The number 1 challenge is most ideas already been thought of by someone, and probably already executed. Let’s say I want to build an accounting system or a coffee machine, and there are easily thousands of solutions out there. So how do I persuade others to buy my solution?
Niche
I could specialize or target the niche, such as accounting system for hotel, or coffee machine for geek. We could go local as well, providing something in our own language and culture. There are probably fewer competitors there (but still a handful of them), and the pie gotten smaller as well. So I have to evaluate if the pie is big enough for me, and how could I beat these competitors.
Innovation
We might try to put in a few tweak to make our solution better in terms of performance or user friendliness, but it might not be enough to win customers over with these minor enhancements. We need “revolutionized” certain conventional ways of doing things, creating something fresh and inspiring. For example, Opera introduces Tab Browsing, Add-On (Plug-in) made Firefox popular, and Chrome with its clutter-free Interface and Lightning speed. We need to be more than just another solutions, though the competitor will catch up with these innovations pretty fast.
Cutting-edge Technology
We could introduce some cutting-edge technology into our solutions, such as what Google and Bing is doing with the current search engine war. But not many of us could effort to spend so much money in R&D to gain a competitive edge.
Price
We could always set a lower price, or even give our free version (and charge for premium version). Though price does play a role, but marketing is more important in order to let customers know your solution exist in the first place.
Marketing
Most of the times, I think the features of the solutions itself is nothing if compared to the marketing effort. I think a lot of accountants would agree UBS accounting software is not the best in the market, but it’s the most widely used and most well known in Malaysia. Even though I could create a better accounting system, I don’t think I could beat UBS without a huge marketing budget. Organic growth is only possible when the competition is non-existent or too weak.
People Connection
Besides marketing, connection is equally important in the sense who do you know (who could help you sell more). Basically I would not create a product if I didn't know someone who could at least help me sell a dozen copy (the quantity depends on the price). We need either a very solid salesperson, or someone who know people around the industry. May the best win may not hold true most of the time, triumphed by the one with more connections.
Late Comer Strategy
Since most of our idea is not really new, thus there are probably many similar solutions already capture most of the market share. We can try to hit it with more marketing effort, but certain solutions are “sticky” and made it hard for their customer to migrate to other platform. How can we steal their market share? How about a feature which could migrate the entire UBS accounting to my accounting system easily?
Conclusion
What ever space we plan to compete in, there shall always be competitors: sometimes they are huge (Google, Microsoft, etc), and sometimes there are ten thousands of them. Very seldom we shall gain the first mover advantage, and being a first mover we could be limited by resources and market idea (and acceptance).
How can we really compete in this harsh environment out there, where we are limited by manpower and money? In such situation, we have to go back to the idea itself. We must be able to solve a problem which haven’t been solved, or solve it better than others. It’s true that bigger company have more brains and financial muscle to do things in a bigger scale; we just have to come up with some nifty which everyone likes (my head is banging hard now).
Now I am banging my head on how my idea could survive the onslaught from my biggest ally and foe: Google Buzz & Google Map.
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