4 Steps to Finding Your Competitive Advantage

4 Steps to Finding Your Competitive Advantage | Defined Ventures, Inc.

Competition between businesses is so much more serious today than it was just 10 years ago. As a result of this change, your business has to work harder and smarter to compete against a longer list of potential disruptors.

At first glance, achieving this goal may seem straightforward; figure out how your competition does it and find a way to do it better. But this is a short-sighted approach. It fails to factor in whether or not those competitive strategies are in any way sustainable (or even smart).

Instead of focusing on the short-term, focus on sustainability in advantage. Use this step-by-step guide to increase consumer benefit, better serve your market, and improve customer satisfaction for real, identifiable change.

Create Value That Lasts

Product value is one of the biggest factors in business today. With the current mini-recession, consumers (B2B, B2C, or B2P) want more for the money you spend. They’re also much more likely to hold off on buying until they find high value.

Unfortunately, that also means cost-competitive advantage is one of the biggest business disruptors.  All your competition needs to do is find ways to be cheaper than you without sacrificing quality and they have the consumer in the bag.

It’s at about this point that most business owners protest. “We can’t afford to knock prices down; we’re going through this mini-recession, too!” If you can relate, take heart: cost-competitive advantage is less about self-sacrifice and more about finding ways to make product creation and delivery cheaper. Product price drops are easier to swallow when they’re justified.

How to Make It Happen

To achieve better cost-competitive advantage, you need to get real about your product. Follow this formula for best results:

Direct material costs
+ total labor costs
+ manufacturing overhead
Total Product Costs (TPC)

Then, take your TPC and divide it by the number of products you produced:

Total Product Cost (TPC)
% of products produced
= Product Cost Per Unit (PCPU)

Note that these formulas also work well for services. Just apply your direct material costs, labor costs, and manufacturing overhead costs to service provisioning and delivery instead.

Once you have your PCPU, find ways to reduce it. Forge partnerships with suppliers who can manufacture your product for a lower cost. Find ways to cut back on overhead or human resource needs. Streamline workflows surrounding product or service provision and creation to reduce inefficiencies and missed opportunities.

As you bring down your PCPU, balance the reduction in costs with savings to consumers without sacrificing growth or shareholders. This is a constant, ever-changing process, so don’t expect to engage just one time.

Find What Makes Your Business/Brand Unique

Sometimes, the issue of competitive advantage is less about what you’re saving people and more about the fact that you’re just another face in the crowd. Without setting yourself apart from the competition, consumers won’t see you as unique, and that means they’re less likely to choose you versus the veritable avalanche of other options on the market.

Becoming unique, unfortunately, isn’t always easy, especially in tiny, deep-niche industries like industrial or manufacturing. Often, tight regulations and processes leave little room for marching to the beat of a different drum. But there are ways to achieve this goal – it just takes a bit more effort.

How to Make it Happen

Uniqueness starts with knowing your competition inside-out. Figure out why they are, what they’re doing right, what they’re doing wrong, and how much of the market they have cornered.

Basic market research strategies should reveal these facts (and more). If you’re having trouble nailing them down, go on an information-gathering quest. Buy a product or service from your competition and experience them first-hand. Then, determine where your competition is failing (no business is perfect) and eliminate those failures back at home.

Truthfully, becoming more unique is a broad ask. It doesn’t come down to only one specific factor. Instead, it’s more about taking all of the items listed here and stitching them together to create something “shiny, attractive, and new.”

Forge New Alliances

There’s strength in numbers. If you can’t beat ‘em, join ‘em. These phrases have been around for decades. If you’re in a business that’s struggling against too much competition, they can also amount to staggeringly good advice.

There is a point where your business simply cannot compete. That’s just a fact of business life. Maybe you can’t access the same kind of pricing as your competition, or you just don’t have the same size cut of the market right now to make it work. Whatever the reason, you should view it as an opportunity to branch out within your community and your industry to forge new alliances.

