Sustainable competitive advantage: the fallacy
The speed of change in business means the notion of businesses having a sustainable competitive advantage is no longer a reality argues Dan Monheit.
Sustainable competitive advantage. What a beautiful, romantic, delusional idea. An idea that somehow still gets plenty of airplay.
Anyone who’s studied the theory of business or brands will be familiar with the concept; Brands must create or acquire attributes that let them outperform competitors for an extended period of time.
Anyone who works in the reality of business or brands will know that this is a complete fallacy.
A competitive advantage that lasts years or decades would require everything else to stand still. No changes in consumer behaviours or attitudes that reshape what’s considered ‘valuable’. No advancements in technology that ignite and obliterate entire categories overnight. No international competitors turning up in our streets, shopping centres or Google search results. No nimble start ups setting out to disrupt the industries we’ve worked so hard to stabilise. In short, no progress.
So while the theory is appealing, the reality of creating a competitive advantage and then crossing it off the ‘to do’ list for the next decade is absurd. Instead, businesses must look for their ‘Transient Competitive Advantages’. Those things that give them a leg up for the next six, 12 or 18 months, after which it’s reasonable to assume that everything will have changed, and a new set of advantages must be brought to the table.
Yes, it’s exhausting, but this is our new reality. It’s what underpins the new wave of startups who ‘move fast and break things’; Facebook adding Newsfeed, then going mobile first, then acquiring Instagram. Kogan launching with rock bottom prices, then being first to market with any new Apple or Samsung products, then adding 24,000 SKUs to over a dozen categories.
But it’s not just startups, Transient Competitive Advantages also play a key part in the ongoing success of established players like Nike and McDonalds, who relentlessly reinvent their own products, processes and fields of play.
For brands and businesses looking for a competitive advantage that will stand the test of time, there’s only one worth pursuing. Change. Self initiated, fast and often.
Dan Monheit is director of strategy at Hardhat Digital
Of course “the reality of creating a competitive advantage and then crossing it off the ‘to do’ list for the next decade is absurd” – if a company was to think that was even possible that in itself would spell the end for the company then and there. I would not dismiss the idea of a SCA because of today’s environment. There is value in creating something for your customers that is exactly what they want – certainly customer needs/wants change, but fundamentally an offering responsive to this is invaluable. McDonalds here is a perfect example of a SCA. They’re in fast food – The particulars have changed – they’re serving fast salads as well as burgers – but they still have a distinct SCA, and are still serving their customers exactly what they want. Change is vital – yes I totally agree! Transient vs sustainable – I need more elaboration to be convinced here…
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