Instead of copying what top competitors do well, analyze what they do poorly or neglect. Excelling in those specific areas creates a powerful differentiator. This is how Eleven Madison Park focused on rivals' bad coffee service to become the world's #1 restaurant.

Startups often fail by making a slightly better version of an incumbent's product. This is a losing strategy because the incumbent can easily adapt. The key is to build something so fundamentally different in structure that competitors have a very hard time copying it, ensuring a durable advantage.

Traditional supermarkets derive significant revenue from suppliers through slotting fees and co-op marketing. Trader Joe's rejects this entire "shadow economy," making money only when a customer buys a product. This aligns their incentives completely with the customer, ensuring shelf space is earned by demand, not supplier payments.

Home Depot succeeded by "counter-positioning" against incumbents like Sears. Their high-volume, low-price model was so different that if Sears tried to adopt it, they would have damaged their existing high-margin business. This strategic dilemma paralyzed competitors, allowing Home Depot to capture the market.

Unlike competitors whose store brands are cheaper versions of national products, Trader Joe's mandates that its private label items offer a unique value proposition. This could be a novel ingredient, unique packaging, or a better price on a superior item, reinforcing their brand as an innovator, not a discounter.

Chomps' first major retail partner, Trader Joe's, operates uniquely by handling all in-store marketing and merchandising. This simplicity allowed the two-person founding team to scale into retail without needing a massive operations team, de-risking a critical growth phase.

Pivoting isn't just for failing startups; it's a requirement for massive success. Ambitious companies often face 're-founding moments' when their initial product, even if successful, proves insufficient for market-defining scale. This may require risky moves, like competing against your own customers.

Like Sol Price at Costco, founder Joe Coulombe was a retail genius who perfected the Trader Joe's model but had no interest in national expansion. He intentionally kept the chain small and local. It was his successor, John Shields, who took the proven playbook and executed the national growth strategy.

To differentiate from the incoming 7-Eleven juggernaut, Joe Coulombe focused on hard liquor. Complex licensing and "fair trade" laws that guaranteed profit margins created a regulatory barrier that larger, out-of-state competitors wouldn't bother with, buying him time to build a unique brand.