Unless you've been hiding under a rock, you know that Facebook CEO Mark Zuckerberg testified before Congress last week. Reflecting the tenor of his testimony, a newly popular meme shows Senator Chuck Grassley asking Zuckerberg, "A magazine I recently opened came with a floppy disk offering me 30 free hours of something called America On-Line. Is that the same as Facebook?"
It seemed some Senators were itching to check their Blackberries so their staffers could explain what the hell Zuckerberg was talking about. Others looked like they'd perhaps forgotten to take their pills.
In a poignant portion of the testimony, Senator Lindsey Graham asked Zuckerberg who he would consider his top competitor. Zuckerberg stuttered and struggled to name just one, maintaining that the company had many competitors across many categories.
This banter continued as Graham implied that Facebook is a monopoly that can't be trusted to self-regulate. But, in a moment of clarity, the bizarre discourse highlighted a universal truth: the traditional rules of competition no longer apply.
Consider the business software market. Companies like Zoho and Insightly are competing with NetSuite for end-to-end solutions, QuickBooks for accounting, Salesforce for CRM and Microsoft Project for project management.
For years, the primary variable that separated competitors was placement on a continuum of price and quality. Today, the path to uniqueness is no longer about a few differing features. More than just competing against other companies, many are competing against varying business models.
Here are some keys to transforming your business model and creating space from competition:
1. Develop a unique monetization method.
For startups and other companies with limited resources, the quickest way to disrupt is to offer a radical monetization method. For example, there is a trend toward "usage fees" made popular by Zipcar, Uber and Airbnb.
People only want to pay for the portion of something they use. One of my company's most successful clients provides fractional CFOs, who seem to always be in demand. One method for brainstorming with your team: Consider pricing methods in other industries, especially ones that don't exist in yours.
2. Deepen the relationship.
Subscription models are also proliferating in many sectors--for example, curated services like Loot Crate, which topped the Inc. 5000 list of America's fastest-growing private companies in 2016. Such offers deepen relationships and create stickiness. Over time the provider (often through algorithms) learns more about the client and delivers greater value.
You should use that data to develop a script on how to serve those clients. Follow the numbers.
3. Become tech-enabled.
While not all providers will have capital to build platforms, they can deploy technology for critical steps in their process. There is a clear trend toward self-serve. One of our clients that sells retirement plans recently built such capabilities, targeting the most labor-intensive part of their business.
Think about how you can use bots and artificial intelligence to further enable such technologies. For example, you can probably use artificial intelligence in your CRM to create highly targeted marketing campaigns that address finite segments of your business.
Provide the illusion of choice, but in a model that providers can scale. At your local poke restaurant, you can order tuna or salmon, but not eel. One of our clients produces digitally printed T-shirts in any size, in the fabric and print of your choice, available for shipment the next day.
You can do this too, by providing your customers with multiple options for the products or services you sell.
5. Make a market.
Two-sided networks that bring together buyers and sellers are sprouting up everywhere. While Amazon and eBay may be the most notable, crowdsourcing and crowdfunding platforms are making new markets. Hatchwise is another example: You can use the platform to create a competition for logos and artwork, and purchase your favorite entry. Especially if you sell a product, you can probably create a resell market.
6. Scale beyond yourself.
Other companies with limited resources find ways to scale quickly. Licensing and franchising provide speed and access to capital. Form alliances with outside parties that can take on some risk. For example, one of our clients opened a couple hundred pet hospital franchises, dramatically expanding their market practically overnight.
7. Create a financial arbitrage.
Made popular by Tim Ferriss's book The 4-Hour Workweek, some businesses create a "negative cash operating cycle," meaning they get paid in advance. Many ecommerce businesses are now paid on receipt, an advantage over brick-and-mortar businesses that have to fund growth through traditional means. Look for ways to stage payments earlier, or even automate payment at the beginning of your cycle.
Be mindful of opportunities to reframe your business model so you can separate from the pack.