Competitive Advantage in Business

I am currently attending a workshop on getting seed funding. We were just talking about innovation and value proposition, so all the teams started presenting. As all the teams presented, one question kept lurking around as a stumbling block. Some of the teams have very good presentations and ideas, but almost everyone can’t give a perfect answer when asked about their competitors. Simply said, how is a startup going to compete with a MNC with millions to burn? Competitive advantage seems to be the key, but how is a startup going to have any form of competitive advantage?

If the competitive advantage of a startup is its people, I think it will not be really convincing that MNCs cannot hire better people than the founders of a startup. If the competitive advantage is process-based, can’t MNCs simply duplicate the process? If the competitive advantage is service, then your business is not scalable. The list goes on… The only competitive advantage that can really seem to stop MNCs from stealing your rice bowl seems to be legal documents such as exclusive contracts, patents and what not.

But… how are normal startups supposed to have all these kinds of things? With that said, how are startups supposed to have long term competitive advantage? I am really quite clueless, maybe because I’m an average guy without an einsteinian brain. Maybe because I’m too dumb to understand rocket science and invent something totally revolutionary, or maybe because I’m not cute enough to persuade big companies to sign exclusivity contracts with me. I can’t think of anything that I can do that MNCs cannot duplicate if they want to.

Yet… sometimes I ask myself is competitive advantage really that important? Personally, I see of competitive advantage as a good-to-have, but not a must-have. Some people don’t even think about competing because the pie is so big in their market that they don’t mind having competitors. Sometimes, they even welcome the idea of partnering up with the very people they call competitors. One good example is the online internet marketing community. How many of them have unique competitive advantages when they started off? Virtually none.

They all started from scratch and sweat through the tough times before they developed their competitive advantage, which can be their websites or their newsletters. Their efforts are commonly duplicatable if their methods are followed exactly, but who cares of new entrants? The market is just too freaking big and they can still make money regardless.

My point is not to say that competitive advantage is useless, because it is truly a great thing to have. However, don’t let people stop you from pursuing your dreams just because someone approaches and asks you “What’s so different about you?” Competitive advantages don’t come free, they come from previous efforts. Google’s algorithmn for producing relevant search results came about from their founders hard work and not because they were born with the algorithmn. Macdonalds is able to come up with their system for serving consistent food because they spent time figuring out the exact process to follow.

Competitive advantage is acquired through hard work and hard work comes only when you believe in yourself enough to keep pushing forward despite having people around asking “What’s so different about you?”.