Strategy Fail # 1: The USPs you keep shouting about are actually standard across your sector
I’ve worked with over 160 organisations in virtually every industry, and this is the biggest issue I come across. People confuse what I would call 'table stakes' – meaning standard, orthodox things that everyone has across your industry – with a USP.
A CEO will say to me, "Our competitive advantage is our people." and I’m sure the CEO believes it, however people are how you deliver on your competitive advantage, not a USP.
I ask the leader of any organisation, "Where did you get all these great people from?" and the answer is that they got them from the same places their competitors did. They may even have recruited them directly from their competitors.
Unfortunately, because the CEO believes that people are the company's competitive advantage, they pour far too much money, time, and resources into whatever they believe their ‘people’ want.
What happens? Nothing changes. The sales figures don't change, and the profits don't improve. That's because you're wasting money on trying to elevate one of your 'table stakes' elements.
Chuck Bamford, Founder and CEO at Bamford Associates, LLC.
Invest in your 'table stakes' only to the point that they are no worse than anyone else's
In your sector, there will be a median expectation from customers on various aspects that are considered to be orthodox (just doing business) including delivery times, processing payment times, answering the phones, responding to email and the list goes on.
Customers can't detect plus or minus 5% deviation from this median in the industry. So, dedicate your resources and effort at making sure that you're relatively close to the median expectations in your industry.
It will ensure you are offering things that customers expect to see and it opens the door for your real USPs.
I was speaking at a conference centre a few weeks ago, and I asked everyone what they thought of the chairs they were sitting on.
The answer was that they hadn't even thought about them – they were basically just regular chairs that people would expect from a conference centre. No one chose the centre for the quality of the chairs. As long as they are ‘average’ they are fine!
So don't over-invest in something that customers see as table stakes. Because no matter how nice you make it, people are not going to pay you anything extra for it.
My 80/20 rule will help you plan your strategy
Business strategy, to me, is all about investing 80% of your time and resources ensuring that your table stakes activities are on par with your competitors’ offering and your customers’ expectations. It means you'll be at the same level as everyone else in your sector.
And that's good. You're delivering on people's expectations.
Then, start to identify your true competitive advantages and invest the other 20% of your time, resources, and mental firepower into those. That's where you'll start to see growth in sales.
Strategy Fail # 2: You're thinking too "high level" when trying to find your competitive advantages
People say to me, "Our USPs are our quality or our customer service," and other high-level/concept-level things that are similar.
Think about it. Can something as broad as customer service really be your USP? Are there other companies who actually set out to frustrate their customers?
Of course not.
CEOs tell me, "Well, we do this for our customers," and I'll say, "Sure, so does everybody," and they then try and tell me something else they do that's different.
Most of the time, it's something their competitors are also doing.
One of the issues is that they often haven't done a thorough competitor analysis or think that something like SWOT is sufficient.
Stop using SWOT to work out what competitors are doing and use 'resource-based analysis' instead
The best advice I can give to anyone who hasn't heard of a SWOT analysis is to cover your ears. It's not strategy – and yet so many businesses think it is.
To discover your real strengths and competitive advantages, you need to utilise an approach that has been well-developed over the past 40 years. It goes by various acronyms (VRIO, VRIN, VRIST, etc.), but all of these are versions of something called resource-based analysis.
It could be that when you drill down into it, there are elements that your customer service team does that are pretty rare. If so, you might be onto something.
The key is that you must get below the concept level to find those elements that have the potential.
Strategy Fail # 3: You're not looking close enough at your competitors (or refusing to look at them at all)
There are some books out there that say you shouldn't look at your competitors. They're terrible. When companies narrowly focus only on what they do, they forget something.
They forget that their customers see your competitors at the same time they do you.
Like it or not, your customers are comparing you to your competitors. Plus, they also have substitute options, such as doing something themselves or not doing it at all.
You can't tell me something you're doing is unique if you don't know what the competition is doing.
It's not that hard to find out. Basic research on competitors is as easy as typing their names into a search engine and spending some time reading. Most of your competitors are only too happy to tell everyone why they think you should buy from them.
A simple spreadsheet can help you discover if your USPs are as unique as you think they are
You've got to separate what you think from the reality of the situation. The best place to start is by recording on a spreadsheet what you think is unique to you and then what each of your competitors think is unique to them.
Next, record for each competitor and your business whether they actually offer each of the elements claimed as competitive advantages. It doesn't have to be precise or perfect, but it does need to look at your whole competitor landscape.
This will give you a clear idea of what's going on in the market right now. You should be able to see what you're actually doing that appears to be unique to you.
When you've done this, you can start looking at what strategy success looks like.
Strategy success #1: How to identify the USPs that will grow your business
Before youstart putting 20% of your time into your separators – also known as your competitive advantages or USPs – you need to know if it will be worth it.
Resource-based analysis has four big elements – Rare, Durable, Non-Substitutable and Valuable.
Examine if you believe the separator you have identified is really rare or unique.
Carefully analyse how long you believe you can hold onto this ‘rare’ thing before competitors copy it.
Some of the things that might slow down a competitor trying to copy your USP include the cost, the time to implement – or that they just won't think it's a good idea.
If they can catch up before you've made any real money out of it, I generally think it's better to let them do it first and just imitate them when they get there. Let them plough the road.
If, however, you're already doing it, it's making money, but it's easy to copy, my advice is to carry on doing it – but quietly.
If you have something that is rare and hard to copy quickly, look at the substitutes. There are always substitutes – but are they good or not? You have to make sure you're not kidding yourself.
Strategy success #2: go all-in on your best USPs
If your separator passes all three tests – it's rare, durable and non-substitutable – then the final hurdle to pass is this: is it valuable to the company?
Most companies misconstrue this element. That's because they are thinking about how it is valuable to the customer. Which is important, but there's more to it than that. It’s about value to the company!
The trifecta is when you can charge more for it, it saves you money and customers will go past your competitors to buy from you.
In general, though, all you need is one of those things to end up with a competitive advantage that is worth pursuing.
Consider putting 20% of your efforts into these differentiators that are valuable to your company and your customers. That's how you grow your business.
/ Chuck Bamford
Ph.D Strategy Trainer & Advisor