Is Competitive Advantage really sustainable?
Or is it a never ending journey?
There are only a few ways to really build competitive advantage -- let The Enterprise Group help you build advantage in your market.
There have been many "gurus" who have written about the creation and sustainability of competitive advantage. No one in my lifetime has contributed more to the thought on competitive strategy than Peter Drucker who observed that Management was not exactly a science nor an art, but rather a "Practice," comprised of elements of both.
More recently Drucker observed that the rapid global spread of management and technology undermined the sustainability of competitive advantage for the companies who had originated such knowledge. Communications technology and transportation advances have erased the distance barriers that once insulated workers in more developed countries (i.e. accustomed to a higher standard of living) from those in less developed countries, who would gladly work for a fraction of the money.
Some intelligent people still forget that the competition for jobs is world wide, based on who can create and deliver the best value to the customer. I cringe whenever I hear the unions talk about "owning" jobs. Jobs are "owned" by whoever competitively creates the best value, and only for as long as they do so.
Returning to the original premise of competitive advantage and the question of whether it is "sustainable," the answer, I contend is "maybe," and "only for a while." As long as the organization and its technology is responsive to the needs and wants of the market with the best value, the competitive advantage can be sustained.
But things change, and these days they change faster than ever. The most compelling issue I have been pursuing for the past year deals with this ability to know what the best value is and how to adapt/evolve to create and deliver it better than the competition--repeatedly. The challenge of understanding value is large, but much good work is being done in this area. The daunting challenge is for companies to become adaptive, generative learning organisms. Change is a cliche. Evolution, and revolution are needed to become and remain the best value provider. Some industries may evolve at slower or faster rates, but all will change dramatically. Whatever created the competitive advantage companies are enjoying now will not be good enough for the future unless it is based on a continuously learning, evolving and collaborating organization.
What creates sustainable competitive advantage? I learned from experience that it is a special combination of People and Technology capitalizing on change. The best people working together in a strong culture, and in partnerships with others, using effective processes and the best technology will create and deliver the best value. If they continuously change as the definition of value does, they will sustain that competitive advantage.
But, the best value at doing what? Deciding "what to do" requires a sound strategy The entire strategic thinking process should be focused on pursuing a business and market in which a competitive advantage can be built or sustained. The first and perhaps toughest part requires an honest and realistic strategic assessment of why you are in that business, and what you are good at that gives you the best chance for success against competitors.
Once strategic thinking is done properly, strategic planning can start. This is also an important step. A strategic plan should not require a binder to hold it; preferably they should fit on 4-5 pages. There are two reasons for this. The first is that conciseness demands focus, which demands real thought on priorities of what must be done and how to succeed. The second reason is that people readily and quickly can read and understand it, (and even carry it around with them to refer to frequently). Of course people can only understand the strategic plan if they have some involvement in its formulation and the if final outcome is communicated. It is amazing at how many companies limit the creation and communication of their strategic plan to the top few organizational levels. This is sort of like a football team where only the coach and the backfield know where the play is going but not the linemen. Sound far-fetched? It isn't. It is common (in business, not in football)!
Too often companies may also behave like a rhinoceros, stomping around heavily with earth-shaking intensity and then charging rapidly at some dimly seen, far off object only to lose interest part way there and stop to graze. At least a strategic plan will help keep that objective more clearly in sight and track the progress toward it. Assuming there is progress, this kind of process works fine--until conditions change, which is usually immediately. It is then that the breadth of organizational involvement in how the plan was developed becomes critical. Adapting successfully to unforeseen change becomes the key to success--the final ingredient in making competitive advantage sustainable.
But lest we heave a sigh of relief, that success is still dangerous. How to succeed will be different tomorrow than today or yesterday. The only sustainable competitive advantage is derived from a strong organization (people working together) using world class processes and technology (state of the need), while adapting to change, learning and evolving faster than the competition. And that organization must understand that such an advantage is not >n. It is a step on an endless journey, one in which the road always seems to be under construction.
