Competitive Strategy

Charles Plant -2017

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Competitive Strategy Eveniftherearestrongtriggersthatarepushingyourbuyertowardinnovating,andevenifyou’vemanagedtogetthroughtheinformationsearchphasebyloweringbarriers,youstillhavetofacethethreatofcompetition.Fortunately,though,youhaveachancetogetsomecontrolinthisprocess.Itisentirelywithinyourpowertodevelopaproductorservicethatisclearlysuperiortothecompetition’sandthatcanenableyoutowinacompetitivebattle.Whyshouldabuyerofinnovationpickyou?Afterall,youmayhavenotedearlierthatthereare90,000newproductsintroducedintothemarketplaceeveryyear.Andthatdoesn’taccountforalloftheonesthatarealreadyestablished.Thereisalotofnoiseoutthere,anditisincrediblydifficultforconsumerstobeabletodifferentiatebetweenoneproductandanother.Inordertogetpickedfromamongstthecompetition,youmustbesubstantiallybetterthanthem.Now,Iknowthatyou’rethinkingthatof,course,you’rebetterthanthecompetition,andyoumightberelyingonthefactthatyourpricesarelowertomakeupforanydifferenceinotherproductorserviceattributes.Butthisisn’tenough.Toconsistentlybeatthecompetition,youmustbereallybetter,milesbetter.CanIemphasizethisenough?Probablynot,soletmesaythisagain:Youmustbeonascaleofmagnitudebetter.Whydoyouneedtobesomuchbetter?Justthinkaboutthenumberofinnovativeproductsyou’veboughtinthelastmonth.WhenIaskinnovatorswhatthey’veboughtrecentlythatisinnovative,mostofthemcan’tthinkofanything.Andthesepeopleareinnovators.Theyarepeoplewhoareinventingnewproductsandservicesandtryingtogetpeopletoadoptthem.Theyaretheoneswhoyouwouldthinkwouldbemostinnovative,mostwillingtotrynewthings,butthisjustisn’tthecase.Lookatwhatyoubuyforfood.Ifyoueatbreakfastcereal,youprobably,likeme,buythesamecerealeverytimeyoushop.Andyettherearemaybe50othertypesofbreakfastcerealouttheretryingtogetyourattentionandfailing.Whyaretheyfailing?Probablybecausetheyaren’tmuchdifferentthanwhatyoualreadybuy.Tobesuccessfulinthecompetitivewars,youmustdosomethingradicallydifferent.Sureyoucanbuildaproductoracompanywhereyou’redoingprettymuchthesame

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thingasthenextperson,andifyouwanttodothis,goahead.Butyoubetterberadicallybetteratexecutingoratsellingifyouwanttogetanywhere.TakealookatAmazon’sFirePhoneasanexampleofaproductthatfailedduetoalackofdifferentiation.Itwaslaunchedinmid-2014intoamarketwherecompetitorshadbeenaroundformanyyears.Sixweeksafteritwasintroducedintothemarket,itson-contractpricewasreducedfrom$199to99cents.Fourmonthsafteritsintroduction,Amazontooka$170millionwritedown.Ayearafterit’sintroduction,theproductwaseffectivelyoffthemarket.Amazonblamedatoo-highintroductorypriceforlackofsales,butthepricereductiondidn’thelpatall.TobeabletobeatAppleandAndroiddevicesinthemarket,theFirePhonewouldhaveneededtohavesignificantlysuperiortechnology.Butitsflashyinterfacewitha3Deffectdidn’tproveenoughofadifferentiatorandtheproductdied.Don’tforgetthatthisisAmazon,ahuge,successfulcompanythathadabigflop.Theyhavemassivereachinthemarketplaceandtonsofresourcesbehindthem,yettheystillcouldn’tmakeitwork.Howdoyouthinkasmall,unknownmarketentrantisgoingtofarewithanundifferentiatedproduct?Thisiswhyyouneedtoberadicallydifferent.Porter’sGenericCompetitiveStrategiesMichaelPorter,oneoftheworld’sforemoststrategicthinkersintroducedtheconceptofcompetitivestrategiesinhisbookCompetitiveAdvantage.Porterarguesthatacompany’sprofitabilityisdeterminedbyitspositionwithintheindustryandthattheonlywaytohaveabove-averageprofitabilityinthelongrunisbyhavingasustainablecompetitiveadvantage.InPorter’stheory,thereareonlytwoadvantagesthatafirmcanhave:lowcostordifferentiation.Whenseenwithaperspectiveofcompetitivescope,thereareonlythreestrategiesafirmcanemploy—costleadership,differentiation,andfocus—asshownbelow:

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1. CostLeadership

Underthisstrategy,afirmsetstheobjectiveofbeingthelowestcostproducerinitsindustry.NotethatIsaidproducer,notnecessarilythelowestprice.Ifafirmcanchargeaveragepricesbutbethelowestcostproducer,thenitgainsacompetitiveadvantageandcanproduceaboveaverageprofits.

2. Differentiation

Adifferentiatedstrategywouldhaveafirmbeuniqueinitsindustrybyvirtueofsomeproductorservicedifferentiation.Bybeingunique,itcanchargehigherpricesandthusearnhighermarginsandbemoreprofitable.

3. Focus

Afocusedstrategywouldhavetwovariants,oneofcostandtheotherofdifferentiationbutinbothcases,focusingonasmallmarketsegmentwouldallowafirmtoownthatsegmentandthusproduceaboveaverageprofits.

Fundamentally,thesearerelativelysimplisticstrategiesandtherearemorenuancedwaysoflookingatthis.Porterdevelopedthesestrategiesinthe1980s,beforetheadventoftheInternetandtheproliferationofproductchoices.

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TheworldismuchnoisierthanitwasinPorter’stimeandasaresult,companieshaveahardertimemaintainingacompetitivedifferentialoveralongerterm.Whattheyneedtodotobesuccessfulnowistoberadicallydifferent.RadicalDifferentiationYoumightaskthequestion“HowcanIberadicallydifferent?”Well,youneedtopickoneormorebasesuponwhichyoucancompeteandthoroughlytrouncethecompetitionononeofthosedimensions.Andthereareonlythreedimensionsuponwhichyoucancompete.Therearequality,cost,andspeed.

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QualityWhenitcomesdowntobeatingthecompetition,inmyopinion,themosteffectivewayisbyhavingbetterquality.IknowIkeepbringingupAppleasanexamplebuttherereallyisnobetterexamplewhenitcomestobeatingthecompetition.Theirproductsareclearlydifferent,theircostumersbelievetheyareclearlybetterandasaresult,theyaremuchmoreprofitablethananyoneelseintheirindustry(orindustries.)It’seasytosaythatyoumusthavebetterqualitybutqualityitselfcanbemeasuredinmanyways.Thereareallsortsofdifferentdimensionsofqualityandyoudon’tneedtobebetteronallofthemthanthecompetitionbutitsurelywouldn’thurt.Youneedtobebetteronatleastoneofthem,andifyouwanttogetnoticed,thenyoumustberadicallybetter.WhiletheremaybeotherdimensionsofqualitythatIhaven’tlisted,I’vebrokendownqualityforthesakeofthisbookintoninedifferentdimensions:

• Performance• Features• Reliability• Conformance• Durability• Service• Design• Vendorexperience• Vendorknowledge

Ihaven’trankedtheseinanyparticularorder,asIhaven’tbotheredtofigureoutwhetherthereisonedimensionofqualitythattrumpsallothers.Isuspectthisisn’tthecaseandthatyoujusthavetochoosewhicheverdimensionenablesyoutobeatyourcompetitioninyourtargetmarket.PerformancePerformancerelatestohowaproductoperates.Thisdimensionofqualityinvolvesmeasurableattributes,anddifferentcompetitorscanberankedobjectivelyonindividualaspectsofperformance.Performancecan,though,beoneofthosethings

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thatarepersonaltothebuyer.Oneperson’shighperformanceisnotnecessarilytheother’ssodifferentiatingonthisdimensionwillgetyouanaudiencethatisattunedtothetypeofperformanceyouoffer.Mybrother-in-lawBrentisagoodcaseinpoint.(HiBrent!)Heisanabsolutemaniacwhenitcomestobarbequing.Hedoesitinwinterandsummer,rainandshineandhisgreatestlove(Ihopeasidefrommysister)istospendalldaygettingnumeroustypesofmeatreadyfordinner.Notbeingcontentwithonebarbeque,hehastwosothathecancookdifferenttypessimultaneouslyondifferenttypesofheat.Heevenwenttotheextremelastyearofre-doingmuchofhisbackyardtocreateanoutdoorkitchenthatcentersonhisloveofbarbeque.I’msureyougetthepicture.WhileI’mcontenttofireupagaspoweredWeber,BrenthascarefullyresearchedandisdevotedtohisBigGreenEgg.Thisbarbequeliterallylookslikeabigegg.Accordingtotheproductliterature“ItsdesignismodeledontheclaycookingvesselsfirstseenduringtheChineseQinDynastyandthenusedbytheJapanesebeginninginthe3rdcentury.”Itisakamadostyledbarbequethathasextremelythickceramicwalls(theceramicwasdesignedfortheSpaceShuttleprogram)andusescharcoal(lumpwoodcharcoalisrecommended.)ThesealeddesignoftheEggmeansthatisusesasmallamountofcharcoalandallowsforaveryslowburn,thusresultinginverytender,juicymeat.PeoplelikeBrentwhoaredevotedtotheEggarereferredtoasEggheadsandtheyhaveanEggfestinKentuckyeveryyear.Inaworldwherethereisnotmuchdifferencebetweencharcoalbarbequesandnotmucheitherbetweenpropanebarbeques,themakersoftheBigGreenEgghavemanagedtostandoutbyaslavishdedicationtohighperformance.Itisn’tforeveryonebuttheyaresohighlydifferentiatedalongthelinesofperformancethattheystandoutandcanattractadevotedfollowing.FeaturesNextuponthelistofpotentialwaystodifferentiateisthatoffeatures.Thesearecomponentsofaproductthatenableuserstoaccomplishavarietyofobjectives.Manynewproductdevelopersliveinaworldwherefeaturedifferentiationistheirmodusoperandi.Unfortunately,thispracticefrequentlyleadstofeaturecreep,particularlywithmeaninglessnewfeaturesthateventuallyendupconfusingthebuyer.Featuresreallyonlymattertothebuyeriftheyarematerialtotheirneedsbutthisdoesn’tstopmanufacturersfromloadingthemoninanefforttodifferentiate.

