The Rules of Competitive Advantage

Achieving and sustaining competitive advantage is the holy grail of marketing management. These achievements however, are not one-time events, but the result of never-ending processes.

The ideas contained in Value Acceleration can be used to achieve competitive advantage in the first decades of the 21st century. Achieving and sustaining competitive advantage, however, always favors innovators in management practices and, therefore, is subject to certain rules. The following excerpt from Value Acceleration outlines these rules:

1. Competitive advantage goes only to the risk takers.

Since the price of doing business is constantly increasing, it follows that competitive advantage goes to those firms that implement new, useful management processes first. When the telephone was a new device, those firms that installed and used the "new" communications technology gained a competitive advantage for awhile. Likewise with lean thinking, those firms that first implemented this manufacturing tool were at an advantage over their competitors, until their competitors caught on. And those firms in the last decade that have implemented structured product development processes are now competing at a considerable advantage over their less well-managed competitors.

2. Initial implementations of a new technique are always sub-optimal.

Once something is tried-and-true, it is merely another cost of business, not a source of competitive advantage. Another way of saying this is that corporate losers are always a generation or more behind with respect to their management systems.

A corollary to this axiom is that initial implementations of a new technique are always sub-optimal. That is, competitive advantage is the result of embarking on a knowingly imperfect initial implementation. The firms that do so however, have the advantage of honing the new skill while their competitors are just learning it and embarking on their own imperfect initial implementations.

3. Gaining competitive advantage is always painful.

It is most painful, if, indeed possible at all, with companies who must play the catch-up game. A company with a culture and management systems that do not encourage the adoption of useful new management techniques not only loses the competitive advantage of implementing the techniques early, but, when it is eventually forced to adopt them, finds it far more painful to do so than for the company where seeking out new ideas is a part of the culture.