Ask any business owner who their competitors are, and they can list every single one, without hesitating.
Competition is fighting over the same resources, knowing not everyone will win. This competitive mindset is ingrained in us at every turn throughout our lives: Sporting events, talent shows, losing weight, even shopping can be a competition in American culture. (Black Friday, anyone?) As Americans, we’re conditioned to strive to be the best, which usually means being marginally better than the guy next door.
It’s no wonder then that in the business world, everything is about competition. We’ve been trained to think that the best route to success is to just be better than the current market leader. This might mean undercutting their prices or offering more features, but is that really how businesses win big?
In the classic business strategy book Blue Ocean Strategy, there’s a generic framework called the Four Actions Framework. The Four Actions Framework offers a way for a business to find a value offering of its product or service, create uncontested market space and make competitors irrelevant. That’s a bold promise, but the framework can really help to do just that. Imagine: No more competing over the same features or prices.
First you need to take an unbiased look at the market you’re in and ask the following four questions about your business or product:
- What can I completely eliminate?
- What factors can I reduce below the industry standard?
- What factors can I raise above industry standard?
- What factors can I add that nobody in the industry has had?
The first two questions help you lower your cost structure, while the last two add insight into adding buyer value. Let’s dive deeper into each of the four questions.
What Factors Does the Industry Take for Granted That Should be Eliminated?
Have you added extra features to your product over the years that nobody uses anymore? Usually these changes come about because competing often means blindly copying the same features as your top competitor, without ever really asking why.
It’s important to pinpoint these unnecessary features for a few reasons. Extra features that nobody really needs are often costly from a development standpoint. Eliminating these usually means you’ll save money on development and support. Unnecessary features also make your product more cluttered and harder to use, which diminishes its value.
What Factors Should Be Reduced Well Below Industry Standard?
This question is similar to the first question, but it's more nuanced. The race to create a competing product often means that somebody just looked at the feature list of the other guy and copied it. Reducing a feature doesn’t mean you should eliminate it completely but rather that you should diminish its importance.
For example, Southwest is the world’s largest low-cost airline carrier. But unlike other airlines, it decided it would reduce the complexity of seating its passengers by having no first class or assigned seats. By not competing on the industry's standard seating features, Southwest was able to focus on lowering its prices and increasing point-to-point departures.
What Factors Should Be Raised Well Above Industry Standard?
This question allows you to think long and hard about the compromises your industry (as a whole) has made for the customer. What is something that would be nice to have but that you don’t, only because the rest of the industry doesn’t or can’t offer it?
Let’s continue with the Southwest example. Because it decided not to compete with other airlines that offer first-class seating options, lounges and other extras, Southwest was able to drop its prices lower than the rest of the industry. In fact, in many cases, it’s almost as inexpensive to fly with Southwest as it is to take a trip with a car. Now you see the beauty of the first two questions. When you eliminate things in some areas, you can raise factors in others.
What Factors Should Be Created That the Industry Has Never Offered?
Think beyond your own industry. This is what will help you break from the rest of the pack—offering new incentives for the customer and creating demand that previously wasn’t there.
The biggest mistake most businesses make is trying to make their products “better” simply by adding features. But that’s an unrealistic approach because the cost of product upkeep will continually rise, cutting into your margins. A better strategy is to find the balance between adding and subtracting features to make a product that renders your competition useless.
Blindly going up against the competition means you’re limiting the potential and scope of your business. It doesn’t matter if you’re a developer trying to create the next big app or a freelancer trying to find more clients: You can use the Four Actions Framework to set yourself apart.
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