How to Build Your Competitive Moat
When describing what separates a business from its competition, Warren Buffet liked to refer to what he called the “economic moat” and said:
“The key...is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage.”
Buffet refers to the moat in terms of investments, but it also applies to entrepreneurs themselves. Just as successful businesses have competitive advantages, we all have individual traits that give us an edge over others in our industry. In order to make your moat as wide as possible, it helps to know exactly what resources you already have so you can make the most of them. (Spoiler: Being talented isn’t on the list.)
You know how to build the right team
Your company might be a castle in need of protection, but no man is an island. Mixed metaphors aside, anyone who has ever hired employees understands how hard it is to get it right. You need people who are smart, independent self-starters, but also team players who prioritize common goals. On top of that, all of these personalities need to fit well together.
Building a satisfied and motivated workforce will elevate your business far beyond what any one individual can do alone, no matter how capable they may be. As workplace expert and writer Patrick Lencioni put it: “Not finance. Not strategy. Not technology. It is teamwork that remains the ultimate competitive advantage, both because it is so powerful and so rare.”
In order to keep those teams intact, it’s essential to create a great corporate culture. I’ve grown my company, JotForm, slowly and carefully. Even so, by the time we’d hit 28 employees in our sixth year, our communication had taken a hit. At that point, I decided to split everyone into small, cross-functional teams, each of which had a dedicated office space. It’s amazing how quickly things improved. Finding a way to return to our lean, collaborative roots not only made everyone happier, but our product improved as well. Developing the right style takes time, but when you figure out what works for you, you’ve gained a huge edge.
To illustrate this point, let’s look at the plight of two lizard species in Florida: Scientists observed an invasive species from Cuba that began occupying the same trees as a native species, forcing them to vie for their habitats. But rather than dig in their heels and face the possible loss of their territory, the native species did something interesting: They moved further up the tree. Within just 15 generations — lightning speed, in evolutionary terms — the native species already developed bigger pads on its toes, with more sticky scales for better grip. There was no need to fight the invaders for space: They simply changed themselves to fit their new reality.
This phenomenon is called "character displacement," meaning that species in competition with each other evolve to take advantage of different ecological niches. It’s not so different from what an adaptable founder does, whether it’s a changing technological landscape, or when their market is invaded by, say, Google or Apple. Being adaptable isn’t about being better — it’s having the mental flexibility to handle changing circumstances.
You have patience
“Move fast and break things” was long known as the cri de guerre of Mark Zuckerberg, and the message has lingered around startup culture even after Facebook itself professed to have moved on. In a world where speedy disruption is prized above all else, the value of patience is often overlooked. It shouldn’t be.
In an article for Forbes, business growth advisor Jonathan Creaghan writes that one of the biggest challenges to a well-executed idea is an impatient leader. The problem, he argues, is that a leader spends so many hours conceptualizing an idea or change that when it comes time to act, he or she expects the rest of the team to be on the same page instantaneously. Unfortunately, this is not often the case.
Rather than getting frustrated and moving on from the project, Creaghan advocates for what he calls “strategic patience,” or harnessing that impatience and using it to create an implementation strategy. In most cases, taking the time to do something right is actually much more efficient than doing it hastily the first time.
You can tolerate discomfort
Humans are programmed to avoid pain and seek out pleasure. Back when merely staying alive to see another day was an ongoing challenge, this made perfect sense.
But what these early instincts didn’t teach us was the power of tolerating discomfort. This can mean delaying instant gratification in pursuit of a long-term goal, or having the mental toughness to take setbacks in stride and come back better for having experienced them.
Sarah Clatterbuck, Director of Engineering at Google, writes that this is one of the most important skills she developed as a competitive athlete. “Mental toughness comes from adversity and an ability to be comfortable with suffering,” she says. The ability to suffer is a major advantage over those who rely on talent alone, whether in sports or in their careers. “I can wrestle with difficult things long enough to take deliberate action — much like when I am in a bicycle race and can wait to find the right line for a sprint despite the searing pain in my legs and lungs.”
You can stack your skills
The truth is that while you may have many qualities and attributes, it’s unlikely that you are the best at any one of them. That’s okay — because that’s where skill-stacking comes in.
The premise of skill-stacking is this: Rather than trying to be the absolute best at one thing, put your energy into mastering a combination of skills. In an article on Medium’s Forge, Tomas Pueyo, VP of product and development at Course Hero, explains that the best skills to stack are those that complement each other:
“Imagine someone who is reasonably good at public speaking, fundraising, speech-writing, charisma, networking, social media, and persuasion,” he writes. “Who is this person? A successful politician. The most successful politicians don’t seem to be off-the-charts amazing at individual skills, but check off the right boxes that allow them to thrive.”
Being smart and talented is great, but those things alone won’t lead you to success. Instead, focus on the qualities that make you, you. Then, start building that moat.