Competitive advantage is a concept that is often misunderstood. Many individuals mistake it for being good at something in particular or being the first in market with a product or offer.
Unfortunately, these misconceptions are often held in conjunction with the belief that a competitive advantage is ongoing and upon establishment, does not require any updating or refinement to enable the business to stay ahead of competitors and remain responsive to a dynamic business environment.
However, the reality is that a competitive advantage is transient in nature and must evolve alongside a business whilst being protected to safeguard your business.
What is competitive advantage?
A competitive advantage refers to the ways a business can create and deliver products and services better than its competitors. It is something that cannot be easily replicated, is exclusive to a business and serves as one of the main differentiating factors that sets a business apart from its competitors. Essentially, your competitive advantage is what underpins the strength and effectiveness of your IP.
In today’s dynamic business world, competition is more than just products and services. It encompasses factors such as who owns an idea, who has the rights to an innovation first, as well as who is the true owner and protector of the brand. Therefore, in today’s market landscape, protecting your competitive advantage (i.e. your IP) is a vital component of safeguarding the sustainable growth and longevity of your business.
The risk of not protecting your competitive advantage
Failing to protect your competitive advantage (i.e. your IP) makes it easier for competitors and new entrants to the market to replicate your offering. This can have a multitude of adverse consequences including but not limited to:
- Reputational damage
Whilst brand trust and credibility take years to build, both can be lost in a matter of moments. When IP is unprotected, competitors can replicate your offering, undercut your prices and acquire some of your market share. Furthermore, if the replica is of inferior quality, customers will associate this with your business, resulting in brand attrition.
- Lack of innovation
Unprotected IP often stifles innovation and commercialisation within a business as it impacts upon the motivation and mindset of the team members. This is primarily because without IP protection, their ideas can be replicated without recourse, resulting in reduced motivation to develop groundbreaking or market leading products or services.
- Diminished business valuation
The inability to prevent competitors or others from replicating your offerings and innovations can have unfortunate financial consequences. This lack of exclusivity, inability to licence or franchise the offerings, as well as increased financial and legal risks, all contribute to an increased difficulty with regards to attracting investment, the ability to scale or the ability to sell a business in the future.
The risks of not protecting your competitive advantage are significant both for the short and long-term future of a business. Therefore, protecting your IP in terms of trade marks, logos and designs is imperative as these represent your reputation and credibility and are integral to protecting your market share.
Not securing your IP directly undermines your competitive advantage as it makes your differentiators easier to copy, harder to defend and less valuable to customers and investors, thereby exposing your business to multiple serious risks that can undermine growth, profitability, and reputation.
The value of protecting your competitive advantage
Protecting your competitive advantage (i.e. your IP) is essential as it affords you legal exclusivity over key aspects of your products, services or brand, making it harder for competitors to replicate.
This exclusivity facilitates the differentiation of your business in the market and the maintenance of both customer loyalty and profit margins, all of which are core elements of competitive advantage.
Furthermore, a structured and solid IP portfolio signifies innovation strength, reducing any perceived risk for investors, which helps to further solidify your market position and value.
Therefore, regardless of the size of the organisation, having an effective IP strategy is imperative in today’s business environment and should be considered as important as managing your finances or operations.
An effective IP strategy will help to:
– Secure your competitive advantage – Generate revenue streams – Serve as a source of competitive intelligence – Attract investors and partners – Avoid and mitigate relevant risks –
How to protect your competitive advantage
Often business owners and operators don’t take the necessary steps to protect their IP as they are unsure if there is any valuable IP within the business. However, every business, undoubtedly, possesses valuable IP as it encompasses the unique creations, knowledge, and intangible assets that differentiates it from competitors.
IP can be found across numerous areas of a business including but not limited to core business activities, brand identity, unique features, know-how, collateral, materials, designs and innovations.
Whilst the optimal time to protect your IP is in the early stages of your business, the second-best time is the present. However, before you commence developing your IP strategy, it may be beneficial to gain an initial understanding of what IP you may possess before seeking legal assistance to register IP rights.
At Antcliffe:Scott we have developed a five-step process you can utilise to help identify your own IP before seeking legal guidance. This process is not a replacement for legal advice, merely a supporting tool to help you better understand what intangible assets may need protection. Simply click to download your FREE copy here.
In addition, once you have registered your IP, it is prudent to conduct regular IP audits on a regular basis as well as in alignment with investment cycles, new product development, or market requirements to ensure your competitive advantage remains protected.
Establishing a well-structured and disciplined IP strategy is imperative not only to protect your business today but to safeguard its success and longevity in the future. If you or a business you work with needs some IP guidance, feel free to reach out to our team at Antcliffe:Scott. Our in-house IP division can provide you with guidance you need to ensure that your IP rights are managed accordingly, protecting your business now and into the future.