Achieving a 10X Advantage
After you’ve won control of a key external constraint, the Scaling Up Performance Platform will help you identify the equivalent in your business model. Labeled an X Factor, it’s an internal 10x advantage over the competition. This advantage helps strengthen the moat around your business and signals to a strategic buyer what they could achieve, given their much larger resources.
Discovering your X-Factor is achieved by solving an industry bottleneck or revolutionising the marketplace with a new way to create customer value or conduct business.
How to Find Your X-Factor
Find the bottleneck in your industry. Verne Harnish in his book Scaling Up, states that the first and easiest way to find your X-Factor is to look for common industry bottlenecks that, if solved, could put your business in the driver’s seat. These bottlenecks are things you or your consumers generally hate about your industry and centre around the three factors we all balance: Time, quality, and cost. Harnish offers a great suggestion on how to find these challenges: Look at the breakout session content from your last few industry tradeshows and find patterns. You will likely find that you and your competitors are all faced with similar problems, that, if solved, could help you dominate your market.
Once you’ve found your X-Factor, keep it under wraps. It’s only a matter of time before competitors discover it and try to copy it. By then, you’ll already be working on your next X-Factor. This is the essence of good strategy: Continually finding unique, compelling ways to make what you and rest of your industry currently do obsolete in such a way that you gain a 10-100x competitive advantage. Your business’s longevity depends on it.
This internal advantage is like a buyer knowing there is a “Rembrandt in the attic” of a home they’re buying. Buyers are going to be much more willing to offer considerably above asking price to secure this outsized internal advantage.
Is there an aspect of the business where you outperform the competition by a factor of 5 - 10? Nail this and your valuation will soar.