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ThebestexampleIhaveoffeaturecreepistheSwissArmyKnife.Originallydevelopedinthe1880sasapocketknifeforsoldiers,itwasproducedbytwoseparatemanufacturers,WengerandVictorinox,whoeventuallymergedtheirbrandsintoone.Inanultimateforayintotheworldoffeaturecreep;Wengerproducedaknifein2006calledTheGiant.Itincludedeveryimplementthatthecompanyhadevermade.Itwasusefulfor141differentfunctions,contained87differenttools,andretailedforabout$1,000.Theproblemwithaddingmoreandmorefeaturesasawayofdifferentiatingisthatyouappealwitheachaddedfeaturetoasmallerandsmallertargetaudience.Andintheprocess,youcreatesomethingsocomplexthattheoriginaltargetmarket,whichdidn’tneedallthosefeatures,getsturnedoffandmigratestoasimpler,andprobablylessexpensiveproduct.ThinkofthecomplexityofWordandhowmuchofityouactuallyuse.OrinfactanyAdobeproduct,whichhasmultiplefeaturesthatI’mconvinced,doesexactlythesamethings.Andthisfeaturerichstrategygivesanopportunityforsomeonetoutilizeaninversefeaturestrategy.Manyinnovatorsnowtakeacomplexproductwithmultiplefeaturesandeliminatemanyofthemtoappealtopurists.IntheprocesstheycreateaBlueOceanStrategyandappealtoawholenewtargetaudienceataradicallyreducedprice.Andtheworldgoesaround.ReliabilityThisisgettingtothenittygrittyhereandabasisthatalotofcompaniesusetodifferentiate.Reliabilityofproductorserviceisoneofthosethingsthatiseasytomeasure,InfactConsumerReportsandotherorganizationslikeJDPowermaketheirlivingfrommeasuringreliabilitywhileothersmaketheirlivingbydifferentiatingbasedonit.TheAmericancarindustrywasdecimatedbytheJapanesemovetomorereliablecarsinthe1970s,andeventhoughAmericancarshavebecomemuchmorereliableovertheyears,theJapaneseprobablystillholdtheconsumerpositioningastheonesproducingthemostreliablecars.Onceyoustakethisbasisofcompetitionoutandsucceedinprovingit,competitorswillhaveahardtimedisplacingyouandyou’llhavecarvedoutaparticularnicheofcustomer.

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AtSynamics,wedeliberatelychosereliabilityasabasisofcompetition.Weclaimedthatourmasscallingsystemswouldneverfailandweactuallywrotecontractsthatpaidcustomersmoneyifoursystemswentoutofproductionforlongerthanaspecifiedamountoftimeeveryyear.Fortunately,weneverhadtopayanythingoutbasedonthatclaim.Butthecorollarywasthatitwasdifficulttoconvinceclientstopayforsupportonanannualbasis,asthelogicjustdidn’twork.Howcouldweclaimthatoutsystemsneverfailedandyetalsoclaimthatclientsneededtopayforsupport?Wepurposelyengineeredoursystemswithallsortsofredundantcomponents,failuredetectionsoftware,andautomatedrecoveryroutinesspecificallytomeettheneedsoftelecommunicationscompanies.Thesecompanieslivedinaworldoffiveninesreliabilityandasaresult,werewillingtopaymoreforsystemsthatneverfailed.ConformanceWhenwetalkaboutconformance,we’retalkingabouthowaproductmeetsspecifiedstandardsthatmayexistfortheproductcategory.Oneofthebiggestwaysinwhichconformancehascometotheforefrontisthroughfood.Aseachcomponentoffoodhasbecomedemonized,newproductshavearisentofillthevoidandtoeliminatethedemonizedcomponent.Asaresultwehavefoodthatis:

• Fatfree• Dairyfree• Sugarfree• Glutenfree• Nutfree

Infacttherearesomanyexamplesofhowproductshavebeenengineeredtomeetspecificstandardsthatthelistcouldgoonandon.Theendresultmayhavebeenthecreationofanobesityepidemicasfat-freemeantaddedsugarandsugarfreemeantartificialsweeteners,bothofthesesubstitutesbeingworseoffinthelongrunthanthethingtheyreplaced.ButIdigress.Thebacklashtoconformancethrougheliminationofspecificcomponentshasresultedinthe“organicfood”movementthattakesfoodbacktoitsoriginalroots.Afterall,whenitcomestofood,therearenotmanybasesuponwhichtodifferentiateone

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productfromanother.Itishardtocompetebasedonperformanceorreliabilityalthoughmanymanufacturershavemanagedtocompeteonfeaturesbyaddingvitaminswheretheydon’toccurnaturally.Nexttimeyouareatagrocerystore,lookatthecerealaisleandtrytofigureouthoweachofthemanufacturersiscompetingandyou’llprobablyenduplaughingatthelengthstheygotoseparatethemselvesfromthecompetition.DurabilityIbettermoveawayfromfoodwhentalkingaboutdurability.Afterall,I’mnotsurethathowlongtheproductlastsisthebestwaytodifferentiatefood.BeforeImoveawaythough,takealookatthepackagedbreadyoubuyforsandwichesortoastandcomparehowlongitlastsontheshelfcomparedtothefreshbreadyoucanbuyatabakery.AllthechemicalsinpackagedbreadmakeitlastlongerthanfreshbreadbutIhaven’tseenanyoneclaimthat“ourbreadlastsamonthontheshelf!”asI’msureitwouldcauseconsumerstotakeacloserlookatwhattheyareeating.AbetterexamplefordurabilityistheTimexwatch.IhadoneasakidandIstillhaveitinadrawersomewhere.InfactmyfatheralsohadoneandIstillhavethatoneaswell.(Talkabouttheendowmenteffect.)IboughtamechanicalSwatchrecentlythatdidn’tlastayearandmysportwatchesgetreplacedforsmallproblemsregularly.ButthoseTimexestakealickingandkeeponticking.(Oops,IjustrepeatedtheTimexslogan.)Timexwasfirstheavilymarketedinthe1950s,atimewhentherewereafewproductsbutnotenoughthataconsumercouldbeoverwhelmedwithchoice.Theydemonstratedtheirreliabilitybysubjectingwatchestotorturetests.Men’swatcheswereshownbeingsubjugatedtotorturebyanoutboardmotorandwomen’swatchesweresubjectedtotortureinawashingmachine.(Iwon’tevencommentonthesexistnatureoftheexamplesused,menforaleisureactivityandwomenforhousework.)ThesloganwasthatTimex“takesalickingbutkeepsonticking.”By1975,Timexhadsold500millionwatchesandhada50percentmarketshare,upfromtheir33percentmarketsharein1960.Obviously,durabilityworkedasabasisofcompetition.

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ServiceNextuponthelistofwaysthatacompanycandifferentiateitselffromthecompetitionisthatofservice.Servicerelatestoeverythingbeyondtheproductthatgoesoninthebuyingprocessincluding:

• Personalselling• Phoneservice• Emailservice• Shipping• Installation• Aftersalessupport• Maintenance• Repair• Return• Replacement

Customerserviceisoneofthosecompetitivedimensionsthatyouseecompaniesclaimingastheirown.InfactorganizationssimilartoConsumerReportsevaluatecustomerserviceinthesamewaythatCRdoesproductevaluations.OnesuchorganizationisStellaService.FromAugusttoOctoberof2015,theyresearchedwhichcompanydeliveredthebestcustomerservice.Theymeasuredmultipledimensionsofservicetoissueareportandthisiswhattheyfound:

“Accordingtothereport,LLBeancameoutontopbecausethecompany'scustomerservicerepresentativesconsistentlyrespondtoallinquiries—andquickly,aswell.StellaService'sanalystsclaimedthatduringthestudy,theywereabletospeaktoliveLLBeanrepresentativesinunder30secondswhentheycalled,andinlessthananhourwhentheyemailedthecompany.”“However,eventhoughLLBeancameoutontopoverall,itwasn'tthehighest-ratedforanyindividualcategory.Net-A-Porterhadthebestphone-basedcustomerservice,BestBuyhadthebestshipping,Burberryhadthebestcustomerserviceforreturns,andiHerbcameoutontopforemailandchat-basedresponses.”

http://www.businessinsider.com/retail-brands-best-customer-service-2015-11

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DesignDesignasabasisofcompetitionisoneofthosesubjectiveareaswhereitisdifficulttomeasureasoneperson’sideaofgooddesignisnotnecessarilyanother’s.Certainly,companieslikeApplehavefocusedondesignandgenerallyappealtoamoredesignconscioustargetmarketthanotherelectronicsvendors.InlookingonlineformoreinformationonproductdesignasabasisofcompetitionIstumbledupon(notusingStumbleUpon)thewebsitered-dot-org.Theyhavebeenawardingprizesfordesignsince1954andImustadmitthatthesiteworkedlikeclick-baitforme.NotonlyisthesiteabeautifulonebutalsoIgotlostforawhileintheCommunicationDesigncategory.FastCompanyrankedtheworld’stop10mostinnovativecompaniesindesignin2014andthelistwasasfollows:

