Customers: a sustainable competitive advantage Premium

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Ivey Business School Professor Niraj Dawar tempers Rita McGrath’s ideas on “the end of competitive advantage.” While it is true that the current business environment calls for continual strategy reassessment and revision, the need for customer focus remains a constant. Business Digest presents a selection of studies that indicate the best competitive advantage strategies shift the focus from products to customers.

Shift value creation
Until recently, competitive advantage was rooted in what was done prior to market launches (i.e., product innovation, manufacturing processes, and so on). However, new information and manufacturing technologies have altered the situation, and differentiation now depends on what happens post-launch. The interactions between your company and its customers offer invaluable opportunities for unique and sustainable value creation.

Build strategy around customers

What do you really know about your customers’ buying experience? Answering this question will enable you to identify new and even atypical places to create value. What is most important is to find out where your customers encounter hidden costs and risks.

Consider the entire picture to figure out where to take action

Instead of adopting the currently popular strategy of one-to-one marketing schemes, Niraj Dawar advises businesses to take advantage of new data analysis tools to develop a comprehensive view of your customers. Competitors’ customers are never exactly the same as yours, and this alone paves the way for significant competitive advantage.

Business leader testimony
Danone has applied Niraj Dawar’s suggestions. In mid-2013, the company equipped its Indonesian subsidiary with a tool for detecting product-related complaints and suggestions published on social networks by the company’s 247 million customers. Danone used the tool, which is capable of gathering more reliable information than traditional consumer surveys, to create new flavors of children’s yogurt as per consumer requests.

Read our dossier :
Customers: a sustainable competitive advantage

Based on, among others, Tilt: Shifting Your Strategy from Products to Customers by Niraj Dawar (Harvard Business Review Press, November 2013) and the case studies on Nike, Danone, Best Buy and Toyota.
Business Digest N° 247, June 2014

Watch the video :
Tilt: Shifting Your Strategy From Products to Customers

Niraj Dawar introduces the central theme of his book, Tilt, in an animated video.