Set your Tech Startup apart by going beyond "cheaper."

Successful companies are those that compete with superior business models. That is the premise of business model experts Alex Osterwalder and Yves Pigneur in their book "The Invincible Company." Those ten words very well point us in the right direction in building differentiation in tech companies. After all, part of a tech startup’s success depends on its ability to stand out.?

However, we often place a premium on price to attract customers and, ideally, stand out. Many have taken this route and learned that differentiating just on price is a poor strategy for long-term distinction. Finding a differentiator is difficult, but price competition almost always results in a lose-lose situation. Alternatively, like many technology startups, our innovation efforts may be entirely focused on the product, with little regard for the rest of the business. While necessary, this is unlikely to be enough. It is even possible it could result in a complex product.

The Osterwalder book argues that to become invincible, businesses must develop superior business models that disrupt and are difficult to disrupt. "It is increasingly a rat race to compete solely on new products, services, price, and technologies" they write. We must innovate across the entire business model, not simply on products, technology, or price, if we are to create successful firms and stay ahead of the competition. In the long run, developing a successful business strategy outweighs setting a cheaper price for short-term gain.

Our startups, and businesses in general, then must take a different approach to how we differentiate to keep ahead of the competition. We must identify and implement value-adding elements while also being difficult to imitate. The business model comes into play at this juncture.

So how do we achieve a superior business model?

Let's first take a closer look at the term “business model”. It is commonly used, but what exactly does it mean? Frequently, the terms are used to explain how a company makes money. I prefer the big-picture view of business models as the system we've put in place to create, deliver, and capture value for a particular market opportunity.

You may be familiar with the business model canvas, created by Alexander Osterwalder and Ives Pigneur and popularized by the book Business Model Generation. It's a nine-part framework for mapping your business.

To demonstrate the various differentiation techniques, we'll adapt questions from the book "Invincible company" and use examples from Kenyan entrepreneurs who have been able to build successful businesses or at least have respectable traction, according to media reports. My assessment of the business models for the various technology startups is based on the publicly published information.

Let’s now use these questions to purposefully establish our business difference. Shall we?

1.???How may the business enter a previously untapped or neglected market with significant potential?

Consider how Copia, a B2C e-commerce platform with a tech-assisted distribution solution, has enabled rural populations to participate in e-commerce despite being unbanked, without internet connection, and lacking a proper delivery address. They have tapped a previously neglected market by using their tech-enabled distribution system, which connects middle and low-income consumers to a selection of high-quality products delivered at their convenience. A value proposition that generates or unlocks an untapped market is another option to apply this principle to your business.

2.How could the company approach the market differently or eliminate the middleman??

Tushop, for example, aggregates users into groups and allows them to buy groceries directly from manufacturers and farmers at lower prices, avoiding traditional wholesalers. Customers can increase their order volumes by ordering in bulk. The group then negotiates cheaper wholesale purchasing rates with these greater volumes. Tushop maintains direct contact with the consumers who manage purchases and deliveries. Tushop, on the other hand, is likely to reap bigger profits because there is no middleman.

3.?How may the company create a valuable resource that is difficult or impossible to duplicate?

Patents, intellectual property (IP), or a significant R&D investment are examples of such resources. Take, for example, Lipa later, a buy-now-pay-later company. It owns a patented credit-scoring and machine learning engine that allows customers to join up and receive a credit limit in seconds, with no voluminous documents or a lengthy approval process. It takes advantage of this to give clients easy and affordable credit. Lipa Later has also developed a Buy Now Pay Later API that can be integrated into e-commerce platforms, allowing businesses to sell products directly to customers and pay for them in monthly installments. In this way, it has provided consumer credit to many people who previously did not have it. Consumers and online merchants alike have profited from the move, which allows retailers to sell things straight to customers and pay for them later in manageable installments. Lipa Later's own credit rating and machine learning approach gives them a competitive advantage and lowers the risk of disruption.

4. What activities could your organization change to scale faster or reduce bottlenecks in production?

Here you explore a shift in the kind of operations your company performs and how you combine them to deliver value to clients. Consider Wasoko (formerly Sokowatch), a B2B company that enables informal vendors to restock regular commodities. By creating central distribution hubs, they more efficiently deliver supplies to these small traders. They fulfill orders to small business owners from these hubs, allowing them to swiftly resupply necessary supplies. Wasoko has improved its operations even more by using analytics to predict shop owner orders and pre-stocking its delivery vehicles to assure even speedier delivery. In this approach, they have lowered the cost of doing business in the large informal retail sector. When you compare this to typical distribution methods, it's clear that Wasoko has a distinct advantage.

5.?How might your company identify a new income stream or unlock a previously unprofitable market to capture additional value?

Here you'll explore new approaches to capture and monetize value, open previously unprofitable markets, and/or significantly boost revenue. For example, Zydii, a digital training platform, obtains sponsorship from third parties to provide its digital courses. These third parties could include government agencies, foundations, corporations, and so on. As a result, more students have access to digital instructional content. Zydii, on the other hand, is likely to be able to cover the costs of content creation.

6.?How could your business disrupt established cost structures or revenue patterns innovatively?

Here, you'll look at how you might outperform the competition by focusing on what clients are ready to spend the most for while keeping costs low. This can be accomplished by developing a business model with a game-changing cost structure, not simply by reducing processes and resources, but also by doing things in novel and disruptive ways. As an illustration, Lori Systems, a Kenyan logistics firm, employs technology to improve cargo journey management. Their technology-enabled, operations-driven marketplace allows them to deliver real-time information on long-haul transportation services, allowing them to efficiently connect transportation and cargo. They use a supply chain management system that is transparent and has resulted in increased flexibility, reliability, and cost savings. It's no surprise that by providing such a benefit, the market has taken notice, and demand for Lori Systems’ platform has skyrocketed.

Focus on developing a valuable and distinct formula for your startup to distinguish yourself and make a name for yourself in today's competitive tech industry. The business model elements provide a framework for thinking about it. Go above and beyond to add value to yourself and your customers.