• AirBnB• Nike• WarbyParker• Nest• Philips• Starbucks• Dyson• Quirky• Jawbone

Whatyouwillseefromthelististhatmanyoftheproductscanelicitanemotionalresponseandthat’stheideaofgooddesign;separateyourselffrommoreutilitariancompetitorsbycreatingastrongemotionalresponse.Justaswithanyoftheothercategoriesonthisspectrumoftechniquesindifferentiation,itisexpensivetocompetethroughdesign.IoftenwishIcoulddoitbutneverseemtobehappyaboutwhatIproduce.VendorExperienceThenexttwocategoriesofcompetitivedifferentiationareaboutthevendor,notabouttheproduct.Incertainproductcategories,softwareforinstance,itisverydifficultto

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havealong-termdifferentiationthatisbasedonproduct.Franklywhenyoulookatmanysoftwarecategories,mostvendorslookquitethesame,allwithaboutthesamesetoffeatures,thesameperformance,etc.Sohowdoyoucompeteinaworldwherethereisn’tmuchopportunitytodifferentiate?Ifyou’vebeenaroundforalongtime,youcanrelyonvendorexperienceasabasisofdifferentiation.Whenabuyerlooksforasolution,theycaneasilytellwhethersomeonehasbeeninthebusinessalongtimeorisabrashnewupstart.Sincemuchofcorporatebuyingisbasedonriskreduction,itseemslogicalformanybuyerstorelyonlengthofexistenceasamethodofseparatingonevendorfromanother.Ifyouhaven’tbeenaroundforawhile,thenitishardtocompetethiswaybutthereisanotherdimensionofvendorexperiencethatcanwork,andthatisspecialization.Manybuyers,mistakenlyornotbelievethatitisimportantthatavendorunderstandthembyhavingagreatdepthofexperienceintheirindustry,geography,orsomeotherdimensionofsegmentation.IBMisacompanythatbenefittedfromthisbasisofdifferentiation.Inthe1980stheexpressionusedwasthat“NoonegotfiredforbuyingIBM.”Itwasinfuriatingatthetimeforcompetitorsbecauseitwastrue.Evenifyouboughtasubstandardsolution,thefactthatyouboughtitfromIBMwasenoughtoexcuseanymistakesinthepurchaseselection.Thehardpartforcompetitorswasthatevenwithsuperiorproducts,serviceandahostofotherdifferentiators,IBMcouldstillwincompetitivebattles.IspendalotoftimeinColombia,workingwithavarietyofcompaniesintheITindustrythereandtheyarealwaysfrustratedthatAmericanITsuppliersroutinelybeatthematlargecustomerssimplybecausetheColombianbuyersperceivedtheAmericancompetitorsashavinggreatervendorexperience.FortheColombianfirms,theyusuallyretaliatedbyhavingamuchlowerpricebutthisleftthemwithtoolittlemoneyformarketinginwhichcasetheyfailedatcompetingonthenextdimension,vendorknowledge.VendorKnowledgeFinally,ifallelsefailsinfindingawaytobedifferent,companieshavetorelyonbeingspecial,havingmoreknowledgeandthusbeingabletohelpcustomersmorethroughthepurchaseanduseofaproduct.Whilecompaniesarecheckingoutyourproductand

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yourbaseofexperience,theyarealsocheckingtoseewhetheryouhavetheknowledgetobeabletoaddvalue.Thisiswherecontentmarketingcomesin.Looselydefined,contentmarketingistheartofmakingallsortsofvaluablecontentthatiscustomerfocusedavailabletocustomerstohelpthemwithworkissuesthatareeitherdirectlyorlooselyrelatedtothebusinessyouaretryingtodowiththem.Itisbasedontheexpression,“Youhavetogivetoget”andyourmarketingcontent,eitherpresentedinwrittenorvideoformorevenpersonallycanestablishyourcredibilityandsetyouapart.WhileworkingwithanumberofColombianfirmsthatcompetedwithSAP,thegiantGermanenterprisesoftwarefirm,Ihadachancetocomparehoweachofthemdealtwithcontentmarketing.FranklyIwasblownawaybyhowmuchattentionSAPpaidtothismethodofcompetition.TheircontentwasgreatandreallyusefulforbuyerswhereColombianfirmshadbarelyanythingavailable.OneoftheresultsofthiswasthatSAPwasabletochargedoublethepricefortheirsoftwareandservices,winmoredealsandthusgeneratemoreprofitthattheycouldthenbedeployedindoingmoremarketing.ThinkaboutitOK,nowit’suptoyoutofigureouthowyou’regoingtocompete.Thefirststepislookingatyourcompetitionandrankingthemontheirabilitytocompeteoneachofthedimensionswedealtwithinthissection.Tomakethisprocesseasy,I’veusedathree-pointscaletoenableyoutomakeaquickdecisionastohowtoscoreyourcompetition.Inthegridthatfollows,scoreeachofyourcompetitorsastohowwelltheycompeteusingscoresbetweenoneandthree.(Oneisbad,3isgood.)NameofCompetitor

Performance Features Reliability Conformance Durability Service Design

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Experience Knowledge Total Havingdonethatforyourcompetitors,nowfigureoutwhatbasisorbasesyou’regoingtochoosetocompeteonandhowyou’regoingtodothat.

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SpeedWhileit’seasytoseehowcompaniescompetebasedonquality,competingonspeedisanothercase.Itisn’tsomethingthatyouwouldnormallythinkofasacompetitivedifferentiator.That’sduetothefactthatbeforetheInternetcamealongtherewasn’tmuchopportunitytocompetebasedonspeed.Forthemostpart,transactionsweredoneinpersonandunlessdeliverywasanoption,speedwasn’ttoomuchofafactor.ButtheInternetintroducedanewdimensiontoservice,onethatcouldbeobjectivelymeasuredandforwhichretailerscouldassumeresponsibility.Nowsomepeoplereadingthismaybethinkingthatspeedisonlyanotherdimensionofqualitybutthatisn’tthecase.Speedcanbeusedasabasisofcompetitionwhereverthereisaserviceprocesswheretimetocompletionplaysapart.Sowhileyoucanmeasurequalityofservice,itisalsopossibletomeasurespeed.Tolookathowspeedplaysafactor,youcanlookattheserviceprocessorthevariousplacesthatserviceplaysaroleincustomersatisfaction.Itstartswiththeorderingprocess,movesontodelivery,toimplementation,learning,andthensupport.Ineachoftheseareasitispossibletomeasureandmanagethetimetocompletion;thus,itispossibletopickanyoftheseareasasabasisuponwhichtocompete.TransactionLet’slookfirstattheprocessofcompletingatransaction.Haveyoueverstoodinlineatanold-stylebakerywaitingtobeservedaspersonafterpersonwaitsinlineandthesalesclerkverypatientlyserveseachoneinturn?ThereisabakeryIgotocalledHenrietta’sonHighway60nearDwightthatisjustsuchanoldstyleGermanbakery.EverytimeIstandtherewaitinginlineIamamazedathowslowlytheprocessgoes.Theclerkfirsthastowritedowneverythingthatyouwantonanorderpad.Thenheorshemovesupanddownthecounterplacesthethingsyouorderedinabox.Afterthepackingiscomplete,theclerkwritesdowntheamountforeachthingontheformandaddsupthetotal.Next,theamountshavetobeenteredintothecashregister,paidforandyoufinallygettogo.Forsomereasonthelineisalwayslongandthereareusuallyanumberofpeoplebehindthecounterbumpingintoeachotherastheyeachlaboriouslyservecustomers.Nodivisionoflaborandnostreamlining.Ihaveafriend(HiKeeley!)whorunstheDwight

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Marketdowntheroadwhowouldlovetotakeoverthebakeryjusttospeedupthewaittimeandthroughputoftheline.Thisisaverypopularbakeryincottagecountrythatcouldbeevenmoreprofitableifpeopledidn’thavetowaitaslong.NowIlivetoimproveprocessandifIweredoingit,Iwouldhaveonepersononcashwhotakesanorder,collectspaymentandpassesthecompletedsalesreceiptovertoanotherpersonforpickingandpacking.Thiswoulddrasticallyspeedupservicebutthenagainmaybepartoftheappealoftheplaceisthefactthatservicerunsasslowlytherenowasitdid40yearsago.Whoknows?Certainlyyoucan’tdothatonthenet.Youcan’tmakecustomerswaitthroughalaboriouslylongorderprocessifyouexpecttogetanybusiness.Amazonknewthisandturnedorderingintoacompetitiveadvantagewhentheyintroducedthe1-Clickmethod.InfacttheypatentedtheprocessinaverybroadpatentthathashelduptoattacksintheUSbutnotinEurope.ForotherslikeApplewhowantedtousethemethodintheUS,theyhadtolicenseitfromAmazon.What1-Clickdoesistocompletelyremoveanybarriersfromthetransactionprocessbyhavingthecustomer’sinformationonhandfrompasttransactionsandenablingacustomertoplaceacompleteorderwithoneclick.Justthesimplicityandtimesavingaloneresultsinanextremelyhighconversionratefromexistingcustomers.DeliveryNextupintheorderingprocessisdelivery.Ifyou’reshoppingatastore,yougettotakewhatyoubuyhomewithyou.It’sprettyhardtobeatthatintermsofspeedasadifferentiator.Butifyou’reshoppingforbooksatBarnesandNoble,youhavetotradeoffasmallerinventoryinstorethanyouwouldgetonlinewithfasterdeliverywhenyoutakeithomeyourself.WhenIwasakid,myfatherworkedforEaton’s,Canada’slargestdepartmentstore.Oneoftheirbiggestdifferentiatorswasspeed.Theyownedandoperated(andmyfatherran)ahugefleetofdeliveryvehiclesthatcrisscrossedthecitydeliveringthingsthathadbeenboughtinstoreorthingsorderedoverthephone.Oneofthegreatestthingswasthatyoucouldgoshoppingandleaveallyourpurchaseswiththestoretobedeliveredlater.Itmadeshoppingforalotofstuffveryeasy,asyoudidn’thavetothinkabouthow

