Competitive advantage? Just how competitive are you.


I am working every day with businesses that are denying that the game has changed. Many believe it is just the government that is inventing new rules. This is true in some cases, but in most the government is also simply responding to global changes. The benefit of working outside of South Africa sometimes is that I get to see the domestic manufacturers from another angle. And the truth be told: South African firms are not as competitive as they would like to believe. Yes, there are exceptions, and we hail their achievements.

Tim Kastelle published an article today titled “here’s why you need to build your innovation capability“. When my eye caught the first sub heading I almost stopped reading. It shouts “Competitive advantage is dead. Or at least dying”. Blink. I believe in competitive advantage, and I believe that firms must figure out what it is that they have to do to remain competitive. I also know that once you found a gap in the market it takes hard work to remain competitive. Being a follower of his blog I plowed on.

Wait. Don’t let me spoil a good post. you have to read Tim’s argument for yourself. He argues that it is more important to become innovative than to have a competitive advantage. This is not a new argument in itself, but I like his angle on this. He then provides some simple steps that a manager can take to become more innovative even within a rigid organizational context where innovation may not necessarily be appreciated. His logic will also apply to not-for-profit organizations that don’t believe they compete even though they have to be able to compete for funding.

Reading this article also made me think of how we idolize some of the very famous firms now, but how we tend to forget how many great firms have dissolved here in South Africa and in other developing countries. It usually starts with a refocusing, then with selling off under-performing or non-core units. Then a merger of the remains with another firm with a “strategic fit”. Then, the end. They just slip from our conscious into the past.

Let me not close so depressing. Let me rather ask: how can you use the environment as an constraint that you have to consider in your business model and your innovation process?

If it constrains you it must constrain your competitors. Can getting around this give you an edge? In other words, can you put the constraint between you and your competitors?

Then ask: what are the constraints that are on the horizon, and how can I anticipate these constraints to get them between me and my competitors?

Thinking about this often might save you the anguish of trying to adapt while under pressure to also deliver.

I wonder how your answers will challenge your current view of how competitive you really are, and how innovative you are to respond to the changes in the environment.

5 Responses to “Competitive advantage? Just how competitive are you.”

  1. Tim Says:

    Thanks for the mention Shawn. I made a small revision to my post after reading this. Rita McGrath does argue that sustainable competitive advantage is pretty close to dead, but she does say that it is still important to have a competitive advantage – it’s just that they’re transient now. I agree with her on this. But you’re right – firms still need to do something distinctive – this doesn’t get them out of that requirement!

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    • Dr. Shawn Cunningham Says:

      Hi Tim,
      Thank you for making me aware of the change on your blog. It was a really great post.

      An organizations ability to innovate continuously should result in a competitive advantage. For me, innovation also requires change in business models. Figuring out when to change and when to hold steady is in itself an innovative competence, that requires a willingness to often fail and to recover fast.

      Regards,

      Shawn

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  2. Ajiv Says:

    Hi Shawn,
    we’re busy with a panel survey for 225 manufacturing firms in Ethekwini in partnership with UKZN. the survey was first conducted in 2002/03, and now 10 years later again. this can provide some insights in firms that have survived; how; why and which firms were able to stay competitive, what did they do, etc. would be interesting to test your views on competitive advantage.

    regards
    Ajiv

    Like

  3. Liza van der Merwe Says:

    Reminds me of the TED talk by Angela Lee Duckworth on Grid – http://www.ted.com/talks/angela_lee_duckworth_the_key_to_success_grit.html. Would be very interesting to test the griddiness of those companies who survived, especially by looking at which ones are now flourishing compared to a decade ago.

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