X Factor? What is that?

X-Factor? What is that?

Why do some companies excel and others do not? What makes some companies successful while other struggle? We are all looking for competitive advantage. Companies that have found it usually have identified their X-Factor.


Your X-Factor comes from creative innovation and dynamic brainstorming to help your company develop a 7-10 times advantage over other competitors in your industry.
Here are some characteristics of an X-Factor.

  • Solves an industry bottleneck
  • Gives 10x competitive advantage
  • Revolutionizes the marketplace
  • Matures and will be copied

There are several aspects of X-Factors that are important to understand in order to maximize their use.

First, you seek X-Factors in your company by trying to overcome common industry bottlenecks. Look for bottlenecks by asking questions like: “What is the largest cost component in my industry?” or “What is the part of my industry that I hate the most?”

Next begin looking for solutions that will give you an exponential competitive advantage (7-10x) for your industry.

Once you find an X-Factor, other competitors will eventually figure it out. Therefore, start working on your next X-Factor as soon as you can after you launch your last X-Factor.

X-Factors take some time to find. Solutions to complex problems that have stumped your industry for years won’t appear with just one brainstorming session. My purpose is to put this concept on your radar screen and to give you another lens of perspective.

Outback Steakhouse

Outback Steakhouse provides a classic example of the X-Factor and its importance and impact in getting ahead of your competition.

In the late 80’s the average tenure for a store manager was 6 months. In most chain restaurants, competent restaurant managers got promoted to area manager positions in order to make more money, or they left to start their own restaurants. Big chains were spending millions to recruit/train new managers.

In 1988 – Outback initiated a breakthrough compensation plan based on their prior experience in the industry. They asked key managers to sign a 5-year contract and to invest $25K in the restaurant they would manage in exchange for 10% of the store’s cash flow and a higher than industry average base salary. The deal could turn $45K-per-year employees into millionaires.

Ultimately, the experiment worked. 95% of managers stayed with Outback for 5+ years, giving the company a 10x advantage over its rivals, and 80% of employees renewed their 5-year contacts.

X-Factor Exercise

Here is a simple 5-step process to help you and your team focus on and find X-Factors.

1. Think. Convene your leadership team and think long and hard about your sector or industry. What is the one bottleneck in your industry that you could solve to gain 7-10 times advantage over the other competitors in your industry? A key here is to focus on the question, not the answer; and to think outside your “box” as much as possible.
2. Ask. Once you determine a bottleneck, keep asking questions about it until you have determined a leverage point to base a solution (and that hopefully has the potential to revolutionize your industry).
3. Look outside. Open up to input from others that you trust. What is happening in other industries that may have a parallel? Answers can come from the strangest sources.
4. Do it now. When your leadership team has the answer, DO NOT wait for anything — go do it now! And, keep it a well-guarded secret.
5. Go Back to Step 1. Your X-Factor will eventually be copied and become “table stakes”. Keep innovating!

Contact me for help identifying your X-Factor. Good hunting and good luck!

All the best

© 2014-2020 David Paul Carter. X Factor exercise derived from 7 Steps to Determine Your X Factor by Barrett Ersek.

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