- November 26, 2008
- Posted by: admin
- Categories: Blog, Business Dynamics, Enterprise Agility, Outsourcing & Agility, Uncategorized
Context
Today, with companies and industries not merely competing but trying to eat each other up, clinging on to a single competitive advantage is no longer relevant!
(Recall the AAA ratings of the financial behemoths that exist no more or are desperately eyeing the bailout? Does that ring the bell? Not just a bell, it has RATTLED the whole business environment and the way we view strategic management.)
You spend long-drawn efforts building up your competitive advantage – and just when you triumphantly try milking the cow, another smaller but smarter competitor replicates that and adds much more value to it at a much faster pace! Think Alta Vista, Think Yahoo, Think Google!
It’s a War!
It might give one a false sense of fortified comfort to feel that one can survive because of concrete business model, strong business practices, solid management gears and standard operating procedures… BUT the reality is… well they’re DOOMED! Doomed to extinction!
It’s no longer an age of arrogant, sluggish oligopolies – it’s a war!
Today is the age of an agile organization giving tough times to the concrete ones! The Rules have changed… the concretes are tomb-stoned – the agile are Ruling the world!
Competitive Advantage of Differentiation, Cost Leadership, Quick Response! All are soon becoming the theories of the past.
Out of the 3, Quick Response might remain the survival kit for some of the last ones who catch the bus! But the ones driving this bus of the new economy are those who are agile and can make quick assaults! (Assaults after assaults) – AND the survivors are the ones who can make timely responses to those assaults! All others?
Well do you really want me to tell again? – THEY ARE DOOMED!
Pyramids OR Playgrounds?
Organizations today cannot live in Pyramids – Pyramids are meant for DEAD organizations symbolizing their glory of the past! Today’s organization needs to be like a soccer team on the ground. The competitive advantages (one after the other) have to be created on the go – create the best angles, dodge your opponent, position yourself most competitively on the field, pass the ball over to the most strategically placed player (at a point in time), aim at the goal and do whatever (legal and ethical) it takes to get in there!
Convert a defense in to an attack – an attack into a defense and then in to a counter-attack – really FAST! Surprise the opponent – Score the Goal – Rule the Field – Become the Champion!
BUT after scoring the goal, be mindful that you’re just 2 sluggish moves away from a defeat! – A HUMILIATING DEFEAT!
Today’s Competitive Advantage? – Ability to keep generating competitive advantages one after the other!
So with all this insanity happening throughout the global and regional markets – what is that you can do to find yourself in a competitive position?
What is the Competitive Strategy if having a rather static competitive advantage is simply a defeatist attitude?
Well, today “the ability to keep generating competitive advantages” is the BIGGEST Competitive Advantage. In order to do so, you need to be agile and brave enough to experiment, kick-off, roll-back and kick-off again a sequence of WOW projects – the premium today is on PROJECTS – the hierarchical decision structures have wrapped and suffocated the ailing organizations to death!
Enterprise Agility is an ability to keep on generating competitive advantages (one after the other) FAST!
How do you generate such competitive advantages at an internet speed? – Well through what we call ‘Enterprise Agility’! Enterprise Agility is an ability of an organization to keep its strategies, processes and applications oiled up, super-fast, robust and playful enough to foster such PROJECTS that provide it with an on-going tendency of generating a never-ending series of competitive advantages!
Let’s take the plunge!
Gear up for an unknown journey of agility, excitement, fun and liberty! Sit back, look at your organization and ask the following questions:
- Does your business model, strategies, organizational culture, human capital and IT platform help OR hamper your need to generate more than one competitive advantage?
- How long would it take you to completely change OR create a new business process to realize a new competitive advantage?
- How much time and fortune would it take to change your current IT applications to support this new process? Does your business run on top of integrated, agile applications OR legacy silos?
- How are your inhouse teams and 3rd party sourcing deals structured – Will they support or sabotage your need to go agile?
