Choosing between Could and Should
Finding your Unfair Competitive Advantage
Most start-ups have many options and possibilities that could grow the business. One of the greatest strategic challenges of young businesses with limited resources is choosing between what they could do, and what they should do. This comes down to finding the strategy that leverages an unfair competitive advantage.
At one of my start-up companies we had a technology that could be used to salvage blood lost during surgery for reinfusion to the patient to reduce the need for donor blood transfusions. Blood salvage was a common procedure during high blood loss surgeries like open heart, spine and liver transplant, and our technology had many potential advantages around quality of washout, size and portability of equipment, and ease of use. Unlike existing products that required a certain batch volume of blood to process, our technology had the unique ability to process even at very small volumes.
So while we could have waded in to the large established market with our advantages, we chose instead to develop a product specifically for the less established market in orthopedic joint replacement. In this application blood loss was highly variable and unpredictable. Our ability to provide high quality washed red cells for transfusions, regardless of the volume of blood loss, became our unfair competitive advantage, and the system became a great success and the market leader in the segment.
Could and should applies to other strategic choices as well. For example, global market expansion. Many US companies choose the UK or Canada as their first international expansion markets because there are no language barriers and they are geographically close. I have seen this approach a lot from new medical technology companies. However, both of these markets have highly institutionalized health care systems where introducing new technology and approaches can be slow. Instead, pick the international expansion entry point where you have that unfair competitive advantage.
For one of my companies it was the UK, not because of the language, but because several of the top clinical experts in the field were based in the UK and were big fans of the technology. In another company our strongest international market was France, because our representative there had strong personal ties to the governmental entities making large scale clinical protocol and purchasing decisions. An unfair advantage could be many things. It could be favorable guidelines or regulations, or a particularly skilled and committed distribution partner. Don't make a business investment because you can, make it because you have an advantage that no one else can match that will give you the biggest return on investment.
If an unfair advantage does not present itself from your core technology or contact network, you may need to generate one. In the consumer space companies often use brand or customer experience to drive differentiation. We need to do more of this in B2B. In one of my companies there was an existing core competency in manufacturing quality. We leveraged the internal capabilities to build a highly valued training program to help customers learn six sigma approaches using our products. In another company we built a core competency in compliance documentation. When launching our product in new hospital customers we helped drive and document best clinical practice in their nursing staff to meet their required compliance documentation. In another we built a core competency in digital marketing, providing education on clinical practice, and by the way, our products. The key is to choose something where your competition cannot easily follow because they do not have the skill set, bandwidth or flexibility to follow.
Whether it is a product difference, a business advantage or a core competency find your unfair competitive advantage and lean into it.