Competitive Advantage vs. Competing

So I'm going to borrow a page from MBA days (and of course, Mr. Porter) and discuss competitive strategy today. Everything always boils down to how do you create a long term sustainable competitive advantage and then manage to keep it. Many times, product manager just want to compete rather than build a competitive advantage.

Whenever I look at building a feature or assessing a competitor I rate/rank the feature against the following 4 criteria:

• Valuable - Is the feature valuable for your customers/prospects?
• Rare - Is it rare or common in the marketplace?
• Costly to Copy - If you were to build the feature, would it be easy for competitors to mimic you?
• Easy to Substitute - Can the feature be substituted with another feature, thus eliminating this features importance?

You should apply these 4 criteria to the target market segment for your product/company. For example, 8 cylinder engines are Rare for 4 door family sedans, but not so rare for large SUVs. If you start with your company/product and create a VRIN matrix of all of your features and then one for your competitors you may find some nuggets of information such as:

• Your product has no long-term source of competitive advantage
• Your product is well positioned vs. the competition, however, this is likely short term as it is easy for competitors to catch up
• Your product has a lot of features that are not valuable to your target market, but are valuable to another market segment.

As you and your competitors add new features add them to the matrix and put a date of launch. You may find that by focusing on when a feature is launched you may be able to determine trends (e.g. your competitor has been building a lot of features lately that are focused on a particular market segment). You will be prepared next time an executive asks you for how you compare to the competition. 

Another analysis technique I have used is Kano analysis to help determine the type of feature. For more information on Kano analysis click here. The uniqueness of Kano is that it asks the negative question (i.e. How would you feel if the feature was not present?) in addition to the positive question (i.e. How would you feel if the feature was present?). The negative question allows the product manager to determine which features are "exciters" vs. "expected".

So as you think about competing in the market, don't forget to think about building up your competitive advantage!