When you create new connections between your business, you naturally generate publicity and conversation while expanding your business reach. You also have the opportunity to create change for good

How to Make It Work

Forging alliances and partnerships is about being an active, involved member of your industry and/or community. Start with community events and get involved with charity where feasible. Sponsor local or global organizations for good, and be willing to “play well” with your competition to achieve goals. Setting aside your differences momentarily to improve the world shows your business’s good nature while also making you appear more human and relatable.

Business partnerships are a bit more dicey. It would be ill-advised if we told you to rush out and partner with your biggest competition; not only will they probably deny you the chance, but even if they do, it’s a risk you just shouldn’t take.

Keeping your enemies closer is fine – but that doesn’t mean you need to hug them and sing kumbaya, either.

Instead, look for opportunities with companies or organizations on your level. These are other businesses who struggle against the same competition, often for the same reasons. There are countless examples of the “little guys” coming together to rise up and defeat industry leaders in the past.

If all else fails, there’s always temporary social media alliances. Brands like KFC, Cap’n Crunch, Skittles, and Honda make this work by either cross-advertising their products by agreement or by engaging in friendly banter and jokes. The world watches closely, and most interactions wind up gaining viral status the same day. That’s a powerful PR move.

Innovate, Disrupt Your Industry

Struggling against a company with a huge competitive advantage? Feeling the affects of a disruptor? Spin the situation around on its head and find ways to become the disruptor yourself. Stop fighting up the stream and become a whole new industry or approach altogether with disruptive innovation.

Disruptive innovation doesn’t create a better product or service. In fact, it doesn’t even improve customer service, business flexibility or access specifically. Instead, it focuses on disrupting the current market by creating an entirely new market instead.

Richtopia gives a few great examples of industry disruption in this article. One of the examples they use is Elon Musk (owner of Tesla) and his current focus on space travel.

Space travel and high-end vehicles? They are connected, as strange as it may seem. Through research into space travel, Musk generates macro disruptive technologies that benefit Tesla’s image and  their vehicles all at the same time. There’s significant technological crossover in application.

Netflix is another great example of disruptive innovation. By taking movie rentals out of brick and mortar businesses, they played a major role in disrupting businesses like  Blockbuster. Today, they continue to disrupt major cable outlets by steadily increasing what they make available online for a much cheaper price. The “disruption” here is that it’s just plain easier to use their newer streaming technology than to run out and rent a DVD or order cable.

How to Make It Work

Product innovation specialist Jay Samit gives fantastic advice to businesses who seek to disrupt through innovation. He advocates the Zombie Idea Approach; when you have an idea for innovation, you shouldn’t nurture it – instead, try your best ti identify “why it sucks.”

“The purpose of an idea in a startup isn’t to nurture it like a flower; it’s to kill it. You want to go to every potential customer and every user before you build it, write code, or spend millions, so that you can find out why it sucks, and keep on chipping away, iterating as quickly as you can and as agile as you can until you come up with what I call a zombie idea – an idea that can’t be killed.”

This is where so many businesses fail to innovate or disrupt. They over-rely on one or two good (but totally unsustainable) ideas and suffer the consequences. True, sustainable industry disruption lies squarely within these Zombie Ideas that can’t be killed.

Samit is a bit of a revolutionary this way; he often advocates working disruptive innovation in reverse. Maybe that’s why he also suggests that businesses should master self-disruption – finding ways to innovate that disrupt your current process. After all, it’s always better if you’re the first one to do it instead of your competition.


President and founder of DVI, Aaron Boerger realized early in life that he had a unique combination of x-ray vision and business acumen for seeing the weaknesses that held businesses back – and the ability to define the right tools, technology and strategy to make them stronger. From founding a successful technology support business in his early teens, to serving as Chief Operating Officer for several companies in the financial, technology and marketing industries, Aaron has developed a reputation for reinventing technology implementation tactics – and the willingness to tell people not what they want to hear, but what they need to hear, in order to achieve success without overwhelm. Aaron will always go the extra mile to provide the accountability and support his clients need to achieve their goals, yet isn’t afraid to tell them when they are doing something wrong.

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