So what makes a great competitive advantage? What served you well 3 years ago- does it still hold the same market cache that it did in 2010? These questions are at the forefront of many business owner’s minds and if they are not, they should be?
Three years ago McDonald’s did not market “healthy menu options”; Organic produce was for “veggies” and “tree huggers”; and social media had little value to business. Trends and market wants/demands are always on the move and your job is to keep your competitive advantage highly valued by your current and future customers. Remember when IBM actually made hardware? With Android smart phones taking up so much market space, does the once so dominant Apple brand still look impenetrable?
So what is your most salable competitive advantage? How long do you think the market will still desire it enough to grow your business? What do you think they will want next?
There are basically 3 broad areas to have a competitive advantage in. Firstly, you can specialize in product innovation – like Apple or Kia Motors. This path requires lots of R & D and is often short lived (you are valued until your competitor offers the same thing or offers something better).
The 2nd way is to be operationally efficient. Great supplier change arrangements with low costs and low inventory requirements are the foundation to this path. While operational efficiency is important to all businesses it really shines with larger firms because of the shear number of transactions. Think of WalMart, who can tell you within 40 seconds of any transaction made in any store. This is great for collecting data on market purchasing patterns (did you know that 48 hours before a hurricane hits the East Coast strawberry pop tarts are in very high demand:)
The 3rd way to have a competitive advantage is to be client intimate. This goes beyond providing great customer service (although this is something few firms even understand). This means knowing about client’s other interests, complimentary products that you can help them acquire, providing helpful pieces of information that serves their interests. It is a 360 degree focus of a company that the client comes before all.
This is a high value and cost effective way at customer retention and expansion – but it does require a sustained conscious and company wide culture effort. We will provide more details on how to implement an effective client intimate culture next time.