Feel free to contact us to help find some of the answers. We share the same urge, passion and aggression that you have to thrive in this pugnacious environment!
A lot of credit for shaping my thoughts goes to Tom Peters (www.TomPeters.com) and his book “Re-imagine” where in 2003 he predicted exactly where we stand today and beyond!
Whether it is a time of crisis as we areseeing now or it is a boom time, it is often a unique idea that is well executed that makes a difference.
In times of crisis there are as many opportunities as we would see in the boom time.
Thus for a business to survive, one must ensure that they have adapted to the context and positioned their services/products/ideas as relevant.
Relevance of the USP is the key. Agile organisations change and react to the external world faster and succeed.
In good times or bad we should never cling to a single competitive advantage. In order to succeed long term a company has to continuously compete against itself before real competitors have an opportunity to outmaneuver and shift advantage.
“Where you pit your future against your present and let the two battle it out for an optimal middle ground is where you will find sustainable competitive advantage.”
On a daily basis ask yourself where you are most vulnerable and where you can improve then develop alternate strategies so that when you need to shift focus you already have a game plan established.
As I see it,
Win Lindner
M Ali,
It can be, but not for too long. But the answer is not to develop a suite of competitive advantages, because it saps and diverts resources. It’s more important to understand that sooner rather than later someone will come along to eat your lunch, and ask yourself: what is the next logical leap?
In other words, you have to be willing to cannibalize yourself…eat your own lunch, before someone else eats it for you.
Josh.
I agree with Marc Aniballi. Simple. Accurate. Real.
Clinging to a single thing is never a good survival tactic.
Money does not disappear in a crisis. It simply moves around less.
Consider the last crisis period which was the 1970’s. In the US, we had sharp rises in fuel prices and actual shortages where people could not get gas for their cars. Politically we had severe changes in the Middle East, principally in Iran but elsewhere too. Financially, there were severe disruptions in stock markets.
This period was also the one in which Microsoft and Apple Computer as well as other firms got their start. Inexpensive services, labor, manufacturing created by the crisis was the incubator for their business. As more conventional businesses were failing, investors were looking for new things to try and this allowed them to expand. During the same period there were equally bold attempts which failed but, make no mistake, the strongest and most agile, thrived.
If you wish a biological analog, if there had been no “Ice age” the world would be run by giant lizards, dinosaurs and not smaller and more adaptable mammals.
Ali,
My answer is: it depends from the current company market position. For instance, look on Intel. The company is going to survive mainly based on the single product – the Pentiume class CPU multi cores. Certainly, Intel makes other products, but x86 is long time company survival kit. The Microsoft main money are from well known Windows and Offices, nothing new in this kit for decades, but there Xbox, developer tools and etc, they are not the core of the MS back.
Now about small companies. Look on communication equipment original designers. After 09/11 majority of competitors in telecom market are gone, just few companies left. They definitely don’t needed for diversification their product portfolio, but they can do that. I mean, power line communication design, the ADSL developers, UWB manufacturers. The only reason for diversification for them – not stable or not developed client net. If their clients are good – they are good as is, no improvements needed.
In energy sector there is same situation. If you do solar development, I don’t believe you have a money shortage with just 1 product.
As opposite example, when many products are needed for company survival now – the nanotechnology R&D business. These kind of companies needed for many different nano materials to survive.
My 0.02
Ali the truth is if your a business you have to have more than one competitive advantage and that has nothing to do with speed or another guy doing it faster or anything like that.
Its very simple but we tend to complicate things … a very large pokey megacorp can easily compete with a plucky upstart, think Microsoft or IBM vs Google. Regardless of press Goog’s pretty much a one trick pony. MS and Big Blue are very diversified. Google may own one market but that’s all they own; and that market has to flow through desktops which are owned by one competitor, and through networks and services owned by other competitors.
