factors (initially) had both lower capacity and higher price per megabyte, and thus were ill-suited to satisfy the needs of established vendor’s customers.
In each case, one or more upstart disk manufacturers who did not compete in larger form factors won the market for the smaller form factor drives. Different was better than better.
Here is an exercise for you. List the top three to four reasons customers choose among existing companies that address similar needs to the ones you plan to address. Now think of reasons those customers would pick you instead; only list reasons that don’t apply to the other companies. These reasons differentiate you.
- “Better” means your company has to fight larger competitors head-on.
- Instead, be different in a way that is deeply valued by some set of customers. You won’t have to compete directly, and you’ll have more time and room to get established.
- Your differentiation may be either core or supporting the need you address; either could be key to your success.
- As your customers buy from you again and again, and tell others about you, you will grow with them.
John Chisholm is CEO of San Francisco-based John Chisholm Ventures. His new book, Unleash Your Inner Company: Use Passion and Perseverance to Build Your Ideal Business (October 2015), is available for purchase on Barnes and Noble, Amazon and other booksellers.