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youweregoingtogetithome.Butyoucouldstillgetitsamedayifyouboughtinthemorningandnextdayifyouwereshoppinglaterintheday.Oneofthegrocerystoresintownherehasmadespeedoneofitsprimedifferentiators.Inthiscase,though,whattheydoistodoallofyourshoppingforyouandforafeeof$5youcanplaceanorderwiththemandspecifyatimeofdelivery.Youthejustrollupinyourcartothedeliveryareaandtheyloadyourgroceriesrightintoyourcar,savingyouthehassleofspendingtimeshoppingandtherebycompetingonspeed.IhategoingbacktoAmazonallthetimebutinanarealikethis,howcouldonenot?Amazonhasmadedeliveryspeedakeyintheirbattletowintheirproportionoftheshoppingdollar.TheyhavespreadwarehousesoutacrossNorthAmericatomakescertaingoodsavailableclosertotheconsumer,therebysavingshippingtimeandcost.Theyarealsoexperimentingwithsamedaydeliveryincertainareas.Tocapthatoff,theyarehopingtousedronesforlocaldeliveries.ImplementationIfyou’refollowingthischainofthought,thenextitemthatyoucanusetodifferentiatebasedonspeedisimplementation.Afteracustomerhastakendeliveryofwhateveritisyou’reselling,thenextthingupontheto-dolistisitsimplementation.Thisdoesn’tmattermostofthetimeforsimpleconsumerpurchasesbutformanyindustrialpurchases,implementationisabigdeal.Takecomputersoftwareasanexample.Manyyearsagomostcomputersoftwarewascustomizedandimplementationofittookforever.(I’mtalkingmanymanyyearsago.).Thensomeonesmartcameupwiththeideaofastandarddatabase.Havingthedatabasestructureinplacewhenyouwenttocustomizeanapplicationmeantthatyoucoulddrasticallyshortentheamountoftimetocustomizeandimplementasolution.Thensomesmartpeoplecameupwiththeideaofpackagedapplications.Thesemighthaverequiredsomecustomizationbutitwasalotlessthanwhentheapplicationhadtobewrittenfromscratchonadatabaseplatform.Butyoustillhadtoplaceanorder,maybebuyanewserver,getitconfiguredtotheprecisedemandsofthesoftwareyouwerebuying,loadit,testit,commissionitetc.ThiswashowtheworldofsoftwarehadevolveduntiltheInternetchangedthegameentirely.Salesforceisanexcellentexampleofacompanythatusedimplementationasa

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verylargecomponentoftheirbasisofdifferentiation.Ifyouhaven’theardofSalesforce.com,theyareintheworldofCustomerRelationshipManagement(CRM),softwarethathelpsyoukeeptrackofcustomersandyourinteractionswiththem.(Ifyouhaven’theardofsoftwareI’mnotgoingtoexplainitandperhapsyoushouldcrawlbackunderyourrock.)WhenSalesforcestartedout,theyfocusedonahugeun-servedcustomerbase,onesthatdidn’tusethedominantCRMsoftwareofthetime,Seibel.Theirpropositionwasthatyoudidn’tneedtobuyaserverandinstallsoftwareatall.YoucouldsimplyusesoftwareovertheInternet.Salesforcekeptthesoftwareinstalledontheirpremises,ontheirserversandyoudidn’tneedtoworryaboutimplementationatall.Infactyoudidn’tneedtoworryaboutsoftwareeveragain,installingit,servicingit,supportingit,upgradingit.Bymakingitavailableonthenet,theydisruptedthesoftwareindustryandasaresult,claimedthedominantpositionintheindustry,eventuallymovingontoservethelargercompaniesthatwerenottheirtargetmarketinitially.ThewholeSoftwareasaService(SaaS)modelofdeliveringsoftwaredramaticallyreducedimplementationtimebymakingsoftwareavailableonlinewithnowaitingtimewhatsoever.Ifyou’restillawakeandrememberbacktowhenIwaspontificatingaboutbarriers,you’llrememberthatcostsandtimeforimplementationareoneofthebarriersthatgetinthewayofcompanieslandingcustomers.Well,SaaSbasedsoftwarecompaniesnotonlyeliminatedthatbarrierbuttheymadeimplementationacompetitivedifferentiator.LearningAfteryou’vepurchasedaproductandhaveitupandrunning,youhavetolearnhowtouseit.Forsomeproducts,thisissimple.Forothers,asignificantamountoftimeisrequiredtolearntouseit.Mypersonalfavourite(not)isAdobe.Ican’tunderstandwhytheirproductsaresodifficulttolearntouse.Somethingaboutthemisjustnotintuitive.IprobablyshouldhavetakenacourseinPhotoshopyearsagobutI’venevertakenacoursewithanyotherpieceofsoftwareI’velearnedtousesoIcan’tunderstandwhyIneedtotakeacourseforPhotoshop.WheneverIhavetodosomethingnewonPhotoshop,thewayI’velearnedtofigureitoutistogoontoYouTubeandlookforavideothatcanexplainittome.WhatI’venoticedisthateventhisisn’tsimpleasthereareusuallyseveralwaysofaccomplishinganygivenobjectiveI’vehadandI’mneversurewhichoneistherightonetouse.Ihave

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alsonoticedthatIneedtospecifymyreleasenumberasthemethodfordoingthingsseemstochangewitheveryrelease.Appleproductsontheotherhandareremarkablyintuitive.Onceyou’velearnedtouseone(andthisisn’tveryhardtobeginwith)therestofthemareprettyintuitiveandquicktopickup.Fromthepositionofcompetitivedifferentiation,theworldofcreatingwebsitesisaninterestingone.InthebeginningtherewasHTML,somethingthatonlypeoplewithapenchantforprogrammingcouldgettheirteethinto.Wordpresssolvedthatproblembypresentinganinterfacetoenablenon-programmerstodevelopawebsite.Withallofthedifferentthemesavailable,itdidn’trequiretoomuchintermsoflearningtobeabletocompleteasite.Whatyoudidneedtofigureoutthoughwaswhereandhowtohostyoursiteandusethetoolsconnectedwithhosting.Butformany,eventhiswastoomuchandahostofevensimplerinterfacesweredevelopedthatenabledausertodraganddroptheirwaytowebsiteheaven.Wixevenmadeiteasierthanthatinthattheydidn’tmakeyoupayanythingtousetheirplatformtodevelopyourownwebsiteinthehopesthatacertainnumberofuserswouldsignupandpaymoneyfortheprivilegeofdoingsomethingmorecomplexandthatwouldn’tshowadsforrandomproducts.Wixremovedalmostallbarrierstothecreationofawebsite.Theyeliminatedtherisk,anycosts,andcomplexitiesofimplementationandcomplexitiesinlearninghowtodoit.Thisreallysetthemapartfromthecompetition.SupportandServiceFinally,inthelastareathatspeedcanbeacompetitivedifferentiator,wegettosupportandservice.ThinkaboutitOK,nowit’suptoyoutofigureouthowyou’regoingtocompeteusingspeedasadifferentiator.Thefirststepislookingatyourcompetitionandrankingthemontheirabilitytocompeteoneachofthedimensionswedealtwithinthissection.Tomakethis

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processeasy,I’veusedathree-pointscaletoenableyoutomakeaquickdecisionastohowtoscoreyourcompetition.Inthegridthatfollows,scoreeachofyourcompetitorsastohowwelltheycompeteusingscoresbetweenoneandthree.(Oneisbad,3isgood.)NameofCompetitor

Transaction Delivery Implementation Learning Support Total Havingdonethatforyourcompetitors,nowfigureoutwhatbasisorbasesyou’regoingtochoosetocompeteonandhowyou’regoingtodothat.

