Excursion 35

More About Unfair Advantages

The simple reality is that most start-up companies do not have any of these; most start-ups do not have an unfair advantage. For most start-ups, the goal is to generate some level of unfair advantage over time. Many successful businesses have very limited unfair advantages; many rely on executing their business just slightly better than other organizations. Many entrepreneurship scholars, like Amar Bhide, believe that most small business succeed with “hustle” rather than any structural unfair advantage. The owners and employees simply work harder; the company provides better products and services as a result.

Your innovation or opportunity may have an unfair advantage. If so, you should be thinking about:

How that advantaged is leveraged by the other elements in the canvas,

What protections and investments will be required to maintain that advantage over time, and

How the operations of the venture can build on and extend that advantage as competitors seek out options to erode or bypass that advantage.

If you do not have a clear unfair advantage (remember, most startups are in the same situation), then your goal here is to hypothesize some advantages that could be developed over time to differentiate the organization. Let’s start with a simple example and then consider the AEB.

You live in a city that does not have a sushi restaurant. An old friend, who happens to be a trained sushi chef, moves to the city. You decide to launch a sushi restaurant, having confirmed from socializing the innovation that there is latent demand. Your only unfair advantage (if any) is your sushi chef. Realistically, as your friend points out, the training is not unique or overly extensive; there are surely other chefs either in the city or available to be hired and relocated from elsewhere. The success of one sushi restaurant might well encourage entrepreneurs to open another. It is worth thinking about how your restaurant will success if that happens. Will you strive to provide higher quality food? Better service? Clever marketing? Lower prices? Are any of these sustainable? Is it even possible to have a long-term, sustainable unfair advantage in this situation?

What is the bottom line for you, as you build your business model canvas? If you think you have a true structural unfair advantage, make sure you confirm with trusted business experts. If not, think about whether your have the potential to build an unfair advantage over time. And, if you suspect that developing a sustainable structural advantage is unlikely, start thinking about the factors or drivers of success in a competitive market. You might find some of Bhide’s writings to be especially helpful. “How entrepreneurs craft strategies that work” can be accessed online. I have found that the five strategies described in “Developing start-up strategies” (Bhidé, A. (1999). Developing start-up strategies. The Entrepreneurial Venture”, 2ª ed., Harvard Business School Press, Boston, MA, 121-137.)