Achieving competitive advantage is a key objective of business. To win the customer dollar from your competitors. So businesses spend significant focus and resources on looking to create product or service differentiation, finding that magic element that creates white space between us and our nearest competitor.
Of course, having a unique proposition is a big part of competitive advantage, but that’s just the tip of the iceberg. A key word missing here is 'sustainable'. I don’t just mean sustainable in the environmental sense (although this is fast becoming a very necessary norm for us all) I mean in the enduring sense.
Take a favourite brand like Apple. Well known of course, but good to use as an example because it’s so familiar. Apple as we all know, designs and innovates to create great products for the customer, but they deliver through a deliberately created culture that reinforces the values, vision and purpose of the organization on a daily basis. This culture, guided by vision and purpose, adjusts, alters and develops the approach to deliver these outcomes. Arguably, for Apple, it’s the customer service and innovation ethos that really drives the sustainable competitive advantage. People using other brands might think that they have similar or even better product functionality.
Businesses like Apple have long realized that for competitive advantage to translate into profit, it has to be sustainable, and for it to be sustainable it has to achieve that highly desired space between what customers highly value (what they will pay a premium for) and what really works for the business. Ultimately the aim is that this becomes something that is done better than the competition.
The three parts to Sustainable Competitive Advantage (SCA)
1. Deliver what customers really value: What the customer values highly enough to want to pay a premium for. Customers may want many things, but here it’s about what they will pay you for. What customers will pay for quickly separates ‘nice to have’ from ‘must have’.
2. Create a positive impact on the business: There is no point for example, in driving the business to deliver everyday low prices, when the business is built for niche, premium quality products. To achieve sustainability in competitive advantage, this has to be believed in everyday and delivered every day. The business has to be orientated towards this across the whole value chain. That means marketing, operations, innovation, financials and people.
3. Be better than competitors: Being better than your competitors is of course key, but you have to know the battlefield upon which you will win. Identifying and delivering high customer value and creating positive impact in your business are those battlefields.
Understanding and delivering Sustainable Competitive Advantage (SCA) is finding your product or service’s place in the world. It’s your brand’s positioning. Your strategy should be in service of delivering your SCA with your vision and purpose guiding you.
Without a clear SCA and all that supports it, profitable and lasting success is nigh on impossible to achieve.