Earlier today I was talking with a successful entrepreneur about competitive differentiation. As with many markets, there’s 500-pound gorilla that’s slowly moving into his space and he’s working hard on a long-term competitive differentiation plan. His business continues to grow nicely but there’s the persistent threat of this significant competitor seriously affecting his startup.
Here are some ideas when thinking through competitive differentiation with startups:
- Build a competitive matrix listing everything possible comparing the different companies, even if it isn’t a software product
- Consider softer items like quality of customer service, contract terms, and variety of options
- Look to adjacent parts of the value chain that are less likely to be entered
- Analyze marketing and lead generation options that are too difficult or too niche for large competitors
Competitive differentiation is hard, especially in commoditized markets. Startups should focus on staying close to the customer and making decisions quickly without overly focusing on the competition. It’s prudent to regularly think through competitive differentiation and make sure all team members are aligned.
What else? What are some other ideas when thinking through competitive differentiation with startups?
David Cummings on Startups 
I have one point to add DC… remember that differentiation is what makes you different, not necessarily “better” than a competitor. When you put together your matrix, keep that in mind. It’s not about reinforcing over and over again why you’re better, bigger, faster and smarter than the other guys and gals (though that helps). Sometimes it’s that one thing you do different that makes all the difference.