Move guide
Prove the advantage
Your report suggested a move on at least one of these two questions:
- what the source of your advantage is, and whether it lasts;
- whether there are barriers to entry protecting your position.
This move guide names where your edge comes from and shows it in your numbers. Then it shows what a new competitor would face, from the competitor's side.
1. When it applies
Use this move guide if your report placed either question at "Red flag" or "Doubtful".
| Question | Where it may sit today | Where this move guide aims |
|---|---|---|
| What is the source of our competitive advantage, and is it sustainable? | Red flag: "We win on price and relationships, and our competitors say exactly the same." Doubtful: "We claim an edge we have never traced to a source." |
Supported: "A named source (capabilities, go-to-market, scale, assets, technology, brand, networks) shows up in our economics and is hard to replicate." |
| Are there barriers to entry protecting our position? | Red flag: "Nothing stops a new entrant, and competitors are already eating into our position." Doubtful: "We assert barriers we have never tested." |
Supported: "Barriers we can quantify (scale, switching costs, assets, regulation, know-how) and show holding." |
If both already sit at "Supported" or higher, skip this move guide.
Both are warning questions on the seller check. A low answer on either moves the report's verdict toward "Slow down".
2. What to do
Five steps. They take four to six weeks.
- Name the sources of the edge: capabilities, go-to-market, scale, assets, technology, brand or a network. Table A below records them.
- Prove each in numbers a buyer can reproduce: margin against peers, win rates, cost per unit, retention.
- Retire every claim that rests on "relationships".
- Name the barriers that protect you: scale, switching costs, assets, regulation or know-how.
- Find where entry has been tried and failed, and show why it failed. Where nobody has tried, work out what a new competitor would have to spend and win to pay back.
3. What to produce
One table.
Table A. The advantage and its proof
| Source of advantage or barrier | The number that proves it | Where a buyer can check it | Has anyone tried to copy it? |
|---|---|---|---|
A source with no number in the second column is a claim.
4. A worked example
Illustrative. Written for this move guide. It describes no client.
A specialist maker of laboratory instruments sells to hospitals and universities.
The advantage.
- The owners had written "our people and our relationships". The work named two sources instead: a service network in every state, and the certification its instruments carry.
- The service network showed in the numbers. Customers who used it renewed more often, and its tender win rate was higher where it had technicians.
The barrier.
- Certification took years and a test record. A rival from overseas had tried to enter, and left without winning a tender.
Five weeks on.
- 2 sources of advantage, each with a number
- 1 failed entrant, with the reasons it failed
- 0 claims left that rest on relationships
On a retake, both questions could be answered at "Supported".
What it looked like in our work
From our own work. Figures changed.
For a buyer of a vehicle-parts maker, our due diligence tested the barriers from a new competitor's side. It simulated four ways in, each with its own factory and contracts. Contracts only came up when a vehicle model changed, so volume arrived late.
| Way in | What it needed | Years to pay back |
|---|---|---|
| Large factory, wins the largest contract | One big contract, years away | Never |
| Large factory, wins enough to break even | Several contracts, won one after another | About 14 |
| Small factory, wins the largest contract | One big contract, years away | About 8 |
| Small factory, wins enough to break even | Two contracts, won one after another | About 18 |
The fastest way in still took years to pay back. That is a barrier a buyer can check.
5. Effort and dependencies
- Chief executiveNames the sources of the edge and the barriers.
- Chief financial officerFinds the number behind each one.
- Sales leadSupplies win rates and what competitors have tried.
What you need
- The market model from proving the market and your growth.
- Your margins, win rates and retention by segment.
How long
- Four to six weeks.
What gets in the way. We have seen these in our own work:
- A failed entrant as proof. For a vehicle-parts maker, an overseas rival had entered and never broke even. Its economics proved the barrier better than any claim.
- An edge a competitor shared. An industrial manufacturer's margin gain was price held while its input costs fell. Every competitor had the same windfall, so it was not an advantage.
6. How will you know it worked?
The test is whether a buyer could reproduce each claim from your numbers. Retake the check when each source and barrier has its number. Each of these should be true when you answer:
| Question | You can answer Supported when | A document alone does not count if |
|---|---|---|
| What the source of your advantage is | A named source shows up in your economics and is hard to copy. | The advantage is described, with no number behind it. |
| Whether there are barriers to entry | The barriers are measured and shown holding. | The barriers are listed, but nobody has tested them from a competitor's side. |
The worked example is illustrative.
Think we've used your work without proper credit? Tell us and we'll fix it.