What’s Your Unique Advantage?
What’s Your Unique Advantage?
The power of knowing what sets your business apart from the competition
In my recent article, “Why Innovation Fails Without Strategy,” I discussed the importance of linking your innovation efforts to the unique advantages of your firm.
I also raised the topic of unique advantages in my article “4 Elements of a Shared Vision.” As I explained, defining your right to win in the future begins with knowing the distinct strengths of your business to compete in the marketplace.
In this week’s article, I would like to explore in more detail the concept of “unique advantages”, and how you can apply them to grow your own business amidst the rapid change of the digital age.
Why Unique Advantage Matters
When we look at the leading companies of the digital era—Apple, Microsoft, Nvidia, Alphabet, or Meta, for example—we see, that while each are exceptional companies, they are exceptional in different ways. Different companies thrive by being good at different things.
What is your organization uniquely good at?
What assets, skills, relationships, or capabilities do you have that add value to your products or services and give you a competitive edge?
I call these things your unique advantages.
Knowing them is a critical step towards winning in the digital future.
What Unique Advantage Looks Like
When Netflix filed for its IPO, its paperwork identified three advantages that distinguished the firm: its subscriber base, its data sets on customers’ media preferences, and its proven ability to deliver personalized experiences.
For Mastercard, its vast network of consumers and business partners (both banks and merchants) is one key strength as it looks toward the digital future. Another is its access to massive amounts of economic data tied to individual commercial transactions.
Walmart’s unique advantages include its vast data on customer buying patterns, drawn from 150 million shoppers in its stores each week. Another advantage is Walmart’s physical proximity to those same customers. As ex-COO Jeff Shotts told me, “The biggest asset we have is 4,700 stores in the US that are within 10 miles of 90 percent of the population in America.”
The Canadian Automobile Association (CAA) is racing to transform itself, as digital services like Waze and Uber disrupt most of its traditional services. But, as President Tim Shearman explained to me, CAA retains some powerful assets: a membership base of 36 million; a trove of data from their loyalty program with other businesses; and the CAA brand, rated as the most trusted brand in Canada across every industry.
These are precisely the kinds of advantages that can be leveraged—by Netflix, Mastercard, Walmart, and CAA—in digital business model innovation.
Finding Your Own Unique Advantage
Every organization has its own unique strengths and advantages; otherwise, it would no longer be in business.
These advantages can range from physical assets to patents, technology, data, customer relationships, brand reputation, strategic partnerships, employee skills, and more.
Your unique advantage might be the network effects that keep customers coming back to your multi-sided business model. It might be a supply chain that is more resilient than your peers. Or it could be a uniquely skilled and well-trained enterprise sales force.
As you look to your own unique advantages, consider the following categories:
• Tangible Assets— real estate, facilities, equipment, or product inventory
• Intangible Assets—intellectual property, data, or software
• Relationships—brand reputation, network effects, customer relationships, or business partnerships
• Capabilities—skills, insights, training, or talent
• Culture and process—employee culture, governance model, speed to market
• Positioning—differentiation from peers in where and how you choose to compete
A Skeptical Eye: Table Stakes vs. Real Advantage
As you start to identify your unique advantages, it is important to have a skeptical eye.
Whenever an advantage is proposed for your list, ask yourself, how unique is this really? (“Are we truly unparalleled in this dimension? Or are we in the top 20 percent of our peers? Or maybe just in the top 50 percent?”)
Also, ask precisely what competitive benefit does your business gain? (“Does this advantage reduce our costs? Does it make our customers more loyal?”)
Without an honest assessment of these two questions, I have seen discussions of unique advantage produce a long list of things the organization is quite good at but which are simply “table stakes” to operate in their industry.
While such qualities are necessary, they will never differentiate you from your competition.
Putting Advantage to Work
Knowing your unique advantages is critical to any strategy for growth.
This is because effective strategy is not about spotting opportunities that could work for any business.
It is about spotting opportunities that play to your strengths, where you will have an “unfair” advantage over other firms who might attempt the same thing.
