Leading with transitory competitive advantages Premium

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It’s a strategic error to believe it’s still possible to achieve long-lasting competitive advantage. Nowadays, even the greatest successes can evaporate in the space of a few months. Consequently, cutting-edge companies are abandoning ambitious five-year plans in favor of launching new initiatives on an ongoing basis. The challenge lies in putting your faith in agility.

agile

1. Think transient competitive advantage
The field of competitive battle has grown due to pressures from emerging countries and developing information technologies. Regardless of the area in which a company operates, its leaders can rest assured that their brilliant idea will not stay their exclusive property for long. In this context, companies have an incentive to fight against their propensity to look for stability and instead get moving switching from one competitive advantage to another

2. Design projetcs in an open environment
There is a strong temptation for many companies to carry on moving forward with organizational patterns inherited from the age of sustainable advantage. But to grow in today’s world, it’s necessary to take an interest in your company’s entire ecosystem and broaden your field of view using different networks. It’s also important to optimize flexibility by invest in training for teams and favoring small, reactive decision-making processes. Try to see the collapse of any aborted initiative as an opportunity to move on to something else rather than a complete failure.

3. Put innovation at the heart of your strategy
Innovation is a prerequisite for survival. The watchwords in these transient times are project initiation, management, selectivity, and mobilization at all levels! Three top priorities are:
• Creating a climate conducive to innovation and to innovators by assigning innovation budgets and putting innovative projects in the career path of your talents.
• Sensible innovation: just because you have an idea doesn’t mean you should act on it. The best ideas are those that meet a clearly defined need.
• Looking after all the phases of the innovation process: Before “launching the machine,” try to identify possible obstacles or constraints, rather than just looking for evidence confirming that your idea is the correct one.

Samsung Electronics moves from one competitive advantage to another

Few sectors have experienced as much change over the past 20 years as the high-tech industry. IBM no longer manufactures computers, Nokia lost its place as the leader in mobile phones, and Chinese companies like HTC gained the upper hand in innovation. So how has 40-year-old Samsung manage to stay on top? By constantly moving from one short-term competitive advantage to another. As a result, the South Korean giant now generates more profits than Apple, Google, and Microsoft combined.

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Leading with transitory competitive advantages

Based on The End of Competitive Advantage, How to Keep your Strategy as Fast as Your Business by Rita Gunther McGrath (Harvard Business Review Press, June 2012), a case about Samsung, and Zebras & Cheetahs, Look different and stay agile to survive the business jungle by Micheal J. Burt and Colby B. Jubenville (Wiley, May 2013).
Business Digest nº 239, September 2013.

Watch the video
Rita McGrath on The End of Competitive Advantage

Rita McGrath discusses the core components of her theory on the end of competitive advantage. In particular, she explains that business leaders should first and foremost revise their analytical references.