Martin coulthard - keeping an edge - sustainable competitive advantage

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TSS Core 4: Competitive Strategy - Monday 8th November

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Martin coulthard - keeping an edge - sustainable competitive advantage

  1. 1. © 2010 Martin Coulthard winning a 3 level approach to business strategy Martin Coulthard BCS/BEN Tech Startup School core 4: Competitive Strategy 8 November 2010
  2. 2. © 2010 Martin Coulthard overview • context • approach • kinds of competitive advantage • examples
  3. 3. © 2010 Martin Coulthard context • business is competitive • a team, contact sport like rugby • what does ‘winning’ mean to you? – get your idea/product out there? – social benefits? – lifestyle business, to pay the bills? – fast growth of sales and profit? – a big exit?
  4. 4. © 2010 Martin Coulthard 3 levels
  5. 5. © 2010 Martin Coulthard level 1 – broad competence • do (almost) everything well • actually, basic competence in all areas is often enough! • a ‘me too’ business can achieve a level of success if it consistently deliver good quality product/service, on time, in the right market
  6. 6. © 2010 Martin Coulthard level 2 – competitive advantage • different + better • what could you do or offer that is different to and better than your competitors? • if this is not protectable / sustainable then others will quickly copy
  7. 7. © 2010 Martin Coulthard level 3 – sustainable competitive advantage • you keep your advantage • because the competition is not able, is not allowed, or does not want to copy it • or you keep getting better at it, changing it or finding a new one!
  8. 8. © 2010 Martin Coulthard where is the edge? kinds of competitive advantage intellectual property protection other strategic elements formal intellectual property rights • patents • trademarks • copyright • design rights know how / unique skills of team complexity / difficulty of product / service 'sticky' products brand / reputation / trust team expertise pricing control of routes to market domination of target market segment (not worth competitor trying to take it from you) quality design / user experience / object of desire ‘the whole product’ first to market hard work passion location funding size continual development / improvement innovation! other protection • copying is not illegal! • confidentiality agreements • employment/consultancy contracts – and other legal agreements • secrecy • copy protection technology – e.g. encryption, DRM (Digital Rights Management)
  9. 9. © 2010 Martin Coulthard intellectual property rights 1. patents - protect what makes things work - like what makes a wheel turn or the chemical formula of your favourite fizzy drink 2. trademarks - signs (like words and logos) that distinguish goods and services in the marketplace 3. copyright - an automatic right which applies when the work is fixed, that is written or recorded in some way 4. design rights - protect the appearance of a product/logo © Reg. Des. 1111111 TM ®
  10. 10. © 2010 Martin Coulthard software patents – a dilemma • even if you can get a patent relating to your software… • it will disclose key aspects of your invention (so that someone else can reproduce it) – that is the deal • when those aspects may otherwise be hidden • so others can then ‘copy’ the invention far more easily • but how they do so may also be hidden! • so you cannot be sure, or prove, that they are infringing!
  11. 11. © 2010 Martin Coulthard other approaches to IP protection • if not legally protected by IPR, copying is not illegal! • so what else can you do? • confidentiality agreements – and other legal agreements • employment contracts – confidentiality, IP ownership, non- compete clauses – also consultancy & supplier contracts • secrecy SSSHHHH! • copy protection technology – e.g. encryption, DRM (Digital Rights Management)
  12. 12. © 2010 Martin Coulthard competitive advantage – business areas product or service team market funding strategy know how (tech, market) unique skills connections hard work passion culture quality complexity / difficulty of product design / user experience / object of desire ‘the whole product’ range of complementary products first to market cost structure 'sticky' products brand / reputation / trust choice of market segment / focus control of routes to market domination of target market segment location pricing size funding but which are sustainable?
  13. 13. © 2010 Martin Coulthard startup & early stage – where’s the edge? 1. flexibility and speed 2. low costs 3. entrepreneur’s / founder’s • skills, technical knowledge • market knowledge, experience, connections, reputation • vision, passion, commitment, determination, hard work! • look at yourself! 4. ability to innovate
  14. 14. © 2010 Martin Coulthard case study 1 - Renishaw • Sir David McMurtry and John Deere – Rolls Royce • invention at RR of touch probe to measure Concorde engine parts • RR supported them to get patents and start own company • fought US infringement battle (cost $1M+) • focus on innovative precision metrology, supported by IPR (36 UK patents) • “success comes from patented and innovative products and processes, high quality manufacturing, and the ability to provide local customer support in all its markets around the globe”
  15. 15. © 2010 Martin Coulthard case study 1 - Renishaw • virtuous circle of patents • patents let Renishaw charge a premium price (as competitors cannot copy) • which leads to good margins • which allows high spend on R&D - “18% of annual sales invested in R&D and engineering” • and a long term approach to business strategy • leading to more innovation and patents (though maintaining this in a large company is challenging)
  16. 16. © 2010 Martin Coulthard case study 2 – IPL Information Processing • software projects and consultancy services – not products or applications • 0 patents • focus on large corporate/public clients • and quality of delivery – business & technical – trust & reliability – responsiveness & agility – excellence
  17. 17. © 2010 Martin Coulthard case study 3 – Stonecube Ltd - IPR • invention: realistic, moving visualisation of objects with printed/decorated surfaces • key inventive step was a way to model the physical printing process to generate a 3D model • UK application went • US patent granted!
  18. 18. © 2010 Martin Coulthard case study 3 – Stonecube Ltd – strategy story 1. idea that there was a business opportunity if 3D graphics in PCs & Macs could be applied to commercial applications 2. visualisation of ceramic tiles 3. print 4. packaging and greetings cards 5. selling direct at relatively low price 6. ‘partnering’ – global sales + complementary products
  19. 19. © 2010 Martin Coulthard case study 3 – Stonecube Ltd • how did the patent help? • probably discouraged competitors • encouraged customers, investors, partners, potential acquirers – perception matters • at least doubled valuation for both angel investment and exit • even though we probably could not have fought infringement action (especially in USA) • even acquirer was reluctant to do so • you must be in the game – if you can be
  20. 20. © 2010 Martin Coulthard conclusions • think about climbing through levels 1, 2 and 3 • whatever your strategy, it must build on broad competence (no business excels at everything) • in a tech business IPR is often a key source of sustainable competitive advantage – look for the patenting opportunities – get in the game • but there are many other strategic elements • finding the right mix of elements for an effective competitive strategy is a journey • continuous improvement is essential
  21. 21. © 2010 Martin Coulthard image attribution • slide 1: England Rugby Squad 2003 by BombDog CC-BY-2.0, via Wikimedia Commons • slide 5: stack of cards by Fraser Waters CC-AN-2.0 CC-BY-2.0 • slide 6: Wood and CFRP tennis rackets overlayed by CORE-Materials CC-AT-2.0 • slide 7: Jahangir Khan by Mr Ian CC-AT-2.0

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