How to find your killer USP
(This is an AI generated audio.)
You’re not an entrepreneur if you don’t innovate. You’re not innovating if you do business like everyone else does. I’m going to show you how to find what, in marketing terms, is called your “unique selling proposition” and make great business decisions at the same time. This is how Steve Jobs and Elon Musk did it.
“First principles” is a term commonly used by physicists and made popular recently by Elon Musk. It means looking at what really matters at the most fundamental level. In marketing, it means looking at what really matters to your customers. It also means ignoring what everyone else thinks and making your own decisions.
Steve looked at the Walkman and said, “I can to better than that!” He replaced the mini cassette with flash memory and introduced the iPod. Then he looked at the market-dominating Nokia cell phone and thought, “How dumb can you be? All that processing power and all they use it for is a telephone.” He combined iPod, GPS, mobile phone and a few other gadgets in the same case and invented the smartphone. The results: Nokia dropped from 50% market share to less than 3%.
Steve didn’t take a survey or conduct any other kind of market research. The fundaments were that there was an enormous demand for the Walkman, the mobile phone, and the GPS. Then he asked, “What are the first principles in building these devices?” The answer was that they all needed microelectronics, batteries and displays. Voilà – the iPhone.
Nokia management knew they were in the mobile phone business, not the entertainment business or the navigation business. They never even thought about putting all three together. They learned a hard lesson.
Elon Musk saw GM produce an electrical car, the EV1. It was ugly, short ranged and heavy. In GM’s eyes it was a flop. They were so embarrassed that they recalled and crushed them all.
Elon asked, “Why so ugly; why golf cart batteries?” Elon put a bunch of Panasonic laptop batteries and an electric motor in a Lotus car body and sold the beautiful Tesla Roadster eventually raising the price to $150,000.
Elon didn’t take a survey or conduct any other kind of market research. The fundamentals were obvious. He knew that enough people were very concerned about global warming. He reasoned that GM failed because they produced an ugly car that had an unworkably short range. His target was 300 miles (500 kilometers). The principle that he had to examine first was usable power per kilogram. He discovered that Panasonic laptop lithium-ion batteries have over ten times the usable energy density of the golf cart batteries in the EV1. The results: Tesla is the only car manufacturer making a profit during the pandemic.
GM management knew how to make electric vehicles. They had been making golf carts for years. No surprise that they made a street legal golf cart. No reason to innovate, they were the experts.
The market research that both of these entrepreneurs did was open their eyes. Steve saw that the Walkman sold like hot cakes; he saw that mobile phones were a must-have to anyone who had the money or wanted to look cool; and he saw the phenomenal growth of the Internet.
Elon saw that enough people were concerned about global warming and there were always plenty of early adopters to buy the world’s first high performance, beautiful, electric sports car.
The really important characteristics that Steve and Elon shared were that they could see what anyone should have been able to see if they even tried to think from the customer’s perspective. They saw what was possible that no one else thought of. And they had the courage to do what they knew could be done.
By the way, there are times when doing what everyone else is doing is the smart thing to do. But that is the subject of another paper.
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