Gaining Advantage

To be sustainable, competitive advantage needs to be difficult or impossible to copy.

Without sustainable competitive advantage, your organization will always be vulnerable. Imagine your organization will always be vulnerable. Imagine you run a pizza restaurant in a small town, where you share the market with two competing pizzerias. You decide to win more business, so you differentiate yourself by offering a home-delivery service. Within a month your turnover has doubled: you have achieved competitive advantage. But seeing your success, your competitors also start to offer delivery and within another month, your sales have returned to their previous levels.

The problem is that this competitive advantage was just temporary. To be sustainable, competitive advantage needs to be difficult or impossible to copy. In this example, this could mean investing more expensive premises--located between the shopping center and the cinema, say--that a large number of people will pass by. Your rivals cannot occupy the same site, so you have a sustainable competitive advantage over them.

What are the potential sources of sustainable competitive advantage that your organization should seek to develop? Location is clearly key in the retail sector, but sources of sustainable competitive advantage can be identified in every industry:

• Size: being bigger gives you control of the market and achieves economies of scale.
• Knowledge: a big-city law firm, for example, may have more knowledge than a smaller firm.
• Resources: control of limited resources of any kind.
• Relationships: key relationships with decision-makers cannot be easily coped by your competitors.
• Brand: while it is easy to copy a product, it is difficult to copy the emotions customers feel about a particular brand --that's why organizations invest so heavily in brand identity.

ACTION POINT: Identify the knowledge, resources and relationships that can help you gain competitive advantage.