The business week article “How To Hit A Moving Target” provides interesting insights on competitive advantage. I liked the central idea of the article, which is that competitive advantage is an ongoing process and not a one time event, the author makes the point that:
These days all competitive advantages are fleeting. So the smartest companies are learning to create new ones—again and again and again.
The need to continually seek competitive advantage is the result of increased competition, where competitors are able to copy or imitate you product over night. Yet according to the article some organisations have been able to successfully retain their competitive advantage over time, they do this by applying the following ideas:
- Experiment fearlessly. “‘If you want to do a breakthrough, don’t look around,’ says Daniel Lamarre, president of Cirque du Soleil. ‘Look ahead.’”
- Don’t just get bigger, get unique. “Is the quest to be an 800-pound gorilla the smartest strategy? Harvard Business School strategy guru Michael E. Porter doesn’t think so. In an age of infinite choice, he contends, there’s a better way to achieve competitive advantage. ‘There is no best auto company, there is no best car,’ he says. ‘You’re really competing to be unique. One can now be a very, very large company by really meeting a very well-chosen set of needs — but doing it on a global basis.’”
Why compete? Create new markets? Niches are nice, but inventing a new market is a whole lot better. - Obsess about customers. “‘Heavy equipment is an intensely competitive business, but No. 1 Caterpillar keeps its eyes on the prize: what its customers want. Instead of just selling that familiar yellow gear, the Peoria company sells service — or, as its informal motto says, ‘Buy the iron, get the company.’”
- Give as good as you get. “a lot of companies are taking an even bigger leap forward. They’re tapping into the cooperative crowds that create things like open-source software, eBay’s massive marketplace, and Skype’s peer-to-peer Net phone network.”
- Get personal. “‘With personalization, you have infinite ways to differentiate,’ says Prahalad, whose 2004 book The Future of Competition: Co-Creating Unique Value with Customers, co-authored with Venkat Ramaswamy, urged companies to ‘co-create’ products with customers.”
- Stay hungry. “It’s a hard world,” shrugs Boston Consulting Group’s George Stalk, co-author of 2004′s Hardball: Are You Playing to Play or Playing to Win “It’s ‘I’m going to eat your lunch or you’re going to eat my lunch.”‘
Today, even the most dominant companies need to stay on their toes. The truth is, there’s no final winner in the global game of corporate competition. “All winning does is let you compete against a whole new set of better-funded competitors,” observes Joe Kraus, founder and chief executive of Web collaboration software startup JotSpot. “Competition never ends.”
If you would like to learn more about how to successfully create competitive advantage I highly recommend the book “Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant” as mentioned in the article, and their blog “Blue Ocean Strategy Blog“. I found “Blue Ocean Strategy” one of the best breakthrough thinking strategy books.
Technorati Tags: Strategy, Competition, Competitive Advantage, Management, Business, Books
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