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Is Your Competitive Advantage Sustainable?
By Bob Prosen
In order for your company to be profitable, you have to have clear objectives and a strategy on how to get there.
Many business leaders believe that once they have a good strategy in place their work is done. But it’s far from over.
If you think you have a good strategy in place, test it. Ask yourself many tough questions.
Begin by asking if you can achieve your profitability objectives. In other words, did you pick the right goals on which to concentrate your resources?
To determine this, you have to assess your competitive advantage.
Are you truly better than your competition?
Have you sufficiently differentiated your product or service to charge a premium? How do you know?
All products and services can be imitated.
Just because you have a great idea doesn’t mean it’s sustainable.
Whenever there is profit or a positive NPV in a market, any market, competition will enter.
This is a universal truth, so get ready for it:
Someone is going to come in and try to take some of what you’ve got.
Being Different is Key
So, if your products and services are easy to duplicate, get busy developing distinctive processes that enable you to differentiate in a unique way.
If your company is strong at developing relationships with customers and channel partners, that’s hard to duplicate.
If you can execute better and bring new products and services to market more quickly and less expensively, or your quality is substantially better than your competitors’, that’s hard to copy. If you have tools and processes that allow you to solve problems quicker and less expensively, that’s a powerful advantage.
Another great way to build barriers to stop competitors is through patents. Determine what will give you a sustainable advantage, and then do it.
This is often referred to as an unfair competitive advantage.
Study the Competition
You can gain another key advantage by learning everything you can about your competition.
Know their leadership.
Who are they?
Where did they come from?
How do they think?
Studying them can also yield great information about your competition:
- What have they done in the past and how well?
- Are they fully funded?
- What’s their strategy?
- How do they differentiate themselves?
- What do they depend on to make their strategy sustainable?
- How do they respond to competition?
It’s a competitive war, and you need to win.
Competitive intelligence is a process, not a one-time event.
Do not allow your competition to surprise you.
Remember, once you implement your strategy, it’s hard to change.
You don’t want to set it in motion and then learn that your competition has a better strategy.
Here are a few examples of unsustainable strategies:
- Low-cost airlines, such as Southwest Airlines and JetBlue versus full-service carriers
- Japanese automakers versus the Big Three
- Digital media versus film – Goodbye Kodak!
- Online music stores versus bricks-and-mortar stores
- Netflix versus Blockbuster
- Borders versus Amazon
- Best Buy versus Circuit City – Former Good To Great company
- RIM versus Apple
- Kmart versus WalMart
At the beginning of the day, it’s all about possibilities. At the end of the day, it’s all about results.
The true measure of a business’s success is its ability to understand this mantra, and as a consequence, continuously meet or exceed its profitability objectives.
The biggest challenges in business are neither planning nor strategy but the ability to execute and stay focused on achieving your plan.
all images: stock.xchng