So how solid really is Googles footing? For all their agility they are still trapped on their competitors playing fields. My point is that any good business no matter how big or how small agile or seemingly stodgy will have more than one competitive advantage and if they don’t have one can create one by truly understanding themselves, their customers and their competitors.
I should point out that a business also needs to know the differences between strategies, opportunities and advantages. Microsoft and Google fight over Yahoo is a Strategy. Neither really needed Yahoo it was just a strategy from keeping a competitor from obtaining an opportunity that might be turned into an advantage.
Anything can be an opportunity- like a raw material that can be refined into sometthing it can become an advantage. How you plan and used materials for a longer term is a strategy.
Which is something necessary for all businesses to understand and become accomplished at if they choose to be successful.
I believe in diversification — unless, of course, you’ve got something that is light-years beyond what anyone else has. I remember reading the first research reports on Windows, for example.
But you have to move on from there. The problem with having something that advanced at FIRST is that you run the risk of keeping up.
On the whole, these days, we need as many advantages as we can get, all neatly tied up in a package of superb customer service and impeccable integrity as part of the brand.
t’s a crisis… we can not rely on a single competitive advantage alone.
It could be time to consider diversifying… use Foresight.
TOP Brains should think this way… 20% present, 80% future…
whatever gaps there would be, leave it to your able lieutenants.
It’s during crisis that one’s skill in producing Leaders would greatly benefit;
Therefore, Great Leaders are those who could spot, invest and develop Great Talents… or Potential Leaders.
Hope you do well, Ali.
This is TheGreatLight.
Hi Ali
I think that you are posing a very interesting question but maybe putting in too many other issues as Mr. Jakobson also mentions. I’ll try to answer the basic question.
The short answer is Yes.
If you have a truly competitive Advantage (CA) in the spirit of Porter then this is not easily copied and you will have a first mover advantage and be shielded by different things, i.e. high entry barriers. With a CA you are not (necessarily) limited, as you seem to imply, to a single product. It could be a mixture of products or a number of technologies.
You need a strategy, that may be what you call Enterprise Agility, but the important thing is that you know where you are going and how to get there. A core element in your strategy is to use your CA but also to fight others copying your or achieving the same. This does not mean that you have to sit down and focus on one (core) product it could very well be much more complicated and involving a number of possible future scenarios that you have foreseen.
Using your strategy you can retain your CA and develop new or related CAs. This is key if you want to survive.
Maybe I should add that in most markets there are room for players that do not have CA but just follows the market leaders. This is not a bad survival strategy but it will not get you ahead.
Kind Regards,
Frank Mandix
The way I see it, competitive advantage should be geared around deep soul-searching about what your company is about, and its value proposition to the marketplace. This is different than offering one product, but speaks to what your company is striving to be truly good at.
If you a product-oriented company that strives to produce the most innovative products possible, you need to be very creative and always pushing to obsolete your own products, leapfrogging yourself and the competition.
If you a customer-oriented company that focuses on tailoring solutions to meet your customers’ specific needs, you need continually strive to meet customer expectations and demands.
If you are the low-cost, no frills providers in your market, you need to wring every ounce of expense out of your operation.
That said, I would take care about shifting from strategy one to another. Making a shift from being a customer-centric organization to a product innovator would require an extraordinary change in terms of focus and expertise, and not to be taken lightly. Instead, I would recommend taking a hard look at what your overall value proposition is to your market, what you feel that your market is willing to pay for (ideally focusing on what the market is willing to pay a premium for), and where you need to be to meet that need.
Companies that define their competitive advantage around a product instead of a capability as outlined above are the ones that run into trouble.
In general, It would depend on the type of competitive advantage and the context. But even the best the advantages cannot last forever. The only strategy of course, is to mindful of what’s coming around the corner and be ready for it. Always have a couple of backup plans, directions for new advantages.
In times of crisis, the ability to create new differential advantages and opportunities is far more important than a previously existing advantage. Innovation is the biggest savior in economic downturns (and deep pockets, of course. LOL)
Imran