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There is a myth in business that your organization, to survive in our uber competitive world, must have a sustainable competitive advantage. Setting aside the word sustainable for a moment, a competitive advantage is something that sets you apart from your competition. It could be that you have a product they don’t have. It could be the service and experience you deliver. You may have a more convenient process. These are what win you business today … but they do not guarantee that you will keep that business tomorrow.
In other words, what works today may not work tomorrow. And rest assured, you have competitors that are looking for ways to upend your competitive advantage. The Amazon story comes to mind. It started as an online bookseller, taking on the entire brick-and-mortar book industry. It continued to grow to where it is today. Talk about a competitive advantage! Who would want to take them on? I’ll tell you who … Target and Walmart. They are in an all-out online war to win customers and market share in the highly competitive online consumer sales category.
Amazon’s competitive advantage, a website with one of the best online shopping experiences on the planet, seemed to be a sustainable competitive advantage for a time. Today, the competition is running and gunning for Amazon. And, don’t think they don’t know it … they keep creating new programs year after year—and even more often—to thwart the competition.
I just received a copy of Ruthless Consistency by Michael Canic, PhD, president of Making Strategy Happen. There are some powerful nuggets of information throughout the book. One that caught my eye had to do with the topic of the sustainable competitive advantage. Canic points out that BlackBerry, Kodak and Blockbuster, at one point, all had competitive advantages. Where are they today? And, how about the 178-year-old Thomas Cook Travel Group? After all that time, it is no longer. In a tongue-in-cheek comment, Canic writes, “Help me out here. Exactly which companies had a sustainable competitive advantage?”
I’m sure you have seen great companies perish, not because of the COVID-19 pandemic, but because competitors came along and took them out, either by driving them out of business or acquiring them. I look back to one of my favorite books, In Search of Excellence: Lessons from America’s Best Run Companies, by Tom Peters and Robert Waterman, published in 1982. I loved that book, and it still offers some valuable lessons. But where are some of the big-name companies that were profiled in the book? Companies like Wang, Atari and Kmart? In spite of being put in the category of best-of-the-best, they no longer exist. You see, nothing lasts forever, even excellence.
There’s a good reason for this. In his book, Canic points out that there are evolving markets, changing social norms and emerging technologies. Not to mention that a pandemic can change the landscape of business in just a matter of months.
Yet many of us have been taught that we must have a competitive advantage. Well, you can! Just don’t get overconfident and refer to it as sustainable. The secret is a cadence of ongoing strategy sessions that look toward the future, but are written in pencil, not ink. My point is that you need an eraser to deal with changes you are going to make in the plan when you look at it again next quarter.
Blockbuster, one of my favorite companies ever, went under. I have great memories of searching aisles of VHS tapes with my kids every week, looking for movies we could watch together. Blockbuster was wildly successful, at least it seemed to be. What happened? How could it have fallen so quickly? They ignored the ever-changing landscape in which they operated. Innovation, competition and easier ways of getting movies (from a little competitor known as Netflix) put them out of business.
Let’s talk about Netflix for a moment. It rolled with the changes, moving from mailing DVDs to streaming movies. It is still a leader, but now faces tough competition from Amazon’s Prime Video, Hulu, AppleTV and more. I could go on and on.
IBM went from being a computer company that sold hardware to becoming a software company offering cloud, mobile and data solutions. That’s some serious shifting. And, where are the big computers it is known for manufacturing? In an antique store!
A sustainable competitive advantage … it’s a myth. Don’t get sucked into thinking you have something that will last forever. Nothing lasts forever. So, with that in mind, start thinking in a new way. Just swap out that word sustainable for short-term, as in a Short-Term Competitive Advantage. Then start looking for your next one … and the next after that.
