Every business faces an identity crisis during its evolution. Executives of young companies are constantly questioning how to build a differentiated identity in a saturated industry. Even pioneers in uncharted territory will, before too long, need to find their voice.
Intense competition means you’re onto something good. It also means your industry will shape you if you are not tenacious about defining yourself.
There are three fundamental strategies that are instrumental in distinguishing a company from its peers:
1. Cultivate a work environment that enables you to hire exceptional people.
The prospect of achieving true value-driven business hinges on your ability to recruit the best talent in the industry. “A” players want to work alongside “A” players, so there is nothing more important than building a strong nucleus of talent. Hiring hastily during an inflection point of your growth can be the kiss of death in creating a culture of excellence.
Nothing gets top-tier employees more excited than being challenged to take on outsized responsibility, yet most work environments still adhere to a stripes-earning, teeth-cutting, dues-paying mentality that stifles growth.
One of the ways we’ve been able to succeed in attracting exceptional talent is by showing we strive to be a perfect meritocracy, unfettered by the requirements around age or experience.
2. Question everything but challenge selectively.
Adhering solely to industry standards and best practices is a surefire way to camouflage a company in the market. Businesses strongly positioned for long-term success tend to believe adamantly that their industry’s best practices have yet to be discovered. There is an important distinction between questioning every industry assumption and assuming that every industry practice is flawed – it is a thin line between curiosity and arrogance. In the quest to innovate, leave no stone unturned. If the industry got it right, turn that stone back over.
For instance, when we set out to build Urban Compass, we aimed to innovate on three fronts:
Scope: while most real estate firms tackle a very thin sliver of the real estate experience, we wanted to build a product for the holistic experience – search, schedule, visit, purchase, move, and connect to your new neighborhood.
Technology: we wanted to bring data and technology to a space in which no one had found a way to harness these elements in a valuable way.
Compensation: we challenged the assumption that agents should be paid on commission and piloted a salaried real estate agent model, in which agents received bonuses for delivering good customer service.
While we’ve gained tremendous traction because of our innovation on scope and technology, we found that our initial innovation on compensation was actually detracting value: it prevented us from hiring top performing agents who wanted to benefit from the upside of commission, and misaligned incentives for our current agent base, who were being paid to be nice, not to help their clients close deals. We’ve since turned that stone back over, and we now match the industry standard on paying out commissions.
This was an important lesson for us: Be exhaustive in questioning industry assumptions, be selective in challenging them.
3. Focus relentlessly on value.
Proclaiming the need to focus on value may sound like a truism, but it is remarkably easy to forsake the path of substance.
Businessman and author Ben Horowitz aptly said in order for a customer to switch to your product, it needs to be 10 times better than the product they are currently using. The only way to ensure this is by employing a laser focus on value and eliminating all distractions. This demands not only discernment between value and distraction, but requires the discipline not to pursue the distraction.
As a young company, you’ll face this challenge every day, and sometimes the choice is between less engaging tasks to create value or more interesting tasks destroying value. Making the choice to select substance over splash is critical in building a deep, unique product.