Competitive Advantage: A Developer's Business
A Developer’s Business 🔗
Knowing a thing or two about the mindset of someone on the “business” side of your company can be very valuable. That doesn’t mean you need to spend two years of your life getting a MBA to learn about this (but don’t let me stop you).
This post won’t be about accounting, marketing, entrepreneurship, or making quarterly revenue projections. Instead, it will focus on a concept I learned in business school that helps me in my day-to-day as a developer.
The work you do and the company you work for is bound to have other people or firms that do the same thing. Likely not in the same way, and likely not exact replicas - but they can serve the same purpose. You would need to exist in a very narrow niche of the market for that not to be true. Life isn’t, or doesn’t have to be, the adversarial match that the business world makes it out to be. But, the truth is that most of the time people and companies need to stand out in some way for a paycheck or customers.
Competitive Advantage 🔗
To explore these different strategies, let’s imagine we’re going into business together. You and I are going to build the next great blogging platform. We’ll make it a success by using each of these competitive advantage strategies.
Cost competitive advantage is about being the cheapest option; cheaper than other competitors. A cost strategy is easy to replicate. Once you find out what your competitors charge, you charge less than that. Congratulations, you have utilized the cost competitive advantage strategy in the market! That said, this strategy is difficult to maintain long-term success. Unfortunately, to stay in business, you can’t only sell the most things. You also need to make a profit on those sales.
Staying in business using the cost strategy is the more difficult part of the equation. To keep it up, complete the work in less time or with fewer resources than others need. Proprietary technology or exclusive access to special materials can also make this sustainable. Some operational efficiency compared to the rest of the market must exist.
Using a cost strategy alone to gain a foothold in the blogging market would be difficult. You can blog for free on a lot of platforms today. We could pay people to use our service, rather than charge them. Maintaining that over the long term would be particularly difficult while remaining solvent.
Winning in the blogging space on cost will be a difficult choice. Instead, let’s try meeting the needs of bloggers in ways competitors don’t. This may mean having a higher quality offering that’s valuable to users. We may introduce innovative products or services that our competitors don’t have. We may be able to turn around the output of using our service faster than others. Our product may not be better in any way; but we’ll lean heavily into marketing. When people hear “blogging”, they’ll think of us. Each of these choices would be using a differentiation strategy to attract customers.
Our blogging platform could offer a concierge service for new customers. We migrate their existing content to our platform by hand, ourselves. We could offer to ghost-write their first five blogs. Their personal concierge can sit with them to provide a tour of all the features of our software. Other companies may not provide that level of service. Some customers may be willing to pay for that extra attention. Our differentiated offering will make us an attractive choice for that customer.
With a focus strategy, we’re going to find a tailored niche to dedicate our efforts towards. We’ll find a narrowly-targeted market segment and design to their needs. Our features and services will cater to that audience exclusively.
We won’t try to be the best blogging platform for all bloggers. Instead, we’ll target customers writing about medical care. That’s still a large audience. Academic researchers, hospitals, drug companies, insurers, private practice doctors, nursing staff, and more would be potential customers. We may choose to focus even more narrowly on one of those personas.
With that focus, we’ll build a comment moderation system for their needs. It’ll automatically flag potential HIPAA violations. That’s a feature sports bloggers aren’t too interested in. It’s unlikely we’ll entice them to become a customer with that. Yet, many people in the healthcare space may pay for help with HIPAA compliance.
That doesn’t mean that the sports blogger can’t use our platform. We won’t build features purely to meet their needs though. You won’t find a plugin to scroll the scores of last night’s games on our platform. Our features and future development effort will meet the needs of medical bloggers.
Developing Competitive Advantage 🔗
Now that we know what competitive advantage is, why should you care as a developer? You may not want to run your own company and need to stand out against competitors. You many not see yourself in a position to make strategic decisions for a company or a department. Even so, you will work with people that do have that responsibility. Part of your job is to help them gain the company’s desired competitive advantage.
Do you know what your company’s stated, or intended, advantage is? That will help you propose new initiatives, knowing it’s aligned with company strategy. It can inform how your team builds its next feature. Given our focus, we can frame our design reviews to make sure features add value for medical bloggers.
You should also consider your personal competitive advantage strategy compared to other developers. That may sound obvious if you’re looking for a new job. It’s also important when asking for a promotion, or solidifying your performance review. The labor market now (early 2022) has a limited supply of developers, compared to job openings. Even so, the number of developers looking or interested in jobs is likely more than only you. What’s your strategy to set yourself apart?