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Cost

Failingeverythingelse,youcancompetebyhavingthelowestcostonthemarket.Nowofcourse,costhasmanyelementstoitsoyoushouldn’tthinkofitonlyinonedimension.Thereisawholevarietyofwaystocompetebasedoncost,somethatmeanalottoyourcustomerbutnotalottoyouperhapsintermsofprofitability.CapitalCostsversusOperatingCostsThiscostsstuffmaygetalittleboringbutbearwithme,asitisimportanttounderstandthecustomer’sperspectivewhentheyarelookingatyourpricing.Whenyousellsomethingtoeitheracompanyoranindividualthecosttothemcanbeseeneitherasacapitalcostoranoperatingcost.Takealookatbuyingacar.Let’ssayyou’relookingforamidrangecarandthatcarisgoingtocostyouabout$25,000.Ifyou’vegotthemoneyonyourbankaccount(unlikelyformostpeople)youcanplunkthecashdownandyouownthecar.Inthatcase$25,000isyourcapitalcost.Thesamethinghappensifyouborrowthemoneyfromabankandbuythecar.Youownitandyouhavesomedebttopayoff.The$25,000isyourcapitalcostineithercase.Butthecarcompanies,knowingthatpeopledon’tallhavethemoneysittingaroundburningaholeintheirpockets,decidedthatitwouldbeagoodideatoleasecarstopeople.Thatway,someonecouldpayforacaronlyduringthetimetheyleaseitandthentheycouldhandthecarbacktothelessor,therebyneverhavingobtainedownership.Thelesseemaypay$300amonthorsomethingfortheprivilegeofusingthecarforthreeyears.That$300becomesanoperatingcostandyouhaven’tusedanyofyourcapital.SaaSbasedsoftwaredevelopersreallyutilizedthisconceptwhentheystartedrentingsoftwaretocustomersinsteadofsellingalicenseforit.Sothisisthefirstwayyoucancompeteoncost,bydecidingwhetheryouwantthecosttobeanoperatingcostinsteadofacapitalcost.Whileyourcashflowmaybereducedintheshortterm,inthelongrun,youcanearnalotmoremoneyfromacustomeriftheykeepitpastthepointwhentheywouldhavepaidoffthecapitalcostequivalent.Youhavealsomadeiteasierforthe

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customertoacquirewhatyousellasitisusuallyeasierforpeopletogetaccesstooperatingdollarsthatitistogetaccesstocapitaldollars.IwasneverableatSynamicstomoveoursoftwarefrombeingacapitalcosttoanoperatingcostforcustomersastheupfronthitwastoomuch.ButIwasadvisingasoftwarecompanyontheirfirstsalerecentlyandwedebatedmakingtheirsoftwareavailableonalicenseoranoperatingcostbasis.Becausethiswastheirfirstsale,theycouldstructuretheirexpenses(ownercompensation)inawaysothatthesalecouldbemadeforafixedminimumtermoveranumberofyears.Theresultwasthatitwasmucheasiertogetthatinitialsaleandifthecontinueonthispathinthelongrun,they’llcreateacompanywithexcellentvalue.Onebigadvantageofpricingyourproductasanoperatingexpenseasopposedtoacapitalexpenseisthatyou’llbeabletocreaterecurringrevenue.Banks,phonecompanies,andofficelessorshavebusinesseswithrecurringrevenueandthemarketvaluesthistypeofrevenueveryhighlyasitispredictable.Sobydifferentiatingbasedonhowyoupricewhatyousell,youmay:

• Makeiteasiertosell.• Makemoreinthelongrun• Driveahighervaluationforyourfirm.

FixedCostsversusVariableCostsOK,nowwe’regoingtogetreallyboringandtalkaboutfixedversusvariablecosts.Whenthisisdone,you’regoingtowishyouhadgoneintoaccountinginsteadofmarketing.(NOT)Thebestwaytoexplainthedifferencebetweenthetwoistogobacktoanexample.Let’sgobacktothiscaryoudecidedtoleaseafewparagraphsago.Youdidn’thaveaspare$25,000soyouelectedtopay$300permonthforhavingtherighttodrivethecar.Thisbecomestoyou,afixedcost.Theamountisfixednomatterhowmuchyoudrive(uptoalimitoverthethreeyears.)

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Butinsteadofleasingacarandhavingafixedpriceforusage,youcouldhavedecidedtouseZipcarandpaideverytimeyouusethevehicle.Youwouldthenhaveavariablecostforusingacarinsteadofafixedcost.Whenyoulookatwhatcarcompaniesaredoingtoincreasetheirrevenue,thisisexactlytheirstrategy.Theyhavemovedfromsellingcars(capitalcost)toleasingcars(fixedoperatingcost)torentingcarsforlimitedamountsoftime(variablecost).Ineachcase,theyhaveexpandedtheirexistingmarkettopeoplewhowerenotpreviouslyservedtherebyopeningupnewpotentialforrevenue.PhotographycompaniessuchasKodakandPolaroidfiguredoutthisfixedversusvariablecostthingalongtimeago.Theyvirtuallygaveawaytheircamerasoratleastsoldthemataverylowmargininordertogetyoubuyingfilmonaregularbasis.Thistheypricedwithaveryhighmargin,earninggobsofmoneyeverytimeyoutookapicture.Banksdoitwithservicefeesandphonecompaniesdoitwithminutes.Whatyouneedtodecideishowyou’regoingtostructureyourpricingsothatyouaredifferentiatedfromthecompetitioninawaythatmakessense.ReducingMarginIfthereisn’tanyroomtorestructureyourpricing,thenexttripisjusttoreduceit.Thismeanscuttingpriceswithoutanychangestocostswhatsoever.Thiscangetyouintodangerousterritoryasyoueventuallycanputyourselfoutofbusinessdoingthis.Inthedaysofthetelecomwarsintheearly2000s,therewereallsortsofupstarttelephonecarriersthatpricedwhattheyweredoingforjustalittlelessthanthecompetition.Thetroublewasthattherewereenoughofthemdoingitthatpriceskeptongoingdownaseachonetriedtowaitouttheother’seventualdisintegrationintobankruptcy.Inthelongrun,thispricereductiondidn’thelpandmostoftheselowcostcarrierswentoutofmoney.

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Iknewonepersonwhowasadirectorofjustsuchanalternativecarrier.Theywereanalyzingtheirbusinessonedayandtheydeterminedthatitcostmoretogeteachnewcustomerthanthatcustomerwasworthovertheirlifetimewiththeircompany.Sotheydecidedthattheonlywaytoreturntoprofitabilitywastostopmarketingandthusstopacquiringnewcustomers.Troublewasthattheyneedednewcustomerstoreplacetheoldoneswholeftbecausetherewassomeonecheaperwillingtoselltothemdowntheroad.Whenyoutrytobethecheapestoutthere,you’llattractcustomerswhoarecheapandwhowillleaveyouifthereissomebodycheaper.Sothiscompanybecameprofitableintheshorttermbuteventuallywentoutofbusinessastheykeptlosingonecustomerafteranotheruntilthereweretoofewlefttosustainthebusiness.ReducingQualityThenextwayyoucancompeteoncostsistoreducequality.Thisisano-braineranddonebycompaniesallthetime.Lowercoststoproducesomethingusuallymeansthatyoucansellitforlessmoney.Thisprovidesaprettygoodincentiveforcertainpeopletoswitchtowhateveryou’reselling.Thereisadangerthoughinreducingqualitysomuchthatyouenduptarnishingacompany’sreputation.Clothesusedtolastalongtimeandnowtheyarejustdisposable.Manufacturersandretailershaverealizedthattheycanusecheapermaterialsandoutsourcemanufacturingtoextremelylowwagecountriesanddrivepricesdown.Thismeansthattheycanchangefashionsandcolorsonafrequentbasis,drivingconsumerstostorestobuynewclothesthatarenowreallycheap,onaregularbasis.Intheend,thesemanufacturersandretailersmakemoremoneybymakinggoodsdisposableandsellingmorefrequently.Appliancesarealsothingsthatusedtobewellmadeandarenowverycheaplymadewithlowqualitycomponentssothattheycanmeettheneedsofapopulationthatishungryforlowcosttimesavingconveniences.Youcancreateahugenewmarketbymakingthingsjustabitcheaperthanthenextguy.ReducingSpeed

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Similartoreducingquality,youcanreducespeed.Thewaytodothisistomanufactureondemand,makingsomethingforacustomeronlyonceithasbeenorderedandevenpaidfor.Thiswayyoucanreducecostsofinventoryingpartsandfinalproducts,therebyenablingyoutocutcostsandcutpricesatthesametime.Thecustomerhastowaitalittlelongertogetsomethingthantheyoriginallywouldhavebutthewaitmaybeworththepricereduction.DellComputershasturnedthisintoanart.WhenyouorderformDell,theydon’thaveanythingininventory.Theyactuallyorderthecomponentpartstoyourcomputerwhenyouplaceanorder.Thepartsareshippedjustintimetotheassemblerwhoputstheordertogetherturningitintoacomputerandshippingittoyou.DisintermediationIlovethiswordandloveusingitwhenI’mgivingspeeches.Thetroubleisthatitdoesn’treallyflowoffmytonguewellandIkeepmessingupthepronunciationunlessIspeakveryslowlywhichofcoursemakesmesoundlikeabitofadolt.ButIstilllikethisword.Essentially,itmeansgettingridofsomebodyinthemiddleofthevaluechaininordertoreduceprices.Youcanthinkofavaluechainasallthecompanieswhohavetocometogethertomakesureyougettheendproductyouwant.Valuechainsstartwiththedesignerofaproduct;gothroughamanufacturer,shipper,distributor,andretailertolandinyourhands.Whenyougetridofsomeonewhowasoriginallypartofthevaluechain,youhavegottenridofanintermediary,hencedisintermediation.IKEAturneddisintermediationintoafineart.Notonlydidtheygetridoftheassembleroftheirfurniturebymakingyouassembleityourself,theyreducedthecostofshippingbyreducingthesizeofthefurniturebecauseitcamedisassembled.Amazonhasgottenridofallsortsofplayersinthebookvaluechainanddisruptedtheentirebookindustry.InfacttheInternethasbeenaverysuccessfultoolfordisintermediationandcostreductionoverthelast20years.ThinkaboutitOK,nowit’suptoyoutofigureouthowyou’regoingtocompeteusingcostasadifferentiator.Thefirststepislookingatyourcompetitionandrankingthemontheirabilitytocompeteoneachofthedimensionswedealtwithinthissection.Tomakethis

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processeasy,I’veusedathree-pointscaletoenableyoutomakeaquickdecisionastohowtoscoreyourcompetition.Inthegridthatfollows,scoreeachofyourcompetitorsastohowwelltheycompeteusingscoresbetweenoneandthree.(Oneisbad,3isgood.)NameofCompetitors

Capital Operating Fixed Variable Margin Quality Speed Disintermediation Total Havingdonethatforyourcompetitors,nowfigureoutwhatbasisorbasesyou’regoingtochoosetocompeteonandhowyou’regoingtodothat.

