By Brian Moelich
Business Designer, Innovation Enablement, CX
It’s a common question in venture capital, but no one really tells how to find the answer or how to judge that answer.
The phrase so important, whether for an early stage business or a corporation’s new venture, because it is asking “what is it that you uniquely do that will make customers come to you over the competition?” In simplest terms, how are you differentiated?
The challenge though is how do you identify what differentiates you and how do you judge if what you identified truly sets you apart. I’d like to share the Blue Ocean Strategy Canvas, which I like to use to analyze new ventures.
Who is your customer and what is your value proposition?
The first step is to be clear on who your customer is. Having a narrow and focused view on your customer helps you identify what their needs, pains and jobs to be done are. Then choose which of these your value proposition is targeting.
We do this step to identify what value am I providing for my customer and then ask, who else is providing a similar benefit to my customer. More specifically, what alternatives does my customer have to receive the same value?
This is how you determine who your competitors are.
What are my customer’s value drivers?
The next step is to ask, what are the value drivers your customer uses to select your offering or the alternatives. In simpler terms, what criteria does your customer judge one product or service over another?
Think of it like this, when you’re making the decision of purchasing a coffee from Starbucks v. Dunkin Donuts, what makes you choose one over the other? Is it the ambiance? Is it the variety of beverages? Is it the customer service? Is it the quality of the ingredients?
Make a list of 5-10 of the top value drivers and try to avoid referencing specific features.
How do my competitor’s and I rank on these value drivers?
Now we want to visually show how you and your competitors rank. I like to use a line graph, but you’re welcome to use another style of graph that you prefer.
Begin by giving you and your competitors a score out of 10 on each of the value drivers based on how well each delivers on that value. I’d recommend bringing in as much real data as possible, but you can also assign scores based on your own intuition. For example from the coffee buying example, looking at ambiance, Starbucks has leather chairs, music playing, art on the walls, relaxing colors, so it I would give them a 10. While Dunkin Donuts, has bland colors, no art, hard uncomfortable chairs and overall focuses on serving you quickly and getting you to move on, so I’d give them a 1.
You will get something that looks like this, which is comparison of Cirque du Soleil and Ringling Brothers
Where are the big differences, if any?
Look carefully at your graph and identify the value drivers that you are above, below and matching the competition. If you’re hovering around the competition on every value driver, that’s a bad sign, because then you are in the market to simply play with the competition and are not adequately giving the customer a reason to choose you over the competition.
Blue Ocean strategy refers to this as a red ocean. A place where there is lots of competition and each player is fighting for every inch of the market. This isn’t a place you want to be.
You want to be head and shoulders above the competition on at least 1 value driver. There needs to be a reason for the customer to come to you over the alternatives.
The next question is whether that value driver is something the customer truly cares about and is a reason to choose you. The only to find that is by testing that assumption with customers. Get your offering in the hands of your customer and push on what you identified and determine if it is something they’re jumping up and down about.
Once you do identify something that differentiates you, make it the focus of everything you put in front of the customer or that the customer sees, i.e. the first thing they see on your webpage, your marketing materials, etc.
Brian Moelich is an innovation strategist, entrepreneur and educator. He is a Business Designer for Citrix Systems in Silicon Valley, where he co-manages an internal innovation incubator and is also a mentor for the Citrix Startup Accelerator. In a past life, he was a physical security consultant to IBM in Canada.
Brian holds an MBA from the Rotman School of Management at the University of Toronto, where he worked on live challenges for Celestica, SAP and Infosys Technologies in Bangalore, India. He has received numerous awards for his work, is an advisory board member of Frost & Sullivan’s New Product Development and Marketing Committee and is a regular speaker and workshop facilitator on the topics of design-thinking, business model design and innovation.