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Sustainable Competitive Advantage (SCA) How to survive against your competition over a long period of time |
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What is Sustainable Competitive Advantage? Sustainable competitive advantage allows the maintenance and improvement of the enterprise's competitive position in the market. It is an advantage that enables business to survive against its competition over a long period of time. Todays' Era of Hypercompetition Hypercompetition is a key feature of the new economy. New customers want it quicker, cheaper, and they want it their way. The fundamental quantitative and qualitative shift in competition requires organizational change on an unprecedented scale. Today, your sustainable competitive advantage should be built upon your corporate capabilities and must constantly be reinvented. Distinctive Capabilities - the Basis of Your Competitive Advantage According to the new resource-based view of the company, sustainable competitive advantage is achieved by continuously developing existing and creating new resources and capabilities in response to rapidly changing market conditions. Among these resources and capabilities, in the new economy, knowledge represents the most important value-creating asset. The opportunity for your company to sustain your competitive advantage is determined by your capabilities of two kinds - distinctive capabilities and reproducible capabilities - and their unique combination you create to achieve synergy. Your distinctive capabilities - the characteristics of your company which cannot be replicated by competitors, or can only be replicated with great difficulty - are the basis of your sustainable competitive advantage. Distinctive capabilities can be of many kinds: patents, exclusive licenses, strong brands, effective leadership, teamwork, or tacit knowledge. Reproducible capabilities are those that can be bought or created by your competitors and thus by themselves cannot be a source of competitive advantage...More Owning Your Competitive Advantage Every business can own one or several competitive advantages - the difficulty is figuring out what they are. Market leading companies have figured out the importance of owning their competitive advantage in order to get fast to market and sustain speed...More Cross-Functional Excellence Although innovation is driven by technology, required competence extends beyond technical know-how. In the new knowledge economy and knowledge-based enterprises, systemic innovative solutions arise from complex interactions between many individuals, organizations and environmental factors. The boundaries between products and services fade rapidly too. If you wish to be a market leader today, you must be able to integrate in a balanced way different types of know-how that would transform stand-alone technologies, products and services into a seamless, value-rich solution...More Building on Your Core Competencies and Accessing Missing Ones As a leader, you must focus your firms resources on what it does best and what creates competitive advantage. Some technical and business competencies can be in short supply however. You can address these missing competencies by using three approaches: internal development, acquisition of an outside firm, and partnering. Inclusive Approach At the heart of the inclusive approach is the belief that understanding stakeholder needs - the needs of customers, employees, suppliers, shareholders and society, and the environment - and incorporating them into enterprise strategy are central to the achievement of sustainable competitiveness.10...More Sustainable Business Models In the new era of unrelenting change and competition, your face a daunting challenge: how to sustain the business model of your firm. "The fact is, no matter how bulletproof your firm's current business model, it will be challenged by new business models."4 The new reality is that business models have shorter shelf life. You must constantly attempt to discover new business models if you hope to survive and grow...More Corporate Culture as a Fundamental Competitive Advantage The strength of your organization's culture is one of the most fundamental competitive advantages. If you can build and preserve an innovation-adept culture, a culture of commitment, one where employees passionately pursue your organization's cause and mission, you will be better positioned for success...More People as the Main Source of Competitive Advantage Your technologies, products and structures can be copied by competitors. No one, however, can match your highly charged, motivated people who care. People are your firm's most important asset and, the same time, its most underutilized resource. People are your firm's repository of knowledge and skill base that makes your firm competitive. Well coached, and highly motivated people are critical to the development and execution of strategies, especially in today's faster-paced, more perplexing world, where top management alone can no longer assure your firm's competitiveness7...More Trust as a Source of Competitive Advantage Trust - both between individuals and organizations - is at the core of and delivers significant benefits in today's complex and rapidly changing knowledge economy. Trust-based working relationships are an important source of your sustainable competitive advantage because trust is valuable, rare, imperfectly imitable, and often nonsubstitutable. "Trust elevates levels of commitment and sustains effort and performance without the need for management controls and close monitoring."14 Trustworthy firms have also competitive advantage when it comes to forming and using cooperative strategies...More Leveraging Opposite Forces You can find a strategic competitive advantage in an organizational and cultural context by seeking to leverage, rather than diminish, opposite forces. "An important but widely overlooked principle of business success is that integrating opposites, as opposed to identifying them as inconsistencies and driving them out, unleashes power. This is true on both a personal level and on organizational level as well."2 To be successful in today's complex, rapidly changing and highly competitive world, you must embrace and manage critical opposites...More Dynamic Strategy as a Source of Competitive Advantage In today's fast pace, effective self-management and opportunism create a competitive advantage. To be successful in today's world of rapid change, corporate strategy must be dynamic. Executives of fast-moving companies reassess their strategy continuously to ensure that it reflects the changes in the business environment, the company, and its goals. The source of sustainable competitive advantage is the pursuit of an evolving strategy that cannot be easily duplicated by competitors... More Moving with Speed - Staying Ahead of Your Competition In the new economy where everything is moving faster and it's only going to get faster, the new mantra is, "Do it more with less and do it faster."5 If you wish to stay ahead of your competition, you should learn how to move with speed and build four main fast-moving competencies: fast thinking, fast decision-making, getting to market faster, and sustaining speed...More Establishing Institutional