Competitive Advantage Isn't Dead. Why You Need to Know Yours.
August 14, 2015
“You must remain focused on your journey to greatness.”- Les Brown
What makes your business better than the rest? Why are you any different than your competitors? In the world of business theory, recently there has been a lot of talk about this thing called competitive advantage. If you don’t know what yours is, you can’t use it to your advantage and if you can’t use it, you will have a lot of trouble distinguishing yourself from your competitors. In this post, I will tell you how to continuously define your competitive advantage and what to do once you know what it is.
Competitive advantage is what sets you apart from your competitors. Basically, it is what value your customers see in your business.
The recent debate amongst business theorists is that sustainable competitive advantages do not exist anymore. I say they never did. Sorry Michael Porter, philosopher of all things business, but I just don’t buy it. Anyone who has watched some of the giants of business fail in the past several years knows to laugh at the term sustainable in relation to business.
In business, nothing is stable. The rules of the game: innovate and change or die. Harsh, I know, but when you take away the sustainable aspect, competitive advantage is a real thing to be understood and used in business decisions. Think of the last thing you purchased. There was probably a good reason why you bought it. That why is the value you, as the customer, held in the product or service.
Knowing your value to your customers is important so you can better focus your efforts on creating more of that value. The business term for finding and focusing on customer value is value chain analysis and many large corporations have an entire staff focused on just this task. Let’s say your customers value your quick service and you implement a customer service campaign that involves slowing down the sales process. You may think you are doing a great thing (what is wrong with better customer service?), but with that one seemingly right decision you have just taken away value in the eyes of your customer.
So I ask you this: Do you know “the why” for your customers? Have you asked yourself or your customers this question? Recently? Keep in mind that as businesses grow and change so does their competitive advantage. Change is great unless you fall behind that change and believe your old value is still working when it isn’t. That is when failure to change can be deadly.
You may be thinking at this point, okay, I get it—competitive advantage, value chain analysis, Michael Porter, blah, blah…how do I figure out what mine is and what do I do with this information once I have it?
Finding your competitive advantage involves some serious “business soul searching” and answering some important questions. The biggest and most important of which is “why are you in business?” Some of these questions can be answered by looking at your well thought out vision, mission, and/or purpose statements and some can be answered with a thorough analysis of your competition. Still others may be answered with a quick chat with your best customers or employees. However you get the answers, you must find them before you can use your competitive advantage to add value to your customers.
Once you have clearly defined your competitive advantage (for the time being) the real work begins. Now, you must create business processes and make decisions around that advantage. Build a set of core competencies (what your business does well) that increase that value. Do this and you will create customers who are so unwavering in their support for your business that they don’t even think about your competitors as an option.
What has your business done to find and strengthen your competitive advantage? I’d love to hear your comments below.