Competitive Advantage: 5 Steps to Regain Your Competitive Edge

Current situation

Many American business leaders complain that they cannot compete due to the current state of the economy and the massive outsourcing of jobs to other countries. Over the past two years, the headlines of many local newspapers, national publications, and business publications have been filled with businesses failing or filing for bankruptcy. Many more organizations are at risk of filing for bankruptcy and almost all blame the current economy as the reason for their demise. Many American business leaders have talked about increased competition from around the world as one of the reasons for these economic conditions. They often complain that they can’t compete with the cheaper labor rates found elsewhere and that they can’t hire enough good, reasonably priced workers here to compete. These are the kinds of problems that managers complain about today. President Obama recently addressed this issue in his State of the Union Address delivered on January 25, 2011. In his speech he said, “And now it’s our turn. We know what it takes to compete for jobs and industries our time. We need to out-innovate, educate and build the rest of the world. We need to make America the best place in the world to do business.” Do you think if you had a competitive advantage over your competition, it could change your ability to compete? Wouldn’t it allow you to get a fair price and get out of commodity price wars? I think so, so now what can you do about it?

What should we do about it?

So the question is how does an American business leader/executive support Obama’s call to action? According to recent studies, the United States remains one of the most productive countries in the world, but we also mainly make the most complex products. Therefore, many of the products/services consumed in the United States are imported. Why do we lose so many jobs and buy more foreign than domestic products? The answer lies in the way most organizations compete in their marketplace. Most organizations will develop products and services that are already selling successfully in the market, as this minimizes their risk. Unfortunately, this approach leads to the situation where an organization is seen as a “me too” organization. This is an organization that must compete primarily on price, or could possibly have higher customer value. There is no real noticeable difference between your products/services and your competitor’s. It needs to distinguish itself, so that it is different and unique within the market. As history has shown, if you are a market leader or have a unique competitive position, the price you charge for your products and services is usually not an issue. Take a look at Apple’s iPhone, the first year the price was almost double the second year. When the other organizations started selling their smartphones, Apple was forced to cut the price and start competing on features/functionality as well as price. Therefore, if your organization can create a competitive advantage that makes it unique, the effect of the economy and your competition on your organization will be minimized. This will allow you to receive a better fair market price for the products and services you offer to your customers, as well as greater loyalty. A competitive advantage can be created by adding innovative features to your product, reducing the cost of production, or introducing a unique new product.

5 steps to create a competitive advantage:

develop a strategy -You must create a strategic vision that identifies your unique skills and strengths that will allow you to develop and deliver using this advantage. Your advantage may be producing the product/service at a reduced cost, offering greater value to the customer, or it may be that you are more agile than the competition. This strategy that is developed should take the form of an end-state vision that clearly shows how the organization should operate to take advantage of its unique capabilities.

Develop a tactical plan. – For the strategic plan to be actionable, a good solid tactical plan must be developed. This plan should include the milestones that are necessary to ensure the end state vision is realized. It should also include the timeframes by which the expected benefits will begin to materialize. Also, the time frames in which the necessary features/functionality will be realized to achieve the vision of the end state. The success criteria should be clearly identified and how you will know when it has been successfully completed.

implement the plan – This tactical plan must be implemented with excellence and efficiency. All milestones must be tracked and the plan revised as conditions dictate. You need to ensure that all key performance indicators have been identified and how they will be tracked.

Execute the operations – Once the plan has been completed and successfully implemented, it must be executed with efficiency and excellence to ensure that all desired results are achieved. All operations must be executed with excellence and must be rigorously monitored to ensure that the expected results of these operations are obtained.

Review and Review – Once the plan has been implemented, business leaders must compare the actual results with the planned results to ensure that they are achieving the benefits that were expected. Any variation in results must be analyzed and revisions of operations must be planned to put operations on track and obtain the expected results.

Conclusion

Organizations today don’t have the luxury of sitting back and saying, “Look at what we just accomplished and look how good we are!” There are only two states in the life of an organization, it is growing or dying. There is no such thing as the status quo. Therefore, an organization must seek to continually improve and find ways to improve its processes and operations to make things better. Otherwise, your competitors will pass you by, taking your market share and profits. This development of a competitive advantage will require the support of the entire organization. You will need the entire organization to work together to ensure that the desired results are achieved. Business leaders/executives should avoid letting their organization try to take the easy way out by adopting current “FAD” software products or the latest “FAD” management techniques. This has never given an organization a sustainable competitive advantage, as other organizations will follow suit and use the same software or trick. Typically, this approach leads to a price war as products and/or services become commodity items. Without differentiation of these products or services, customers do not feel the need to be loyal and will buy at the lowest price. The best approach is to develop your competitive advantage, so that you are unique and can attract and retain your customers.

A competitive advantage will allow organizations to compete under any economic conditions or competitive environment. Unique Products/Services These organizations often have no initial competitors when their products/services are first launched, so they can often enjoy a higher price. This allows these organizations to recoup their development costs faster and often earn customer loyalty, which will help them stay strong as competitors begin offering similar offerings. A competitive advantage will help any organization to succeed in the global marketplace.