Excellence The leaders of great companies are not just great at growing profits. They are determined to establish institutional excellence for as long as the company is in business. "When institutional excellence is in place, companies can achieve industry leadership for decades and generations"2... More 7-S Model - How To Best Organize Your Company for Competitive Advantage The Seven-Ss is a framework for analyzing organizations and looking at the various elements that make them successful, or not. The framework has seven aspects: strategy; structure; systems; style; skills; staff; and shared values. To improve, companies have to pay attention to all seven of the Ss at the same time. All seven are interrelated, so a change in one has a ripple effect on all the others. Hence it is impossible to make progress on one without making progress on all...More Leveraging the Power of Knowledge Market champions keep learning how to do things better, and keep spreading that knowledge throughout their organization. Learning provides the catalyst and the intellectual resource to create a sustainable competitive advantage. "The desire, and the ability, of an organization to continuously learn from any source, anywhere - and to rapidly convert this learning into action - is its ultimate competitive advantage", says Jack Welch. Organizations obtain competitive advantage from continuous learning, both individual and collective. Learning by the people within an organization becomes learning by the organization itself. The changes in people's attitudes are reflected in changes in the formal and informal rules that govern the organization's behavior... More Tacit Knowledge as a Source of Sustainable Competitive Advantage All knowledge isn't the same. There is explicit knowledge - the kind that can be easily written down (for example, patents, formulas, or an engineering schematic). The explicit knowledge can create competitive advantage, but its half-life is increasingly brief, as it can be replicated easily by others. Tacit knowledge, or implicit knowledge, is far less tangible and is deeply embedded into an organization's operating practices. It is often called 'organizational culture'. "Tacit knowledge includes relationships, norms, values, and standard operating procedures. Because tacit knowledge is much harder to detail, copy, and distribute, it can be a sustainable source of competitive advantage"3... More Leadership Leadership is the necessary condition for long-term competitiveness. In particular in the knowledge economy, what is proving to be most effective is "the emerging style of values-based leadership, both as motivation for constant innovation up and down all organization levels and as a source of unity and coherence across fragmented firm boundaries."4 Harnessing your abilities to lead through the power of intellect, will, persistence, and vision creates synergies that propel successful companies in the quest for, and achievement of, competitive advantage...More Creating a Workforce that Would Provide a Competitive Advantage "An intelligent and integrated human resources strategy is the only sustainable competitive advantage... Every other corporate asset can be bought or replicated virtually overnight, but competitors seeking to duplicate a well-trained, motivated, and committed workforce will need at least a decade to catch up. Exceptional cultures just can't be created with the wave of wand - or a major infusion of capital".2 Radical Innovation Long-term corporate success linked to the ability to innovate. Although corporate investment in improvements to existing products and processes does bring growth, it is new game changing breakthroughs that will launch company into new markets, enable rapid growth, and create high return on investment.... More Systemic Innovation Innovation used to be a linear trajectory from new knowledge to new product. Now innovation is neither singular nor linear, but systemic. It arises from complex interactions between many individuals, organizations and environmental factors. Firms which are successful in realizing the full returns from their technologies and innovations are able to match their technological developments with complementary expertise in other areas of their business, such as manufacturing, distribution, human resources, marketing, and customer relationships.... More The Role of Intellectual Property Rights (IRP) and Strategy In most industries, intellectual property rights, especially patents and their exploitation, hold key significance in the development and commercialization of new products. Businesses should have an intellectual property strategy as part of their corporate planning and strategy...More Continuous Improvement Firm (CIF) CIF is a firm continuously improving on customer value due to improvements in productivity initiated by the members of the general work force. The key success factor in this endogenous, incremental and continuous technological and operational change is the organization and management of the firm in such a way that all members are motivated to promote change and are supported in their effort to do so. What is remarkable about the CIF is its ability to operate simultaneously in all innovative arenas: new products, new technology, new organizational forms, and new customer relationship management... More Competing: The Art, Science, and Practice Competition is all about value: creating it and capturing it. A fundamental rule in crafting a competitive strategy is to view competition from the other player's viewpoints. To be successful today, your company must become competitor-oriented. You must pursue the right competitive strategy - avoid strengths of your competitors and look for week points in their positions and then launch marketing attacks against those weak points7...More Case in Point: 25 Lessons from Jack Welch At General Electric (GE) the sum is greater than its parts as both business and people diversity is utilized in a most effective way. A major American enterprise with a diverse group of huge businesses, GE is steeped in a learning culture and it is this fact that makes GE a unique company. As Jack Welch puts it: "What sets GE apart is a culture that uses diversity as a limitless source of learning opportunities, a storehouse of ideas whose breadth and richness is unmatched in world business. At the heart of this culture is an understanding that an organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive business advantage."...More Case in Point: Dell Computer Corporation "I wish it were possible for me to interact with everyone at Dell as I used to. But it's not possible to scale the number of interactions to be consistent with the growth of the company", says Michael Dell12, Chairman and CEO of the Dell Computer Corporation. "We've found there are, however things you can do to bridge the distance between you and your people in a larger organization, and develop the fast-paced, flexible culture that's a source of competitive advantage...More Case in Point: Warren Buffet's Investment Criteria Warren Buffet was once asked what is the most important thing he looks for when evaluating a company to invest in. Without hesitation, he replied, "Sustainable competitive advantage"...More |
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