Core & Moats

But you must understand that making sales without a Core is not sustainable if you want to be a high-growth company, because your success will only draw attention to the opportunity you have identified, and then competitors will rush in. At that point, your wonderful new venture will turn out to have been built on a foundation of sand and it will come sliding down when the first big wave hits it.

So even if you aren’t sure what is the best selection for Core, pick a few candidates for the Core and realize you have to make a decision soon. Some of your potential Cores may end up as strong moats, but the most important thing is that you are thinking ahead and protecting yourself, and it is also highly relevant as you proceed to Step 11, Chart Your Competitive Position.

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Defining, understanding, protecting, and growing your competitive advantage is essential to being a high-growth, innovation-driven company. I have worked with many companies that aspire to greatness but will fail to reach their goals without a strong Core.

The Core is that “special sauce” that would be extremely difficult for someone else to replicate if they tried to recreate your product. It is what allows your venture to deliver the benefits your customer values with greater effectiveness than any other competitor—today or in the future.

There are three fundamental elements to a strong Core:

1. Unique: This asset will be difficult for anyone else to replicate.
2. Important: This asset ties directly to your ability to produce something your target customer values very highly—specifically the Quantified Value Proposition in Step 8. You’ll validate and further refine it in Step 11, Chart Your Competitive Position.
3. Grows: To be a strong Core, it should increase in strength over time relative to competitors.

That third element is often forgotten, and it is very important. If your advantage is that your competition does not understand what you are doing today but once they figure it out they can catch up quickly to you, that is not a Core, but instead a moat. A moat is a competitive advantage that slows down competitors but can be overcome. Moats are good, but a Core is better. A Core is an advantage that continues to put you ahead of your competitors. As such, changing it midstream can be detrimental to your company, so make sure you focus on identifying a good definition.

Defining your Core is unlike most of the other steps in the 24 Steps in that you don’t have a lot of additional primary market research involved. Instead, your team looks inward and analyzes the assets and potential assets that the company has.

Use the Defining Your Core worksheet (10.1) to list your assets and rank them by their relative strength. Then, identify potential moats for your business. If you have a good plan for a Core, moats can be extremely helpful to buy you time to strengthen your Core before your competitors are in a position to really put you to the test.

Once you have selected a Core, make sure you can explain why you chose it over other options. Your Core, unlike most of the information you develop throughout the 24 Steps, cannot easily be changed without losing a significant advantage in the marketplace.

Even if you are at par with your competitors today, if you feel you can gain an advantage and grow it over time compared to others, then that asset could be a great Core. That is why it is very costly to change your Core because it is something you build over time.

Determining your Core is a riddle that you must solve. While many other steps are dominated by primary market research and viewing the world through your customer’s eyes, this step is primarily focused inward.

Moats are very valuable but do not replace the Core. I suggest you identify weak and strong moats as you think of your Core and competitive strategy.

Moats, however, can be overcome while a strong Core will be much more difficult to overcome. Your Core is your last stand to prevent others from beginning to commoditize your product or simply steal significant, if not all, market share.

To determine the Core, you will start by inventorying your asset and potential assets. You will then start to identify weak moats, strong moats, and Core candidates, ultimately choosing one. You choose only one because you do not want to diffuse your focus. One great Core is sufficient and you have limited resources. If it is strong, the value of the second is relatively unimportant. You would rather have one very strong Core than two of medium strength.

Content will be published as it becomes available.

Content will be published as it becomes available.