How to Frame Your Competitive Advantage
What’s New: Competitive advantage is no longer static. With 70% of new products and up to 90% of process improvements copied within a year, staying ahead requires constant adaptation.
The average lifespan of S&P 500 brands has plummeted from 61 years in 1958 to a projected 12 years by 2027 (Innosight, 2019).
Regularly reassessing your Points of Difference (PoDs), Parity (PoPs), and Compromise (PoCs) is essential to staying relevant in an ever-changing market.
Without this agility, businesses risk being outpaced by competitors and losing customer trust.
Why It Matters: Clear frameworks help businesses adapt, differentiate, and thrive in dynamic environments.
Redefining Competitive Advantage
The challenge: Competitive advantage stems from attributes that allow your brand to outperform competitors. But what should you prioritize? Without clarity, many leaders fall into costly trial-and-error strategies.
Michael Porter’s insight: Competitive advantage is "not about being better than your competition, but about being different."
Key framework: To define and communicate your advantage effectively, start with the foundational frame—Points of Difference, Parity, and Compromise.
Michael Porter \ Credit: Aric Nicholson
Points of Difference (PoD): What Makes You Stand Out
PoDs answer your customer’s critical question: “Why should I choose you?”
Direct competitors sell similar products in your category.
Indirect competitors pursue the same customers with alternatives (e.g., coffee vs. mineral water).
Case studies:
Target: Combines fashion and price by focusing on design and economies of scale.
Dollar Store: Delivers convenience and price by operating in underserved rural areas.
Porter’s perspective: Differentiation, not superiority, drives competitive advantage.
Points of Parity (PoP): Essential Must-Haves
PoPs ensure your offering meets baseline expectations. Without them, your PoDs won’t matter.
Defensive use: PoPs as table stakes. For example, a bank must offer checking accounts, ATMs, and savings plans to even compete in its category.
Offensive use: PoPs as a break-even strategy. Target reduces price gaps with Walmart, neutralizing its advantage, and shifts focus to design and convenience.
Key insight: Customer expectations for PoPs evolve due to trends, technology, and regulations—staying current is critical.
Points of Compromise (PoC): Strategic Trade-Offs
PoCs involve deliberately falling short in one area to strengthen another.
Alex Chernev’s addition: While Michael Porter emphasized the power of saying “no,” Chernev highlights PoCs as a critical third dimension in competitive advantage.
Examples:
Nintendo: Focuses on affordability and accessibility by compromising on cutting-edge graphics. This deliberate trade-off enables low prices, unique features, and broader audience appeal.
Jam study: A brand offering 75% fewer options achieved 10x the sales of its variety-heavy competitor, proving focus can be a competitive advantage.
“The essence of strategy is choosing what not to do.”
Points of difference, parity, and compromise
Practical Applications
Reflect:
Are your PoDs still clear and relevant?
Are you meeting new PoP expectations?
Are your PoCs aligned with deliberate priorities?
Collaborate:
Share the PoD, PoP, and PoC framework with your team.
Survey customers quarterly or annually to compare perceptions of your brand against competitors.
Use tools: Brainstorm PoDs, PoPs, and PoCs on whiteboards or sticky notes to ensure team alignment and clarity.
Result: Smaller, more frequent adjustments reduce costs and keep you ahead of market changes.
Additional Frames for Competitive Advantage
11 Key Product and Service Decisions by Alex Chernev
PoD, PoP, PoC: The foundational frame for clarity.
Monetary, Functional, and Psychological Value: Understand how your competitive advantage appeals hierarchically to customers.
Example: Walmart shifted from “Always Low Prices” (monetary focus) to “Save Money, Live Better” (adding psychological value).
Chernev’s Seven Tactics: Explore Product, Service, Brand, Price, Incentives, Communication, and Distribution as core advantage categories.
Elements of Value (Bain & Co): A detailed framework for identifying PoDs in B2B and B2C contexts.
11 Key Factors: Perfect for refining functional advantages within PoDs, PoPs, and PoCs.
Final Thought
Competitive advantage isn’t static—it requires ongoing vigilance and adaptation. Frameworks like PoD, PoP, and PoC help you navigate change, reduce risks, and sustain differentiation. Use them to align your strategy, team, and customer perceptions, staying one step ahead in a fast-moving world.
Interested in learning more about good frames for leaders?
Book us for a Talk called, Think in Fast-Frames™ where we equip your audience with a proven shortcut for more effective thinking—better questions and better decisions, no matter how non routine.
