Business strategy is all about competitive advantage. An brilliant strategy is be both unique and sustainable. If it’s not unique, then you’re simply running the same race as your competitors. And if it’s not sustainable, then it will be replicated and no longer be an advantage.
For some companies, technology, innovation and operational excellence are good sources of competitive advantage. Making them sustainable is the bigger challenge.
One of the smartest moves Kodak made had nothing to do with those sources of competitive advantage. They already were low-cost producers of high-quality film; but so was Fuji. Somehow they needed to differentiate their box of film from Fuji’s, in a way that loaded-up value for consumers. What they did was to shift the focus from film to memories by developing marketing messages about “Kodak moments.” It created tremendous value in the mind of consumers — value that lasted until digital cameras changed both the technology and the use of images.
What are you doing to create sustainable value for your customers?
An important focus for any business strategy is to establish a competitive advantage for the firm. The two primary ways to do this are to be the low-cost producer and to be significantly different from your competitors in a way that customers value. The problem with being the low-cost producer is that eventually your competitors will match your prices. It’s a very difficult advantage to retain. When you compete on price, you’ve become a commodity — clearly not a competitive advantage.
Differentiating yourself from competitors isn’t always easy, but it can provide much better profits and be much longer-lasting. There are many ways to differentiate, from technological and marketing innovation to product configuration, customer experience, and even organization culture. Additionally, differentiation can be extremely difficult for a competitor to replicate.
What is your competitive advantage?
© Copyright 2016 Bob Legge
Bob Legge provides organizations with the ability to exceed their most ambitious goals. I work with leaders of Fortune 500 companies, small and mid-size companies, nonprofits, education, and government. Together, we drive strategy, lead successful change, develop high performance cultures, improve individual and organizational performance, and produce faster, sustainable growth and value. Contact him at firstname.lastname@example.org