Sustainable Strategic Advantage
Senior Consultant, CSSP, Inc.
What does it take to be today’s winning competitor? The winner must have a competitive advantage—right? Real winners aren’t satisfied with a competitive advantage that may be just a flash in the pan, they want a sustainable, strategic advantage that will last. We call a sustainable strategic advantage a strategic competency. A competency is a combination of skills, processes and knowledge: the skills we possess as a company; the knowledge we possess as a company – the sum of the individual knowledge throughout the company; and the processes we use to take advantage of our skills and knowledge. It is important to understand that competencies arise from the intellectual attributes of a company, not its physical attributes or locations.
If a competency is to be considered strategic, it must pass three tests. First test is: Does the competency create significant value for our customers? Second is: Does the competency truly differentiate us from our competitors? Third is: Is the competency difficult to copy? With each of the three tests, we grade the combination of skills, processes and knowledge as meeting a standard which is low, medium or high in its effect.
Does the competency create significant value for our customers? If the competency does not create value for our customers, why would people or other companies buy what we have to offer?
Does the competency truly differentiate us from our competitors? If the end result is that we are really differentiated, then customers will buy from us because we bring something very special to the market place, putting us ahead of our competitors because of the perceived value of our strategic competency.
Is the competency easily duplicated? If it is, then the difficulty to copy will be low, and the test will not be met to the degree needed to define the competency as being strategic. It is highly likely that, given sufficient time and both human and monetary capital, any strategic competency may be duplicated.
What burden, then, does this impose on the company that has attained a sustainable competitive advantage, a strategic competency? As compared with physical assets, which over time deteriorate with usage, the more a strategic competency is used, the better it becomes. It is somewhat like a golf swing. If an ordinary golfer plays once or twice a week, he or she will likely play to a particular level, plus or minus a few strokes. That level will depend on the physical attributes of the player, but probably won’t improve or degrade much as long as the player continues to play about the same amount of golf.
PGA players, on the other hand, practice hundreds of shots a day, when not actually playing in a tournament. They have taken their game to a higher level of competency through practice and repetition, honing their skills to the highest possible level. It is through the practice, repetition and constant honing of their play, that they have the skills, knowledge and processes to play at levels us ordinary players can only dream about.
Now, because there are a large number of players who, as professionals, have attained the high level of skill necessary to compete, this particular example would fail the third test of being difficult to copy for the most part. The main point here is that one must be objective in analyzing whether a particular combination of skills, processes and knowledge actually meets the extremely high standards of becoming a true sustainable competitive advantage. If your company has such a strategic competency, you should have a real advantage in the market place, as long as you continually hone the skills, processes and knowledge which make up that competency.
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