Anything you invent will always be ripe for replication down the track. It doesn’t matter how many patents or non-disclosure agreements you have, one day someone will take a close look at your business and develop a product or service similar enough to potentially take a chunk out of yours.
Knowing that there’s no such thing as true differentiation can be a bit of a downer when you’re trying to make your way in the market but actually you’re at an advantage. Firstly, it’s confirmation that you’re doing the right thing. If you’re successful enough for someone to want what you have, then that means the market is there for the taking. Secondly, having copycats replicate what you do means they will always be behind you.
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Be a moving target
They say the only true differentiation you can have is your people and the dynamic your team has, which comes down to the culture you instill in your business. The best approach is therefore to have the best people in the industry on staff to keep differentiating time and time again.
If you’re ahead of others, your business has access to premium pricing, so you don’t just fall into a ‘lowest numbers’ game. By moving early, you have access to the right customers who are willing to pay a good price for what you—and only you—can give them, and you can build loyalty. The copycats are then left to haggle over the rest of the market because everyone who follows needs to offer the same or a similar product or service for a more compelling reason in order to win the market, and that often comes down to price.
The other aspect of differentiation is to stay ahead by anticipating market needs. Most businesses do not set out to be pioneers like Apple or Google but they do have the ability to make small changes to their offering that will make a big difference to their customers if only they would take the time to do some research.
One change that we made at Brennan IT was bundling together a service pack with our products so our clients would get setup and maintenance included in their subscription. We did this after listening to clients and noticing that most of them needed service built-in. It was a simple thing that the market was crying out for at the time (and it’s now pretty much standard for most IT offerings) but that tiny difference saw us grow by 200-300%.
On the other end of the scale you have a giant business like Kodak, which had the photo market stitched up. It put all its effort into making the world’s best photo paper only to see the market for photo paper move on. It squandered its advantage in the photography space by refusing to engage in continual improvement of its digital camera products and by the time it got its act together it was too late.
For difference sake
However, being different for difference sake is not compelling either. Any difference you provide has to come down to the needs of the market, whether that’s an existing need yet to be met, or a future need you can foresee with some clarity. Again, you don’t need to be in the business of creating markets like Apple with its iPad to be successful.
Knowing your market is the obvious first step. Understanding what is compelling and interesting for it is the natural second. Gearing your business to build a product or service to meet that market then follows.
One example of this was the cloud computing market. We noticed our clients were in a credit crunch and couldn’t secure the capital to buy servers, so we developed cloud subscriptions. As one of the first to sell the benefits of cloud, we soon became one of the biggest cloud vendors in Australia, all because we noticed a problem and created a solution.
You can’t prevent people from copying you, but if you’re always on the lookout to understand what customers want and are able to continually identify a better business outcome to meet that, then your differentiation will always be that process, not the product or service that comes from that.
Dave Stevens is managing director of cloud and managed services provider Brennan IT.