For the more than a quarter of a century I've been in business, every business leader, investor and college professor I've heard talks about the need for a competitive advantage.
There is no question having an advantage in anything is better than not having one. Yet millions of businesses succeed, thrive and many even become very rich with no discernible competitive advantage.
The following is a list of possible competitive advantages:
- Patents: Companies that develop products that are one-of-a-kind receive special status from governments around the world that don't allow others to copy their innovation. This could be a process or physical product. Think BlackBerry and Research In Motion (RIMM) . The Canadian tech company receives hundreds of millions of dollars in fees from other companies for the use of the technology behind the BlackBerry.
- Trademarks: These are logos or words everyone associates with a specific business or product. Good examples would be Disney's (DIS) - Get Report Mickey Mouse ears or the Coca-Cola (KO) - Get Report label.
- Professional contacts: Lobbying firms with strong contacts to state and federal officials and high-level business people like former General Electric CEO Jack Welch, who can get another CEO on the telephone when he needs to, can be quite influential.
- Location: Fast food restaurants like McDonald's (MCD) - Get Report and retail banks look for the right physical location where the people walking or driving by will be drawn in.
- Expertise: When the business is comprised of world-class experts in their field, particularly for biotechnology and software start-ups, it is a good starting point.
But thousands of financial planners, real estate agents, restaurants, clothing stores, bus companies, manufacturers and just about any other company or profession you can think of don't have any of the above. What about people who are short and bald or overweight? How do they manage, not just to compete, but become wildly successful? Why do some professionals with the looks, brains and even some of the above competitive advantages fail?
I believe that you can overcome most competitive advantages with the following attributes:
- 1. Honesty: You probably laughed when you read this word. I had lunch with one of the world's greatest entrepreneurs, Dr. Felix Zandman, a Holocaust survivor who took his company Vishay (VSH) - Get Report from nothing to over $3.5 billion in revenue in almost half a century. He said honesty is in such short supply because people will do anything to get what they want. So the honest person builds instant rapport with prospects and locks in clients.
- 2. Customer service: I have interviewed executives at many firms who, when asked about their competitive advantages, will include customer service. It isn't an advantage, because the best companies make it a rule that their service will be excellent. That said, few companies truly master it, so being very good at it will keep customers coming back.
- 3. Listening: The companies that listen to their customers and adjust their business to meet their customers' needs thrive, and don't disappear into the abyss. What happened to Montgomery Ward, JJ Newberry's, Woolworth's and Howard Johnson's? All of these companies were leaders at one point who stopped feeling the pulse of the customer.
- 4. Networking: One of the keys I have found is developing a network of contacts that can refer you business. This goes back to the maxim, "It isn't what you know, but who you know." The other side of networking is being able to refer business to others.
- 5. Knowledge: The other maxim that I like is, "Knowledge is king." Who isn't overwhelmed by the expert who knows everything about their field and says it with enthusiasm? If you go into a bike shop and the kid working there is blasé about the products, you walk out. This happened to me recently. I went across the street and into another shop where the owner was so passionate, I ended up spending $1,100 buying a bike and other accessories.
- 6. Extra mile: Most people mail it in, but the pros who are really successful will go the extra mile. I have had two experiences in this area. One was a service manager at Pep Boys (PBY) - Get Report, who told me I could save money by purchasing a new engine for my SUV myself and then allowing them to install it. He called another customer who had done it and gave me all the information. The second was a waiter at Olive Garden, who had more tables than he should have because the restaurant was short-staffed, but he took care of us like we were his only table. I was so impressed I wrote to the bosses of both people.
- 7. Positive attitude: Nothing sells like genuine "positivity." I am not talking about the phony motivational speaker, but about the people who are excited about their day and what they do professionally.
Sure it's nice to have some competitive advantages, but you don't need that to succeed. You need the above seven elements of success and you can overcome most competitive advantages.
Marc Kramer, a serial entrepreneur, is the author of five books and is an instructor at the University of Pennsylvania's Wharton's Global Consulting Practicum, where he serves as Country Manager for Chile.