The Secret to Creating Value That Competitors Cannot Copy In competitive markets, doing what everyone else does guarantees average results. Vendor or consultant promoted "best practices" often lead to institutionalised groupthink.
By Ritavan Edited by Patricia Cullen
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Following the herd is a reliable path to mediocrity. If margins decay and economic moats evaporate in commoditized industries, then differentiation requires something more uncomfortable - the courage to both reject the popular path and be right. That doesn't mean stubbornly clinging to eccentric views. It means constructing your own working model of the world. A model of how demand concentrates, how assets can be re-purposed, how data compounds, and then updating it ruthlessly with empirical evidence.
The mindset is simple but difficult as you must create strong opinions, but be willing to let them change. You must form a point of view, even when uncertainty clouds the future. Then, instead of defending it to the death, you interrogate it. You look for signals that challenge your thesis. In doing so, you evolve faster than rivals stuck in consensus groupthink.
Tech Consumption is Not Innovation
Buying technology is easy. Anyone with a budget can stitch together cloud services, off-the-shelf models, and dashboards. If your "advantage" depends on tools your rivals can buy today, you don't have any advantage, you have a shopping cart.
That's why vendor SaaS solutions, or plug-and-play analytics, rarely create safety moats. They are table stakes. Widespread consumption of the same tech stack leads to commoditization: performance converges with competitors, margins decay, and your hard-won "differentiation" melts away. In competitive markets, when everyone adopts the same tech stack, returns drift toward average. That's profit entropy. Amazon isn't Amazon because it bought cloud services. They became Amazon because they built AWS when nobody else would, turning their internal scale problem into a compounding advantage.
The Only Safety Moat is a Proprietary Edge
In markets where imitation is swift, the only durable edge is one that rivals cannot copy at the same cost, with the same speed, or without undermining their own business. Such advantages tend to fall into three camps: legacy assets, such as physical stores, brands or supplier networks; structural positions, often rooted in non-digital advantages or distinctive customer access; and compounding systems, where feedback loops ensure that a product improves the more it is used.
Three cases illustrate how firms have translated legacy assets, structural positions, and compounding systems into moats that rivals can't match without eroding their own advantage.
Walmart vs. Amazon: Stores as a data engine
Pure digital players like Amazon can track online clicks, but they can't see how a family of four navigates a physical store. Walmart can. By combining in-store behavioural data with e-commerce data, Walmart creates a complete demand profile that Amazon cannot replicate without buying or building tens of thousands of stores.
This is counter-positioning at its best. Walmart can sell suppliers high-resolution demand insights, bundling online and offline behaviours, while Amazon can't without admitting its "online-only" model is a limitation. That makes Walmart's data proprietary and monetizable.
Lufthansa: Doubling down on "obsolete" jumbos
When the entire aviation industry retired its jumbo jets, Lufthansa took the opposite approach. Their ownership of scarce take off and landing spots at Frankfurt and Munich meant that keeping bigger jumbo jet planes could earn more per slot than the smaller ones.
Every other airline framed these big planes as "gas-guzzlers." Lufthansa reframed them as slot multipliers and their unique leverage. By standardising interiors, managing fuel costs, and timing the strategy to demand recovery, it turned a supposed liability into an edge.
The outcome was that Lufthansa captured demand on premium routes that competitors simply can't, while rivals have no way back without massive reinvestment.
Turkish Airlines: Winning by not buying the A380
While Emirates bet the house on superjumbo planes, Turkish Airlines asked a simple first-principles question: Does Istanbul's geographic hub need Superjumbos or frequency?
The answer was frequency. By flying smaller, more fuel-efficient jets, they connected hundreds of destinations, kept load factors high, and scaled faster, thanks to frequency, than rivals stuck with a few superjumbos. Their moat wasn't technology or aircraft glamour. It was network density and frequency, compounded by a uniquely strategic hub location.
How to build your proprietary edge
Here are five steps to help you find your unique unfair advantages, that you can then leverage in the data-driven digital paradigm.
- Map demand power laws
Don't build for the "average" customer. Focus on segments, products, and channels that concentrate demand. Actively starve the rest if inevitable. - Turn legacy assets into data engines
Your stores, field teams, distributors, or service density are moats if you leverage them in the data-driven paradigm. Use them to generate proprietary data at resolutions competitors cannot see or copy. - Design closed-loop systems
Proprietary data is not a static file in your data lake or a table in your data warehouse. It's a loop where every interaction generates new signals that improve outcomes — cross-selling, renewals, purchases, churn, defaults. Build products that learn by design. - Counter position ruthlessly
Ask yourself what can you do that rivals cannot copy without cannibalising their greatest source of revenue or profits? Subscription models, direct channels, dynamic pricing. Their hesitation and fears are your moat. - Focus on compounding flywheels
Every new customer should make your offering better. Safe, consensus initiatives in a competitive market will make you average. Bold, compounding based on your unique unfair and counter positioned leverage makes you win big.
You cannot buy a safety moat. You can only build one. So, stop chasing groupthink industry "best practices" and consensus tech stacks. They lead to commoditization and profit entropy, not big wins in a competitive market. Instead, look for the winning edges you can own: concentrated demand, unique assets, closed-loop data, counter-positioning plays.
Lufthansa's jumbo fleet, Turkish's network density and frequency, and Walmart's data flywheel all went against the industry standard. That's exactly why they work. Design your business so every interaction makes the next one better, and so that competitors cannot copy without hurting themselves. That is value they cannot copy.
