Andy Nurumov

Author: Andrew Nurumov

Why do some companies significantly improve their market share whereas others cannot increase market share to be at least cash positive? Why don’t attempts of disruptors lead to taking a significant market share? Very often answer to these questions lays in absence of company’s competitive advantage in Operations.

Ideally, it is to construct edge in operating model during incubation of company. And it is applicable to any industry. For example, in VC & PE industry, founders of Andreessen Horowitz created totally new departments for VC company in comparison of their competitors. These departments help founders in strategic part of operations, PR, and hiring. And even this decision doubled its headcount, finally it was a driver for VC company success, and later other industry leaders followed their approach, creating new departments. If you are interested in details – you could read Harvard Business School case about the company.

Second, it is important to differentiate what is not a competitive operational advantage. Many founders & investors think that it is just usage of technology in operations that transforms a market from offline to online. If you hear this, you should know that company has a problem at least with competitive advantage. Higher probability that company has a problem with growth and/or product-market fit. Founders have to be specific with regard to their competitive advantage without too generic explanation.

Ideally, if edge in operating model transforms in financial or operating results as soon as possible. In particular, almost all successful digital marketplaces have operational competitive advantage(s) that is key pillar for their operating results and enormous sizes.

Operational competitive advantage could be the following: (a) Organization of operating process X times more effectively in terms of money or time than (in)direct competitors, (b) Process that allows to make decisions quicker or (c) Process that gives competitive advantage to customers.

How to create operating model edge in your company? There is no magic pill. Only if your business-model is copy from different market, advisors could say you in details what to do. Otherwise, nobody says to you what is right until he or she starts to execute it in your company. CEO’s responsibility is to define, organize, and lead the process that allows to have operational edge.