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NovelDifferentiationStrategiesThethingaboutcompetitionisthatyouhavetoeatorbeeaten.Thereisnowayaroundit.Ifyoudon’tdosomethingtostandout,toreallydifferentiateyourselffromthecompetition,you’llendupbeingaproductinsearchofamarketoratbestaproductthatekesoutanexistencewhenthosearoundyouareflourishing.Sobeforeyougooutthereandbuildaproduct,figureoutwhichelementsofquality,speed,andcostareimportanttoyourtargetmarketandestablishthebasisonwhichyou’llcompete.Whileyou’redoingthat,whynotdosomethingreallyspecial.Ifyouwanttohitoneoutoftheballpark,whynotthinkofanentirelynewwaytocompete,somethingthatiscompletelynovel,radicallydifferent.

Gobigorgohome.OneofthebiggestchangestocomeasaresultoftheInternetisthemovetonovelstrategiestofacethecompetition.WearecontinuingtoseenewcompanieslikeAirBnBandUberdevelopnewandeffectivewaysofdefeatingthecompetition.Soifyourchallengeistodosomethingradical,I’velaidoutinthesectionthatfollowsafewofthewayscompanieshavebeenabletoberadicalandasaresultcreatedfabulouslysuccessfulcompaniesorproducts.TheLongTailThereisalotthathasbeenwrittenaboutthelongtail.InfactthereisagreatbookaboutitbyChrisAnderson,theEditor-in-ChiefofWiredmagazine.Theideaofthelongtailisthatwenolongerneedtoproduceonesizefitsallproductsthataremarketedtothemainstream.Thecostsofproductionanddistributionhavecomedownsomuchandtheopportunitiesforsellingandmarketingaproducthaveincreasedsomuchthatwecandevelopproductsthatappealtothelongtailofthemarket.Thatistosaythattheyappealtoverysmallmarketnichesthathaveverydifferentiateddemands.Takealookatthischartfromhttp://www.longtail.com/about.html

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Sureyoucanbuildanaverageproductthatappealstothemassesoryoucangototherightonthecurveandbuildaproductorservicethatappealstoamuchsmallersegmentofthemarket.Thismethodofdifferentiationgoesrightbacktowhatweweretalkingaboutinthebeginningofthisbook.(Oh,bytheway,congratsformakingitthisfar.)Youarepickinganunservedmarketniche,atargetmarketforwhichyoucanbuildahighlydifferentiatedproductthatappealsdirectlytothem.Inthechoicebetweenquality,speed,andcost,youhaveprobablydifferentiatedbasedoncostandspecificallythereinbasedonfeaturesthatappealtoyouverynarrowsegment.Thesefeaturesaresomethingthatyourtargetmarketcan’tdowithoutandthataren’tworthitforthemainstreamcompetitorstoadd.Therearealotofexamplesofnicheproductsthatappealtothelongtail:

• Exoticspices• Specialtycoffees• Craftbeer• ReligiousTVchannels• Yogaclothes(whichstartedasanicheandbecamemainstream)• Specialsizes

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Someoftheseevengosofarastomakeitintothemainstreambyappealingtotheinnovatorsandthenmigratingintopopularconsciousness.That’shappeningwiththeSous-Videcookerwhichwasadecidedlynichebasedcookerforfoodies.Forthoseofyouwhohaven’ttriedone,foodissealedinairtightplasticbagsandbroughtuptotemperaturebybeingimmersedinwaterthatispreciselythetemperatureyouwanttocooksomethingto.Youcancookasteakthiswayandthengrilltheoutsidelightly.Inanycase,ifyou’relookingtocreatealong-tailstrategy,lookforanunderservedpartofamainstreammarketforwhomyoucandevelopaproductorservicethatishighlydifferentiatedbyfeaturesorperformancethatdoesn’tappealtothemainstream.UltrahighendversusultralowendAnotherthingthatishappeningoutthereinthemarketisthatproductsaremigratingawayfromthemiddletowardeitherendofthevaluespectrum.Whilethereusedtobealotofmidrangeproducts,marketersareseeingsuccessbyproducingverylowcostproductsorveryhighcostproducts.Youcanseethisintheworldofretail.Wal-MartisflourishingatthesametimethatTiffany’sis.ButstoreslikeMacy’sarechallengedbythistrendastheyhaveahardtimeshowinghowtheyaredifferent.YouknowWal-Martisgoingtobedifferentbyhavingeverydaylowprices.AndyouknowTiffany’sisgoingtobedifferentbyhavingveryhighqualityandprices.Sodependingwhatyouwant,yougravitatetooneortheother.Inactualfact,muchofthisdifferentiationisbasedonperception,notreality.Wal-Marthaslowpricesforeverydayitemsthatyoubuyfrequentlybutnotforeverythingelse.AndTiffany’smaynotbebetterqualitybutyouthinktheyare.Whenitcomesdowntoit,youdon’tactuallyhavetohavethehighestqualityorlowestpricestousethistypeofstrategy,youjustneedtomakeyourclientsthinkthatyoudo.Thistrendinproductdifferentiationisfollowingthetrendtowardsthestratificationofsociety.Thericharegettingricherandthemiddleclassarestayinginplace,challengedtotrytocreateabetterlifestylebuthavinglessandlessdisposablecashwithwhichtodoso.Sothewealthyturntowardmoreexpensiveitemstoshowthattheyarewealthy

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andthemiddleclassbuysagreaterquantitytocheapergoodstoshowthattheycankeepup.Whenyoulookatit,it’sactuallyquitesick.Butthereareothertrendsthatarecreatinganopportunityfordifferentiationalongtwoendsofaspectrum.Theagingbabyboomerwillneeddifferentiatedproductsduetooldageandamidrangeproductcanbere-engineeredtoappealtoyoungerbuyers.RadicaldifferentiationononedimensionOnewaytostandoutfromthecrowdisthroughradicaldifferentiationalongonedimension.Youcanpickwhateverdimensionyouwantbutthereareafewverygoodexamplesofcompaniesthathavepickedoneelementandstoodabovealltheirpeersonthatonething.

• Ryanair

Asfaraslowcostairlinesgo,RyanairsetthestandardinEuropethatmanyotherairlinesareseekingtomimic.TheystartedoutofferingridiculouslyinexpensiveflightsaroundEurope,flightsaslowas5pounds.Theydidthisthroughaslavishfocusonprices.Firsttheyflewintoairportsthatwerelookingfortraffic.Frequentlylocatedinsmallercentresnearamajorcity,theseairportswereoftenwillingtopayRyanairtoflyplanesthereasawayofimprovingtouristtraffictothearea.Theyprovidednofrills,chargingforeverythingfromseatselectiontoluggage,allfood,drink,etc.TheymakemuchoftheirmoneyontheirwebsitehelpingtravellersbookhotelsandrentalcarsthroughtheRyanairsite.Theyevenchargeaflyermoretogetonabustotheairportthantheflyerpaystofly.TheirextremelycheappriceshaveevencreatedanewwayforpeopletobeemployedasmanyworkersfromPolandcannowflytoEnglandandworkallweek,flyinghomeontheweekend.

• VacheronTourdel’Ile

Nowthere’sanameyoudon’theareveryday.Itisawatchthatcosts$1.25million.Yesthatisright,$1.25million.Inaworldwheremechanicalwatchesarecollectedbythewealthy,eventhistakesthecake.Vacheronhasbeeninbusinesssince1755.Thiswatchhasatourbillon,whichisawristmountedanti-

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gravitydevicethatpreventsgravityfromadverselyaffectingaccuracy.Ithastwofacesandsomanycomplicationsandpartsthatitisthemostcomplicatedserialwristwatchevermade.Butstandingoutwithanultrahighqualityproductlikethismayonlybetemporaryasthereisfrequentlyaracetothetop,toclaimtherecordforbeingthemostexpensivewhateversold.

• Domino’sPizza

You’veprobablyheardofDomino’s30-minutedeliveryguarantee.Wellthey’vetakenituponenotchinAustraliawherethereisnowa20-minuteguarantee.“Domino’snowoffersa20minutedeliveryguarantee,whenit’ssafetodoso.Wehaveworkedonnewtechnologythatallowsanalgorithmforonlineordersbasedonvariousfactors,includinghowbusythestoreis,thedistanceofthedeliveryanddriversafetyandthesizeoftheordertodetermineifwecandeliveryourorderintheserviceguarantee.Ifyourdeliverymeetsthealgorithm’scriteriayouwillbeofferedtopurchasetheguaranteeoptionduringtheonlineorderprocess.Asmallfeeappliesandshouldyourdeliverynotarriveintheguaranteedtime,wewillemailyouafreepizzavoucherforyournextorder.”

