Long-term business success involves creating, managing and exploiting assets and skills that competitors find difficult to match or counter.
Developing this advantage is a continuing process, not a fixed event.
Here are 5 Tips to help you develop competitive advantage and build barriers to entry.
1. Strategic leadership
The top management team leading your company must develop a vision for the organisation; obtain employee commitment to achieving that vision; and build effective relationships with key stakeholders (e.g. partners, customers and suppliers).
At the same time, management must be a catalyst for change.
A good top team has varied expertise and knowledge.
Most importantly, top managers must learn to think in a non-linear manner, in order to develop successful strategies when faced with new – and possibly contradictory – information.
2. Leverage core competencies
One key to sustaining a competitive advantage is to develop a core set of competencies that customers want and that are difficult for others to imitate.
These competencies can be exploited and leveraged to develop new products or to go after new markets.
The ability to leverage core competencies across geographic and product business units helps any business to achieve economies of scale and scope.
3. Know your marketplace
Provide employees with strong information and decision-support systems that enable them to develop strategies in response to market conditions.
Your organisation must have superior knowledge and understanding of your competitors, your customers and your customers’ perceptions of your products and/or services.
Defining and measuring criteria, and then interpreting and communicating results, is crucial to the process.
4. Develop customer loyalty
Every business seeks satisfied customers who return again and again because they trust a company’s product or service.
Their repeat business comes at a much lower cost to you than that of a customer who must be constantly enticed to continue buying.
In addition to working on core product and service attributes to build customer loyalty (such as treating each customer as a valued individual), businesses must work on such issues as instilling a helpful staff attitude, delivering on advertising promises, developing a favourable return policy and providing accurate product information.
5. Innovate strategically
Whether you are a first or late mover, innovation creates sustainable advantage.
The pioneering company plays a central role in defining both the concept and buyer preferences for a category.
But if the originator doesn’t understand the market, a late mover can identify a superior but overlooked product position and undercut the pioneer.
The key is innovation based on the market’s needs.
