Sustainable Competitive Advantage

For an advantage to be sustained, your competitors must not be able to duplicate it. 

Defining "sustainability" is trickier.  For an advantage to be sustained, your competitors must not be able to duplicate it.  Or, more precisely, they must not be able to duplicate the resources underlying it.  For that you must possess an "isolating mechanism,"  such as a patent giving its holder the legally enforceable right to monopolize the use of a technology for a time.  More complex forms of isolating mechanisms include reputations, commercial and social relationships, network effects, dramatic economies of scale and tacit knowledge and skill gained through experience.  

As an example, Apple's iPhone business is protected by the Apple and iPhone brand names, by the company's reputation, by the complementary iTunes service, and by the network effects of its customer group, especially with respect to iPhone applications.   Each of these resources has been crafted by Apple executives and put in place as part of a program for building a sustained competitive advantage.  These resources are scarce in that competitors find it difficult, if not impossible, to create comparable resources at a reasonable cost.

ACTION POINT: Are their isolating mechanisms in your business that provide a sustainable competitive advantage?