Do the best businesses always stem from an entirely new idea?
Yes, Twitter provided a new way to communicate, and 5-Hour Energy offered a new way to consume caffeine and energy-producing nutrients. But not every successful business requires an inherently "new" idea. An entrepreneurial team also can create value by building a better product or solution than the existing leader in a category or market.
The beautiful thing about this "better mousetrap" business model is that there's already a proven demand for the product. The market already exists, with customers buying an existing product. A new entrant just needs to convince customers to shift to a new product with a better price or a better value proposition.
There is one big challenge with this model, however. If you can build a better mousetrap, why can't someone else? How can you sustain your product innovation and profit from it?
We recently received an email from Hristo Gaydarski. He and his team have launched TMG Workwear, an online retailer selling industrial and worker uniforms in the UK. In response to his request for our help, we asked him the following question:
What advantages do you have in building this business model vs. someone else?
His response: "Our advantage is low price, given our manufacturing in Asia. We offer quality similar to the big brands, and offer our products online." He believes no one else is doing this currently in the UK.
By offering the same products, but at a cheaper price and more convenient sales channel, TMG is clearly an attempt to build a better, more successful, and more profitable mousetrap than the current alternatives in the market. The approach can certainly be successful if Gaydarski and his team can build a set of sustainable competitive advantages as it grows.
If TMG can deliver on this promise, current competitors will certainly react, by offering products online and lowering prices to match, even if it means replicating TMG's Chinese production. At that point, the challenge for TMG will be finding new ways to maintaining an advantage.
The key for sustainable success, for TMG and others taking a similar approach, is to continually build brand value, customer service, trust, or some other unique advantage as they grow. These advantages will not be as easily replicated by competitors. As a new entrant gains traction in a marketplace, it can build trust in its new customer base before competitors can replicate their disruptive model. If a business that has built a better mousetrap can't stay one step ahead of its competitors, it won't be able to maintain a sustainable customer base and a sustainable business.
Are you aiming to build a better mousetrap? Send us your thoughts and questions at firstname.lastname@example.org.