Let's talk about differentiation. How are you different? It's obvious that you have to know the competition to be able to say how your solution is different and better than other solutions. It's so much more than just the features and functionality of your idea, product, service. Your technology can set you apart, sure, but you need to be different enough that you can attract customers and stakeholders. Is technology differentiation enough? In addition, you have to be able to sustain your differentiators in spite of ongoing competition. Similar to how benefits are different for stakeholders, differentiators can be different for stakeholders as well. Differentiators can be categorized into some high-level areas, product, better customer experience, more data, et cetera. Cost, this can be challenging but lower cost to you that are passed on to the customer can be a significant differentiator. Think about Amazon Cloud Service for example. Positioning, brand preference, recognition. Distribution, relationships with third-party distributors or a channel lock-in and execution. Big companies take a long time to change course. You might be able to execute on a promising value proposition earlier than competitors. This may depend on the team involved in the project. I find that folks usually get stuck on one main differentiator, often its price. My solution will cause risks, someone will tell me. What they're missing is that price is not a strong differentiator. What happens when the competition cuts their price to match yours or even be less than yours? I will ask. Or how important is price? How do you know that customers care about price? A common adage about price differentiation is that your solution, has to be three times less expensive than the competition to make a difference. Incremental differences in price are not significant enough for customers to change their behavior. Differentiators can also include things that you might not be thinking of, off the bat, including unique expertise in a particular area, niche market focus, a key supplier, reference customers, and better or more meaningful data. Examples of differentiators that are hard to beat, a company which was founded by a parent who partnered with an MD, both of whom had children with the same developmental disability. An entrepreneur with family connections to suppliers of a key component. A founder who was driven by passion because he suffered from the condition as a child. A startup that can deliver customized information about a company's product almost instantaneously. Recognizing that your solution needs to be and remain better than the competition is critical to your thinking early on. It's not enough to have a solution, you'll have to have a good solution that benefits stakeholders and that can sustain competitive reactions.
