Chances are your competitive advantage is one of these five things…

Sorry to be the one to break it to you, but odds are, the start-up idea you’ve been brewing is not one in a million. If someone hasn’t already built your innovation in your industry, they invariably have implemented it somewhere else or in another industry. If not, someone is at least thinking about doing it right now.

I don’t say this to discourage you. This is a good thing – it will help you ‘smash and grab’ other models or parts of models to fast track your own success.

The truth is that few companies revolutionise industries to the degree that completely changes the game – and that’s ok. A better use of your time is to focus on creating a product or service with a sustainable competitive advantage.

While new business models are being launched like never before, the basic principles of commerce haven’t changed for thousands of years. Business is still largely a game of supply and demand. That means there are numerous examples of different business model methods or ‘plays’ that can be researched, studied and replicated to take a new solution to market.

Investible has developed a playbook of fifty business model types - split into the following five categories including how you can replicate them to secure your own competitive advantage:

1.     Product Play

Product plays use a new or differentiated product or service to jump ahead of the competition. In this game, success is all about how your product is superior or greater than the competition.

Product plays can be ‘original’, ‘value-added’ or ‘re-packaged’. Original product plays often stem from patents and new inventions. Think Tesla – it’s costly to develop, takes the longest time to launch and requires the most technical know-how.

Other product plays don’t require you to reinvent the wheel but rather, taking what already exists to a new level. For instance, the way Expedia allows you to book flights, hotels and entire holidays through one website gave them a competitive advantage. And while Salesforce.com created ground breaking CRM, their business has now morphed into an integrated ecosystem of SaaS products through acquisitions and partnerships – building something new using things that already exist.

2.     Production Play

Creating a winning business model around a production play focuses on the manufacturing or delivery process - the ‘how’ of a product rather than the ‘what’. It often centres around creating better quality, more interesting or cheaper products.

Good examples include Airbnb, whose ‘supply’ is the spare space in people’s homes and Shoes of Prey, which allows customers to design their own shoes by choosing the material, colour, add-ons, heel type and soles and having them sent direct to the customer’s home. In these instances, the emphasis is on finding cheaper or more streamlined ways to create and distribute.

3.     Delivery Play

A delivery play is anything that provides a superior customer service experience. Customers don’t want to jump through hoops to buy a product. They’re attracted to convenience. Just think of The Iconic – it changed the game for online fashion retailing by offering a service where your clothes and accessories can be delivered under three hours for under $10. Similarly, Netflix has a large bank of TV and video content that can be streamed on demand by the customer – what’s easier than a few clicks of the remote? 

4.     Price Play

A price-based business model looks to tackle the opposition through competitive, varied or stepped pricing of products or services. It often requires start-ups to think of the long game. Nespresso is unlikely to make much money on the initial sale of a coffee machine but they make money throughout the life of the customer by selling their coffee pods once people become addicted to the convenience and taste. This is called a lifetime value approach.

Uber allows you to choose from a range of price points from Uber X to Uber Black and surge pricing to increase demand and differentiate it from competitors while Groupon and other group buying sites generate enough sales of a product to be able to justify a better price with suppliers.

5.     Sales Play

?Out of all of the possible plays in your playbook there is likely to be more potential sales plays than any other, with the number increasing every year as marketers become more innovative, technology creates new sales channels and customers respond (or don’t respond) to the other methods.

Startups can develop a distribution channel play and build a competitive advantage through access to a marketplace, sales force or referral base. Alibaba is the best example of this model. Partnerships provide another potential advantage, such as Jamie Oliver working with Woolworths to sell his products without needing a storefront himself. Marketing campaigns can also compel customers to buy into services that build their interest, such as Ipsy’s low-cost, monthly beauty product subscription service.

Defining your competitive advantage is all about your unique approach to solving the problem you have identified and capitalising on the market opportunity connected to it. It is likely your business model will crossover into several of these plays, however it is beneficial to determine which plays or strategies are relevant for your solution so that you can smash and grab from each.

This will help you gain momentum without having to spend the time and funds to learn the lessons companies before you have already illustrated.

If you would like to see a comprehensive list of over 50 plays Click here.