About Hidden Advantage, Ventures and Ladders
The humans have always competed with each other. It could be food, territory, markets, gold, transport, tools of production and, of course, women. In the struggle for these values, the one who had more advantages won: the one who was smarter, more resourceful, more stronger…
However, the world history is replete with stories when clearly stronger competitors (with more advantages) were losing to weaker competitors. Why did this happen? For two reasons:
- their own mistakes;
- the presence of hidden advantages in the opponent.
Let’s take a closer look at the second aspect.
What is a hidden advantage?
It’s an advantage that others don’t know about. To put it simply: it is your trump card up your sleeve that will help you suddenly win the fight against your competitors.
In business, a hidden advantage is a unique feature of a product or service that will make it stand out from the rest once it enters the market. In negotiation, behind the hidden advantage is the knowledge of something that will allow you to manipulate the interlocutor. In warfare, a hidden advantage may be a secret weapon or a strategically better positioning of troops (due to best knowledge of buildings and terrain).
The key difference between a hidden advantage and an obvious one is suddenness. It allows you to be ahead of your opponent in something.
But suddenness is also the Achilles’ heel of this advantage. Once it has been used, it is no longer be hidden (your opponent already knows about it, and therefore knows how to counter it, or he will simply copy it from you).
That’s why when you have a hidden advantage, you should keep silent and preferably make it hard to copy. Otherwise your competitor will be able to use it for himself and become more stronger.
Another misconception often found in business literature is that the hidden advantage is the same as pioneer advantage. It is easy to see that this is not entirely true, because the pioneer advantage does not guarantee success, and all the hard work done by the founder can easily be copied by imitators. Ford, Toyota, Google, Microsoft, Apple, Facebook: none of these companies were pioneers! They just copied other people’s ideas and made them better.
Example 1: Venture startup
Thousands of startups are born and die in the world every year. Some go into oblivion, remaining just an idea on paper (because no one is interested in them). Others, having found a niche in the market (and customers’ money), simply lose the competition war.
Every startup is based on a business idea. And it is usually unique. This intangible asset is the hidden advantage.
As the experience of venture investments shows: no one is interested in startups and their ideas if they do not generate money. However, if a young firm’s business model has already shown at least some viability, competitors immediately begin to wonder what the idea and hidden advantages are behind the startup and how to copy them.
Imagine a scenario: you create an Internet application, then suddenly your co-founder steals the source code, sets up an office in Costa Rica, and crashes the prices. Would you stay in business? What if Google or Apple launched a competing product at $0?
As Jason Cohen said (venture capitalist and founder of Capital Factory): Anything worth copying will be copied, especially after you demonstrate the viability of your business model. Therefore, you constantly need to improve your business model with something unique. A true hidden advantage cannot be easily copied or bought.
If we are talking about Internet applications below are examples of real hidden benefits that fall under this definition:
- Insider information;
- Hiring the right “experts”;
- Gathering the “Dream Team”;
- High personal authority;
- Big community of users;
- Large customer base of existing clients;
- High SEO Rankings.
Here we gave an example of a hidden advantage of an Internet application. But how does it work in other areas of competition? For example, in war?
Example 2: Ladders
Have you ever noticed that all modern ladders are designed wide, rectangular and with a turn to the left? This is done for the purpose of fire safety, for faster evacuation of people (by holding on to the right handrail you can go down faster).
But not so long ago, before the beginning of the twentieth century, buildings were designed quite differently, especially castles: the stairs in them were steep, and the railing on the way up was on the right.
Why were the ladders made steep? So that an enemy who broke into the castle could not see how many soldiers were at the top.
Why were ladders made spiraling? To force the enemy to break ranks so that he could not pile by the whole crowd.
Why were the handrails to the right? Well, that’s the most interesting part! The point is that the enemy warrior is forced to hold his weapon in his left hand as he climbs up and turns to the right. Agree, this is not a very favorable position for a battle! But for the warrior guarding the tower, on the contrary – the stairs leading to the right is a plus! Because going down, holding a weapon in his right hand, and fighting is more convenient for him!
That’s why they used to make stairs in castles like this. That’s why stairs used to wrap to the right. And this is a perfect example of a hidden advantage!
What lessons can we learn from this examples?
It all depends on your position. If you are already successful at something and you are defending yourself against your competitors, you need to keep your data confidential and try to make sure that no one copies your strategy. Do not forget to protect your achievements from enemies. “Build” your own spiral staircase for them. Surprise the enemy with your inventiveness, ensure your advantage in the battle.
If, on the other hand, you are in an offensive position, then you need to focus primarily on gathering information about your opponent. If it’s a business, you need to find out all its competitive advantages. If it is a fight for markets or territory, you need to infiltrate your people into the area to get strategic, important, secret information.
In general, if you are interested in this topic, we highly recommend reading the famous book “The Art Of War” by Sun Tzu, which describes in great detail how to create a hidden advantages and not be afraid of stronger opponents.