How to stay ahead of your competition?

Desh Deshpande
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By Desh Deshpande

(Editor’s note: This is Part-12 of the weekly video column with philanthropist and serial entrepreneur Desh Deshpande, with excerpts from his book “On Entrepreneurship and Impact.” This column appears every Monday.)

“The wise learn many things from their enemies.” — Aristophanes

Desh Deshpande

Remember that having a unique competitive advantage does not mean that you have eliminated the competition.

Dealing with competition is sort of a dilemma for startup entrepreneurs.

On one hand, worrying about competition is meaningless when you don’t have anything meaningful to offer to the marketplace.

On the other hand, understanding what the competition is doing is extremely useful as you are responsible to bring out a meaningfully differentiated product to the marketplace.

I am going to focus on the latter for the rest of this article.

It is rare for a startup to come up with an offer that has never existed in the marketplace because not only is it risky, but “lack of demand” may be the real reason such an offer has not existed before.

In other words, when you are starting out, there is a good chance that there are established players in the space that are offering something similar to what you are planning to do. If you offer exactly what the incumbents (your competition) are offering, your sole option is to compete on price which is rarely an advantage for a startup with limited resources..

So, what else can you do?

You have to focus on meaningful differentiation – how your product is positioned, a lower cost design, the way it is distributed, ease of use etc.

For you to clearly differentiate your product, you need to understand the competition well and also validate that your product differentiation will be valued by your target customers.

Along the way, your competitors will come up with all sorts of offerings and upgrades. Your response should be to go back to the drawing board and revisit why you decided to start the company in the first place AND whether your assumptions related to meaningful differentiation are still valid. If both items check out, your next step should be a heads down focus on execution.

In the early days of our company Cascade Communications, telecommunications networks were primarily built for phones.  Cascade was focused on building equipment to build public networks for data.  All the large telecommunications vendors saw the opportunity but they addressed the market tangentially; they sold large phone switches for millions of dollars and then added a little bit of data syrup on it to handle data.  Since Cascade was focussed on data primarily it was able to design data switches that were an order of magnitude less costly and more capable of handling the volume of traffic.  The differentiation was very clear and allowed the company to focus on execution and not get distracted by the announcements being made by competitors.

In closing, it’s never about ignoring your competition. It is about acknowledging it exists, but sticking to your core meaningfully differentiated offering with a relentless focus on execution.

(About Desh Deshpande: During his entrepreneurial career spanning over three decades, Gururaj “Desh” Deshpande has built several companies. He has injected his passion for innovation and entrepreneurship into a number of social impact initiatives in India, the USA and Canada. He has been recognized for his entrepreneurial accomplishments by many institutions including being named co-chair of President Obama’s National Advisory Council on Innovation and Entrepreneurship. He currently also serves as a Life Member of the MIT corporation. He resides in Boston together with his wife, Jaishree.)


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