Which is Your Source of Competitive Advantage?

Thursday, 15. October 2015

Costs, differentiation, time-to-market, core competencies, technological innovation—these are some of the classic sources of competitive advantage that companies have been using more or less successfully over decades. However, there are all kinds of other sources of competitive advantage that are praised every now and then by consultants, researchers, or managers of young start-ups as the new strategic miracle weapons, whether it’s be big data, business model innovation, or organizational learning. Here, we have put together some YouTube videos for you in which experts spotlight various success factors that may lead to competitive advantage. But remember: There is not the one source of competitive advantage that fits companies of all sizes and types. Rather, what matters is the ability to combine different kinds of competitive advantages in such a way that they suit your organization’s vision and culture.

Julian Birkinshaw: What Comes After Big Data?

In today's knowledge economy, the ability to collect and analyze huge amounts of data on pretty much any aspect of human life and activities is considered a key competitive advantage. In this video, Julian Birkinshaw, Professor of Strategy and Entrepreneurship at the London Business School, takes a look into the future asking what comes after the knowledge era. He believes that in a world in which information is ubiquitous and knowledge increasingly shared, the companies that want to gain a competitive edge will have to look for new sources of advantage. He argues that two key imperatives are action and conviction:

  • Companies will be smart about scanning for information and harnessing the knowledge of their employees, but they will favor action over analysis, and
  • They will privilege the intuition and emotional conviction of their employees over purely rational judgments, thus avoiding falling into the paralysis by analysis trap.

In the second half of his talk, Birkinshaw presents some alternative management models, such as meritocracy, adhocracy, and emocracy that can help businesses to succeed in the post-knowledge era.


Stefan Gross-Selbeck: Business Model Innovation – Beating Yourself at Your Own Game

As former CEO of Xing and current Managing Director of BCG Digital Ventures, Stefan Gross-Selbeck has a lot of experience both regarding how to successfully launch internet start-ups and what large established companies can learn from them in terms of strategy. In this exciting TED talk, he explains that “in the digital age, disruption doesn’t really come from technology. It comes from companies being able to take one part of the value chain, redefining it, and on that basis re-building the business architecture of entire industries.” And they do so not only once, but again and again gaining long-term competitive advantage. A good example for this is Netflix which first made stationary video rentals obsolete with its mail delivery service and later on disrupted itself and television by introducing streaming service.

Rita McGrath: Learning from „Intelligent Failure“

While the concept of lifelong learning is widely-known and already implemented in many companies, the notion that making mistakes is part of the learning process is far less common. Managers often still consider failure as a sign of weakness that can endanger not only your personal career, but also the competitive position of your organization. The Columbia Business School professor and "strategy queen" Rita McGrath takes a rather different view on this as she is convinced that the ability to quickly learn from failure can be an important advantage in today's fast-paced business environment. She advocates to embrace what she calls "intelligent failure,“ that is to put a solid process in place which ensures that:

  • Failure is carefully planned, so we know why something went wrong when it went wrong,
  • The risks are not too great,
  • The downside is controlled, and
  • We have mechanism for sharing the learning that comes out of it.


Forrester Research: Being Customer Obsessed

According to the technology and market research company Forrester Research, being customer obsessed is "the only competitive advantage“ these days. With “obsessed,” they mean being “laser-focused” on customers. Knowing their every need and want and being able to anticipate their next moves. Why now? Because customers have more choices than ever, are empowered by technology, and have higher expectations of companies, as Cliff Condon, Forrester Chief Research Officer, explains. Surveys among top executives across industries indicate, however, that the strategic planning processes of most companies do not place high enough priority yet on enhancing customer acquisition, retention, and loyalty, says Kyle McNabb, Forrester VP, Research Strategy.

Shawn Achor: Happiness 

In this engaging talk in front of Google employees, Shawn Achor, author of the international bestsellers The Happiness Advantage and Before Happiness, argues that the happiness of the employees is the “greatest competitive advantage in the modern economy.” He vividly describes how we as humans often make the mistake to believe that if we work hard we will be more successful, and if we are more successful, then we’ll be happy. Citing latest research in the field of positive psychology, Achor shows that this formula is actually backward: “Happiness fuels success, not the other way around.” Studies across industries have shown that productivity increases by 31% and revenues by 37% if employees are happy. They also live longer and stay longer with the company. “Happiness can be a choice,” says Achor, and as such can be positively influenced through our organizations. Particularly by enhancing social support systems, companies can help employees to become more optimistic and perceive stress not as a threat, but as a challenge.