AmbiguityThelasttwostrategieswelookedatappealedtothecustomeronalogicalbasis.Butyoucanalsodifferentiateonanemotionalbasis.Thefirstoftheseisthroughthereductionofbarriersbyresolvingambiguity.Wehavelongknownthatconsumershateambiguityinpurchasedecisions.Itresultsinreducedsalesandlowerconsumersatisfaction.ButtheInternetandthelongtailofproductproliferationhavemadetheproblemevenworse.Consumersaremoreconfusedthanever,especiallyintheworldoftechnologywherethereisoftenlittleproductdifferentiation.Forinnovatorsandentrepreneurswhosesuccessratesforproductintroductionandstartupsareabysmallylow,thereisarealchallengetointroduceproductsthatcangetnoticedandbought.Somereallysmartmarketershaveusedconsumers’lackoftoleranceforambiguityasthefoundationfortheirbusinesses.

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Googlesucceededprimarilythroughthereductionofambiguity.Itisoftensaidthathalfofmarketingexpendituresarewasted.Theonlyproblemisthatnooneknowswhichhalf.WellGooglesolvedthatproblembychargingonlywhenwebbrowsersclickedthroughontheirads.PreviouslyyouknewthatyouronlineadwasseenbyacertainnumberofpeopleandyoucouldfigureouthowmanyclickedthroughbutGooglechangedthisbychargingonlyonclick-throughs.Thisfirststepwentalongwaytoreducingambiguitybuttheythenaddedanotherdimensionbyhavingadvertisersbidontheuseandplacementofadsandkeywords.Thethirdthingtheydidwastoenableanadvertisertosetamonthlylimitonspending.Thusanadvertiserwhoreallyknewtheirbusinessmodelcouldbudgettospendacertainamountofmoneyandknowexactlyhowmanypeoplewouldclickthroughtotheirsite.Iftheadvertiseralsoknewhowmanyofthoseclickingonthesitewouldenduppurchasingthentherewasperfectpredictabilitytoadvertisingandcompletereductionofambiguity.TheConnectionEconomyResolvingambiguityisawayofaddressingclients’fears.Theflipsideoffearisloveandthisisanothertechniquethatmarketershaveused.Ofcoursetheydon’tcallitlovebutessentially,that’swhatitis.Goodmarketersformanemotionalconnectionwithabuyer.We’vemovedinonegenerationfromanindustrialeconomythroughtheknowledgeeconomyandstraightontotheconnectioneconomy.ThisisanewsubjectthatI’vebeguntoexploreasaresultofmyownexperiencesinseveralstartups.I’vewatchedassocialmediahasdisintermediatedtraditionalmediaandmadethoughtleadershipmovetowardsirrelevancy.Fundamentally,consumersdon’trespondtothoughts,theyrespondtoemotionsandsocialmediahasenabledanemotionalconnectionwithconsumersthatInternet1.0didn’tdeliver.Butmanymarketersarestillstuckin1.0,tryingtocreatethoughtleadership.Thiswillbetheultimatechallengefortechnologymarketers,tobeabletohelpleft-brainedtechnologistsunderstandhowtomakeanemotionalconnection.Idon’tknowhowthey’vedoneitbutAppleisthebestexampleIcanthinkofacompanythathasformedaverystrongemotionalconnectiontotheircustomers.Appledevotees

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willwatchproductannouncementsonline,eagerlyawaitingeventhesmallestproductenhancementandgoingcrazyatanybrandnewproductintroductions.Fornewproducts,devotedbuyerswilllineupforhourstobeabletobethefirsttoownthelatestproduct.Thesedevoteeswillactasproductambassadors,evangelistseven.Appleadherentswon’tuseanythingelse,seeingthemselvesassuperiorbeingswhoareinonahugesecret.That’saratherstrongemotionalconnectionforacompetitortotrytobreak.Andhowdoyoucreatesuchastrongemotionalconnection.Itisn’tbyhavingthelowestcostorthefastestspeed.Itisn’taboutperformanceorfeatures.Ithinkitcomesdowntodesign.InallcaseswhereI’veseenanemotionalconnectionevolve,thereissomethingaboutproductdesignorthedesignofthemarketingcampaignthatappealstotheconsumerinavisceralway.Ofcourseonlycertainconsumershavethedesignsensibilitytoreactwithanemotionalresponsebutonceyou’vegotthem,they’reyoursaslongasyoucandeliverthedesignexperience.BlueOceanStrategyWhatwe’velookedattothispointintimeishowtotakeonedimensionofcompetitionandreallystretchhowyoucompeteonthatonedimension.WhatyouaredoingiswhatisreferredtoasaRedOceanStrategyinwhichyou:

• Buildyourbusinessinanexistingmarketspace.• Beatthecompetitionthroughdifferentiation• Playtoexistingdemand• FollowPorter’sstrategychoicetodifferentiationORlowcost.

Nowit’stimetoaddanothervariableandreallymaximizeyourpotentialbycompetinginacompletelynewmarketspace.ThisisreferredtoasaBlueOceanStrategy.Theconceptwaspopularizedinabooktitled,youguessedit,BlueOceanStrategy,whichwaspublishedin2005byReneeMauborgneandW.ChanKim.Init,theysaythatBlueOceanStrategy:

• Createsentirelynewmarketspacewithoutcompetition.• Rendersthecompetitionirrelevant.• Createsentirelynewdemand.

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• IgnoresPorter’sstrategychoicetocompetewithbothdifferentiationandlowcost.

Tofollowthisstrategyonewouldlowerqualityandpriceforexampleatthesametimeinordertofindanuncontestedmarketspaceinwhichtobesuccessful.AperfectexampleofthisistheFordMotorCompany.FordintroducedtheModelTin1908andmadeitaccessibletothemassmarket.Atthattimetherewerealotofautomobilemanufacturersandanyonelookingattheindustrywouldhaveconcludedthatitwassheerfollytobestartingupanothercarcompany.Atthetime,carscost$1,500,twicetheaverageannualfamilyincome.SoFordbroughttheModelTintothemarketat$850,droppedthepriceto$609thenextyearandby1924,thecarwaspricedat$240.Hismarketsharesurgedfrom9percentin1908to61percentin1921.Andhedidthis,notbytakingmarketsharebutbyfindinganentirelyuncontestedmarket.ThinkaboutitOK,nowit’suptoyoutofigureouthowyou’regoingtocompetebybeingradicallydifferent.Whatcanyoudothatwouldcompletelychangethenatureofcompetitioneitherbyfindinganuncontestedspaceorreallyrampingupcompetitionononedimension?Usethechartbelowtoplanyourattackononedimensionandfigureouthowthatwillcreateanunassailablecompetitivespaceforyou.NewMarket

Quality

Speed

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Cost

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BoilingtheOceanFinally,wegettowhatIthinkisthebiggesttrendinstrategicdifferentiationtoday.Thestrategieswehavebeenlookingatareallone-dimensional.Theytakeoneelementofcompetitionandmaximizethedifferentiationinordertoberadicallydifferent.WeaddedanotherdimensiontothatdifferentiationbycompetingwithaBlueOceanStrategy.Butwhatifyoucouldcompetesimultaneouslyonmultipledimensions.Whatwouldhappenifyoudecidedtobeatthecompletionintermsofquality,cost,andspeed?I’vecalledthisBoilingtheOceanandthereareafewcompaniesthathavedonethisextremelysuccessfully.Let’sgobackandlookatAmazonandUber,howtheydealtwithTriggersandBarriers,andwhatthey’vedoneforCompetitiveDifferentiation.AmazonJeffBezosfoundedAmazonin1994andfromthebeginninghehadavisionforitnotonlyasasellerofbooksbutas“aneverythingstore.”Don’tforgetthatthiswasbackwhentheInternetwasrelativelynew.Todayithasrevenueof$107billion.Sowhywasitsuccessful?

1. Triggers

Thegreatthingaboutsellingbooksisthatwhenyoufinishone,youneedtobuyanotherone.Andunlikesaladdressing,itisn’twisetobuythesamebookyouboughtlasttime.Thusthereisanaturaltriggerforchangethatcausespeopletolooktoacquireanewbookonasemi-regularbasis.Butthenaturalthingtodoin1995wastogotothesamebooksellertobuyabookasyoudidthelasttime.Butwhatifyougothereandyoucan’tfindthebookyouwant.Youmightphoneafewotherstoresin1995butyoualsomighthaveventuredonlinetocheckoutAmazontoseeiftheyhadwhatyouwerelookingfor.Eventuallyyouwouldendupcheckingthemoutbecauseatsomepointintime,yourbookstorewouldn’thavewhatyouwerelookingfor.Aboutthesametimein1995,youwouldhavebeenusingtheInternetforafewthingsandifyouwereatechie,wouldhavebeentryingtouseifforeverything

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youcould.AndevenifyouareaLuddite,chancesareoneofyourfriendswouldhavetrieditandtoldyouallaboutit.SotherewereafewnaturaltriggersandonelargesocietalchangeintheuseoftheInternetthatpropelledpeopletolookatbuyingbooksthroughAmazon.

2. Barriers

Andgiventhatyouarebuyingsomethingrelativelyinexpensive,therearen’tmanybarrierstobuyingbooksonline.Therearen’treallyanytransactionorlearningcosts,nothingtodisposeofsoAmazondidn’tdetractfromwhatyouwerealreadydoing.Therisksaren’ttoogreat.Afterall,it’sjustabook.Maybeit’shardtobreakthelovelyhabitoftrollingabookstorelookingforbooks.ButjustbecauseyouboughtfromAmazononce,itdidn’tmeanthatyoucouldn’tgobacktoyouroldbookstoreeverynowandthentodrinkintheexperiencethatbookloversadore,lookingatawholestorefullofnewbooks.Forsomepeople,therewasnoInternetaccessbutforenoughpeoplethiswasnoproblem.IfAmazonhadstartedtwoyearsbefore,whentherewaslessinternetaccessandalmostnoonlineshoppingtheycouldhavegoneoutofbusinessbeforeitcaughton,buttheywereluckyorsmartwithtimingsotheycaughtawave.Sonobarrierstostoppeoplefromtryingitout,butwhataboutthecompetition;theoldneighborhoodbookstore?

