We are often told that to succeed in business you must have a sustainable competitive advantage.
It is true of course that success in business comes from identifying what it is you do that the customer values, you can deliver and your competitors find it hard (or impossible) to emulate.
Sometimes you know this in advance through research or market intelligence. Other times your gut instinct or invention allows you to discover your secret after the effect – did Steve Jobs really know why Apple would be such a huge success in the beginning?
Too much intuition or complacency means a business founded on too many assumptions, and the risk of overnight obsolescence when the market changes.
Here are a few questions which should help you make up your mind if you really have a competitive advantage:
- Have you a documented list of the customers’ or industry’s main reasons for purchasing (key buying criteria)?
- Is the list broken down into something meaningful i.e. not just ‘quality’ but the component parts?
- Have you asked the customers (or some of the customers) personally to verify that list?
- Do you know how these criteria rank?
- Do you know how your company rate against these criteria and who’s word do you have? Is it just production director’s view, CEO’s opinion, salesforce feedback, or do you have direct feedback from customers?
- Do you know how your competitors rate? Again, from the customer, not just an internal view.
- Have you looked at your rating versus the competitors in the areas that matter most to the customers?
- Have decided to accentuate where you’re great and the competition is weak, but also tighten up on the weaknesses?
- Finally, do you know why you are good at the things you are? If you don’t know, find out because these are competitive competences that drive your advantage.
If a business can answer all of the above, you’ll probably avoid making one of the biggest mistakes in business strategy – thinking you’re good because you think you’re good!
See more on: Business Strategy, Discovery