Once you identify your own unique advantages, focus on leveraging them in two important ways.
First, look to pursue strategies where your unique advantages could help you to create more value for customers—via better performance, a lower price, or an improved experience.
Second, look for where your advantages can help you to capture value—achieving more profits than a competitor would from the same product or business model.
Disney, for example, has a unique advantage from its iconic stories and characters. It exploits this advantage in various business models — from streaming television to theatrical film releases, theme parks, cruises, and merchandise.
While Walmart’s stores were built for its core retail business, they are now being leveraged for its online business too—thanks to the 150,000 products, on average, in each store, ready to be delivered to nearby customers. In particular, Walmart is leveraging its proximity to customers (90% of Americans within 10 miles) to support its push into online grocery ordering.
Intuit has used the unique advantage of its data—payroll and tax data shared by customers using its QuickBooks products—to provide credit for small businesses unserved by other lenders.
As senior executive Rania Succar explained to me:
“We believed at Intuit that we could solve small business lending in a way that no one else has. We have access to more data about small businesses—through what they put in QuickBooks—than anyone. And the hypothesis was that we could leverage that data on behalf of small businesses, to build best-in-class underwriting models and be able to serve small businesses profitably, and dramatically increase the access-to-capital rate.”
After experimentation and validation, the product launched as QuickBooks Capital, leveraging 26 billion data points to train an algorithm that could offer loans of up to $100,000 to small businesses in forty-nine states. Customers were delighted, with 90 percent saying it had a direct impact on the growth of their business.
4 Steps to Define Your Own Unique Advantages
Now that we see the power of unique advantages, it’s time to put it to work for you.
Let’s take a look at a four-step process for identifying your most important unique advantages.
Then, we will see an example of the insights that can come out of following this process for a single business.
Remember your goal:
To identify your firm’s unique advantages vs its peers, and use those to guide your future growth strategies.
Step 1: Brainstorm a List of Possible Advantages
Start by generating a list of your organization’s advantages as it competes against similar organizations.
Think of your strengths and advantages in any of the following areas:
Assets—tangible assets, infrastructure, IP, data
Capabilities—skills, insights, training, or talent
Relationships—brand reputation, customer relationships,
business partnerships, or business model network effects
Positioning—differentiation from peers in where you compete and how you go to market
Culture and process—employee culture, flexible management, speed to market
Other—any strengths that don’t fit the above categories
Step 2: Describe the business benefit(s) to your firm of each “advantage”
For each advantage you have listed, define how it benefits your organization. Write each benefit as a single sentence.
For example, you might define a unique advantage as your
“Brand reputation as the innovator in the market for consumer services”
But how specifically does that benefit your company?
Possible benefits from this advantage might include:
help to acquire new customers when marketing new offerings
greater customer loyalty & retention
helps attracts top talent for our management team
HINT: If you cannot identify a clear business benefit, strike that item from your list!
Step 3: Rate each advantage on 2 dimensions
Next, you should rate each of your remaining advantages on two dimensions:
How BENEFICIAL is this to our future success?
High (a critical competitive advantage)
Medium (significant business impact)
Low (modest business impact)
How DISTINCT is our advantage here vs. peer firms?
High (we are unique among peers in our market)
Medium (we are in the top tier, with a few others)
Lo (we are better than most firms)
Step 4: Create a Matrix to Rank Your Advantages
Finally, you should create a matrix of your advantages and what you have learned.
Be sure to capture what the key business benefits are from each advantage, as well as the scoring on the two dimensions.
Your important advantages will score at the top on uniqueness OR on benefit.
Your most important advantages will score at the top on both.
The diagram below gives an illustrative example.
Conclusion
Knowing the distinct strengths of your business is the first step to leveraging them to win in the digital future.
Now that you’ve identified and explored your own unique advantages, it’s time to start using them as a tool in guiding your own innovation agenda.
Please let me know your own experience, or questions, with unique advantages!
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