The Audacity of Copying Well: Leveraging Differentiation to Stay Ahead

The Audacity of Copying Well: Leveraging Differentiation to Stay Ahead

Most successful companies, including Apple and Google, have a unique ability to ignore the doubters and focus on what is best for their company. However, the ultimate constraint that all companies face is the attention of the end user. A product must align with what the user wants and help them achieve their goals. This is evident in the success of Instagram, which allows users to present the best version of themselves and receive feedback through likes. On the other hand, Snapchat offered something entirely different by prioritizing ephemerality. This gave users, especially teenagers looking for an escape from prying eyes, the freedom to be themselves. While Snapchat offers similar features to Facebook and Instagram, it is fundamentally orthogonal, rather than complementary.

In a vacuum, this divergence in purpose is acceptable. Snapchat does not directly threaten Facebook or Instagram's core identity ownership value proposition. However, Snapchat's strategic moves have expanded its capabilities. Just before Facebook made an offer to acquire Snapchat, the platform introduced Stories, which allowed users to create collections of photos and videos. This concept of user-generated television on mobile, where users are the stars of their own show, was revolutionary. The absence of an explicit "like" feedback loop became a feature rather than a flaw. Users could post anything without worrying about approval, and the content would disappear the next day.

The mistake that many established companies make when responding to new competitors is attempting to win based on features alone. Nokia and Microsoft, for example, tried to create something entirely different from the iPhone, focusing on features like Live Tiles and various content hubs. Similarly, when Google launched its Facebook competitor, Google+, it emphasized features like Circles, Sparks, and Hangouts. However, these features made the products more complicated, and the most crucial element, the friends and connections, was overlooked.

The problem with feature-focused differentiation is that it ignores the fact that category-defining products have already established user expectations. Imperfections in these products become the norm because users become accustomed to them. However, simply cloning these products is not enough. Differentiation is still necessary, and the key lies in identifying what else can be leveraged. Google, for instance, copied the iPhone's user interface but leveraged its advertising-based business model to offer Android for free. Microsoft also utilized a similar strategy by embracing web standards and introducing features like ActiveX in Internet Explorer. Ultimately, this extinguished the threat from Netscape.

Copying a product is not enough; a company must identify what is truly remarkable about a format and determine if it can be applied to their network. Instagram Stories, for example, eliminates the need for Instagram users to try Snapchat. The challenge lies in getting users to adopt a new product, especially when it requires a network effect. However, once a product surpasses a certain threshold of adoption among friends, the difficulties turn into accelerants. In the case of Instagram, the fact that users' friends are already on the platform becomes a significant advantage that cannot be easily replicated.

In conclusion, successful companies understand the art of copying well. They recognize that differentiation goes beyond features and requires leveraging unique aspects of their business model or network effect. By understanding what users truly want and finding innovative ways to deliver it, companies can stay ahead of competitors and continue to thrive. Here are three actionable pieces of advice for companies looking to maintain their edge:

1. Focus on user needs: Instead of solely focusing on features, invest time and resources in understanding what users truly want and need. Build products and services that align with these desires to create meaningful differentiation.

2. Leverage your unique strengths: Identify what sets your company apart and find ways to capitalize on those strengths. Whether it's a specific business model, network effect, or technological advantage, use these assets to offer something that competitors cannot easily replicate.

3. Embrace innovation: Always be on the lookout for new ideas, formats, and trends that can be applied to your business. Don't be afraid to experiment and adapt. Innovation is key to staying ahead in a rapidly evolving market.

By following these steps, companies can embrace the audacity of copying well and continue to thrive in an ever-changing business landscape.