A great illustration of the difference between real unfair advantage from a weak one is the difference between organic SEO ranking versus paid keywords for search engine marketing. Keywords can be easily copied and bought by your competitors, while organic ranking has to be earned.
The most commonly cited unfair advantage that fails the unfair advantage test is first mover advantage. Too many entrepreneurs cite being first to market as a competitive advantage. Consider this list of companies: Microsoft, Apple, Google, Facebook, Ford, Toyota. None of them were first in their respective categories, but fast followers.
Being truly first to market is not an unfair advantage, but an unfair disadvantage. Not only do you have to build a great product, but you also have to build a great market for your product. Stumbling on either creates an opening for a fast follower to steal your lead.
What do you do if you don't have an unfair advantage from day one?
Most entrepreneurs don't have an unfair advantage at the outset of their idea. Consider Mark Zuckerburg. He wasn't first to build a social network and a number of his competitors already had a huge head start with millions of users and millions of dollars in funding. That didn't prevent him from building the largest social network on the planet.
While Mark didn't have an unfair advantage day one, he had an unfair advantage story. He knew his unfair advantage needed to come from large network effects which prioritized everything Facebook did until they realized this advantage.
The good news with unfair advantages is that you don't need one from the outset. When you are just starting out, embrace obscurity to build something valuable without calling out too much competitor attention. Identify an unfair advantage story and if one is not readily apparent, it is always better to leave the unfair advantage box blank than stuffing a weak unfair advantage as a placeholder.
The bad news with unfair advantages is that once you get some traction, your unfair advantage will get tested -- by your competitors and copycats.
Examples of Unfair Advantages
Here are some examples of real unfair advantages that fit this definition:
The right “expert” endorsements
A dream team
Large network effects
Some unfair advantages can also start out as values that become differentiators over time. For example, Zappos CEO Tony Hsieh believes strongly in creating happiness for his customers and employees. This manifested itself in many company policies that, on the surface, didn’t make much business sense, such as allowing customer service representatives to spend as much time as was needed to make a customer happy and offering a 365-day return policy with two-way paid shipping. But these policies served to differentiate the Zappos brand and build a large, passionate, and vocal customer base that played a large role in the company’s eventual $ 1.2 billion acquisition by Amazon in 2009.
Remember that you may have to leave this box blank when you first start out, but it’s here to make you really think about how you can/ will make yourself different and make your difference matter.
Other names that are commonly used in place of unfair advantage are competitive advantage and sustainable advantage.