strategic design & innovation

How Sustainable is Your Strategic Competitive Advantage?

culture & capability portfolio management strategy

An unfair or competitive advantage is any source of difference between your organisation and its competitors that will assist your organisation in the achievement of it's stated ambition and objectives.

But to be strategically valuable, those advantages must be sustainable in such a way that they become enduring. The foundations of such strategic competitive advantage lie not in your organisation's products, and whilst your tangible assets and resources may be significant, they are arguably the easiest for competitors to imitate. Sustainable strategic advantage lies in the complex and hard to imitate relationships between human and intangible resources, and the interactions and processes that develop over time between these. 

sustainable strategic advantage lies in complex inimitable relationships of intangible assets

Typically, strategic advantage is founded on a combination of:

  • innovation and creativity - the ability to invent and reinvent business models, products and processes that overturn the prior competitive advantages of other organisations
  • responsiveness to change - the ability to identify opportunities or threats and act fast, demonstrated by an entrepreneurial mindset among strategic managers and decision makers 
  • superior access to / greater ability to interpret information  - the ability to derive timely strategic insights from unique or proprietary or more contextual information information
  • superior strategic management  - the ability to access better quality or quantities of resources, or to integrate the resources and capabilities more effectively and/or more efficiently
  • superior ecosystem positioning - the ability to engage beyond the organisation in more efficient and/or effective value-creating networks through deeper and more valuable relationships 

Amazon is an exemplar of an organisation that has built strategic competitive advantage through such a combination that has innovation and creativity at it's core. It has become a serial innovator, with the capability to invent, and reinvent, its business models, products and processes such that it has disrupted whole industries.

In his 2019 letter to shareholders, founder Jeff Bezos articulates a further fundamental source of competitive advantage - their responsiveness to change that is closely connected to their innovation culture. Arguably one of the leading exponents of the entrepreneurial mindset of our era, he has built a company of builders - one that develops truly strategic managers and empowers them to identify opportunities or threats, and to act fast.

“From very early on in Amazon’s life, we knew we wanted to create a culture of builders – people who are curious, explorers. A builder’s mentality helps us approach big, hard-to-solve opportunities with a humble conviction that success can come through iteration: invent, launch, reinvent, relaunch, start over, rinse, repeat, again and again. They know the path to success is anything but straight.”

And of course with superior access to digitised customer information and preference, Amazon led the world in developing artificial intelligence that could interrogate and derive insights from big data and the algorithms that would be create value for both customers and the business.

Last year, Bezos told employees that “Amazon is not too big to fail” and predicted bankruptcy, pointing out the ever shortening life-span of large companies. Amazon continues to innovate whilst successful, not waiting until its failing, and is held up as an archetype of what innovation thought leader Alex Osterwalder calls an invincible company. Amazon has developed the capability to sustain strategic competitive advantage.

So, do you know what your source of strategic competitive advantage is today? And moreover, will that be sustainable and sufficient to support your strategic goals in your likely future operating context? 

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