3. Quality

ThefirstdimensionthatisapparentwhenyougoonAmazontosearchforabookisthattheyreallygiveyouachoiceofeverybookthatisavailable,almostworldwide.Evenbackwhentheystarted,theyhadenoughinventorytobeabletobeattheaveragebookstoreintermsofselection.Inotherterms,here’showtheycompeteagainstanormalbookstore:

Amazon Bookstore

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Performance Muchbiggerselection SmallerselectionFeatures Nocoffeeshop CandlesandwrappingpaperReliability Almostguaranteedselection PotentiallyvariableselectionConformance Notapplicable NotapplicableDurability Notapplicable NotapplicableService Notneeded Thiswouldhavebeengoodin

smallerstoresbutprobablymissinginbigboxstores

Design Notasgoodashoppingexperienceforbooklovers

Greatforbooklovers

Experience Notneeded NotneededKnowledge None Thiswouldhavebeengoodin

smallerstoresbutprobablymissinginbigboxstores.

WhatyoucanseefromthislististhattheonethingwhereAmazonhadthelocalbookstorebeatwasintermsofselection.Andsinceyoucouldgotoyourlocalbookstoretobrowse,therewereenoughcaseswhenyouwouldwanttoshopatAmazonjustfortheirselectionthatyouwouldendupusingboth.AsofMarch2014,Amazonhada41percentmarketshareofallbookssold,eitheronlineorinstoreandtheycontrol65percentoftheonlineprintedbookmarket.

4. Speed

Speedisaninterestingvariablewhenyouareshoppingonline.Certainlyittakesmuchlesstimetoorderabookonlinethanitdoestogotothestore,findthebookandwalktothecountertopayforit.Butwhenyouwalkoutofthestore,youhavethebookwithyouwhereasifyoubuyonline,youhavetowaitforittoarrive.ItcouldbesaidthatAmazondoesn’tbeatthelocalbookstoreonspeedbutthatisn’tthewayIseeit.Let’slookatallthespeedvariables.

Amazon Bookstore Transaction Virtuallyinstantaneous MuchslowerDelivery Muchslower Virtuallyinstantaneous

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Implementation Notapplicable NotapplicableLearning Notapplicable NotapplicableSupport Notapplicable Notapplicable

Ithinkforbookpurchaseswhereyouwanttobrowseandwantabookrightaway,peoplewillstillgotoalocalbookstore.Butwhereyouknowwhatyouwantanddon’tmindwaitingafewdays,shoppingthroughAmazonsavesyouactualtimeattheexpenseofelapsedtime.Thustherewillbeamarketforbothbutinmanycases,Amazon’stransactionspeedwillwintheday.

5. Cost

Finallythereisthematterofcostandherethereisnocompetition.Idon’tevenneedtopulloutthecharttodothisone.Amazonisalmostalwayscheaperthanthelocalbookstore.Handsdowntheywinthecostbattle.

Sothereyouhaveit.WithalotofnaturaltriggersandnoBarriers,Amazonwaseasytotryoutformostconsumers.Andforcertaintypesofpurchasestheyhadbetterselection,fastertransactiontimesandlowercost.TheymanagedtocompeteonQuality,Speed,andCostsimultaneouslyandthesewerethefactorsthatgotthemto$107billionand41percentofthemarketin20someoddyears.UberSolet’slookatamorerecentmarketentrant,Uber.Theso-calledtaxiorderingserviceortransportationnetworkcompany(butnotataxiservice.)Theywerefoundedin2009andbylate2015wereworthabout$62.5billion.Notbadforataxicompanywithouttaxis.Sohowweretheyabletogetsovaluablesoquickly?

1. Triggers

Taxisareanotherthinglikebooks.Whenyouneedone,youneedoneandthishappensfairlyregularly.Thereisn’ttheneedtogetadifferentonethanlasttimeasthereisforbooksbutitreallydoesn’tmatterinthiscasebecausetherewassomethingelseworkingtotheadvantageofUber.Formanyyears,therehasbeensomethingelsehappeningthoughthatactedasatriggerfortheuseofUber.Sincethemid1990s,peoplehavebeendoingmore

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andmoreoftheirpersonalbusinessonline.Andsincetheadventofthesmartphone,moreandmoreofthatbusinesswasbeingdoneonpersonaldevices.Peoplehavebecomeveryusedtolivingtheirwholelifeontheirsmartphonesandhaveprobablybeenlookingathowtheycanuseitfororderingtaxisaswell.Afterall,theyhavetousetheirsmartphonetocallataxicompanysowhynotjustpressabuttonortwoandorderitonlinedirectly.Uberbenefittedfromthismoveofecommercetosmartphonessobenefittedfromasocietaltrend.

2. Barriers

Whenitcomesdowntoit,Uberofferedfewbarriersandtheonesthatexisted;theygotaroundthroughclevermarketing.InfactUberevenmanagedtoremoveafewbarriersthatimpedepeoplefromusingaregulartaxiservice.Firstofall,thereisrisk.WhenyouorderataxioranUber,youdon’tknowwhatyou’regoingtogetuntilit’srightinfrontofyou.Uberchangedthisparadigmbytellingyouthenameofthedriver,showingyouapictureofthedriverandtellingyouwhatkindofcarthedriverisdriving.Thesearealladvantagesoverregulartaxicompaniesandremovesignificantriskbarriers.Intermsofthingsliketransactioncosts,learningcostsandothercoststhatwouldhaveimpededUber’sacceptance,therewerenone.Youmightthinkthattherewouldbealearningcostinadoptingtheservicethefirsttime,butlet’snotforgetwhomwe’redealingwithhereascustomers.ThetypicalUberdriverisdoingalotmorecomplexthingsonlinethanorderingataxisothesmalllearningcostswouldnothavepreventedabarrier.Intermsofthestatusquo,therewasageneralreluctancetotryaservicethatwaspotentiallyactingoutsidethelawbutsincetherewasnolawagainstusingUberforapassenger,thisfactorprobablyonlyplayedapartuntilsuchtimeasapotentialpassengergotfedupwiththecompetition.Andfinally,therewerenopsychologicalfactorssuchastheendowmenteffecttodealwithaspeoplealwaystakedifferenttaxis.Thereisnorelationshipwithmostcabcompaniesandmostcertainlynotwithparticulardrivers.

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SoverysmallbarrierstotheuseofUberbuthowaboutthecompetition?

3. Quality

ThisiswhereUberreallyscoredabigwin.Theywereabletoimprovethewholetaxiexperienceandpresenttheuserwithahigherqualityoptionthanaregulartaxi.Let’slookatthecomponentsofqualityagain.

Uber Taxi Performance Abilitytorateperformance Noabilitytorate

performanceFeatures Muchbetterordering

interfaceFewerfeatures

Reliability Visibilityintoarrival NovisibilityrearrivalConformance Againstlocalregulations InlinewithregulationsDurability Notapplicable NotapplicableService Potentiallyfriendlier VariablefriendlinessDesign Bettervehicles AwfuloldcabsExperience Notasexperiencedbutnot

surly.Variableexperience

Knowledge NotasknowledgeablesorelyonGoogleMapsfordirections

Thiswouldhavebeengoodinsmallerstoresbutprobablymissinginbigboxstores.

ThereareafewqualityissueswithUberbutoverall,thewholeorderingexperienceputsUberlightyearsaheadofregulartaxisintermsofquality.Theabilitytoorderonline,andfindoutwhenthecarwillarrivedramaticallyimprovestheexperience.

4. Speed

Intermsofspeedaswell,theUberexperienceissuperiortotheTaxiexperience.Inthiscasewearen’ttalkingaboutthespeedofgettingyoutowhereyouaregoingbutthespeedbeforethecararrives.Backtothegrid.

Uber Taxi

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Transaction Muchbetterspeedatorderingacar.

Slowerduetorequirementforverbalrequest.

Delivery Perceptionofarrivaltimebeingfasterhappensbecauseyoucantrackthearrivalofthevehicle.

Thisisagreatunknowneverytimeyouorderacab.

Implementation Paymentfasterasitisautomatic

Slowpayment

Learning Notapplicable NotapplicableSupport Notapplicable Notapplicable

Ubersolvedthespeedequationbymakingordering,delivery,andpaymentallonline.PaymentforUberchargesisdramaticallyfasterthanpayingacabbiewithacreditcard.Orderingisabitfasterasyoudon’tneedtotalktosomeoneanddeliveryisperceivedtobefasterbecausetheguessworkistakenoutoftheequation.

5. Cost

Andnowwe’reontotheissueofcost.Uberwinshandsdowninspiteofperiodicsurgepricing.Uberisjustlessexpensivetobeginwithandtheinabilitytotipadrivermakesitevencheaperstill.Uberwinsthisonewithoutadoubt.

SothereyouhaveUber,existingtriggers,removalofbarriersandbetterquality,cost,andspeed.Theyhaveboiledtheoceanandpresentedauserwithamuchbettertransportationchoice.

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ThinkaboutitSothisisit,thelastchancetothinkforawhile.IwantyoutothinkabouthowAmazonandUbermanagedtoboiltheoceanbycompetingonallthreedimensionsofquality,cost,andspeedatthesametime.Isthissomethingthatyoucandooristhereanotherstrategythatwillvaultyouintothepantheonofthestartupgods?Usethechartbelowtoplanyourattackonallthreedimensions.Quality

Speed

Cost