BOOST O2 >>

INFORM & ENTERTAIN on CURRENT AFFAIRS|BUSINESS|LIFE|ARTS |MONEY|SCIENCE & TECHNOLOGY

translate

Monday, August 09, 2010

The Fleeting Nature of Competitive Advantage

Professor McGrath has written an excellent  treatise on the fleeting nature of the Competitive Advantage in an article titled “Competitive Advantage is Fleeting (And its Okay to Admit It)”. 

The business-as-usual goal of a great strategy is to achieve “Sustainable Competitive Advantage
However Prof. McGrath challenges that notion and contests that in this era of Hyper-competition – advantages don’t last for very long before competitive entry, imitation and matching erode their edge, or customers move on, or the environment changes in such a way that the advantage becomes irrelevant.  In other words as Emmanuel Matuco (in his comments to the post) eloquently points out, since growth always follows the S curve, so should the business strategy.  Matuco writes most strategy books addresses entry points into the growth strategy, and thriving in it, but their solution to the inevitable stagnation (top of the S Curve) is to start another S Curve on top of the old one does not exists.  Past Strategic Management theories did not focus on ‘fleeting’ nature of the competitive advantage because there was not enough data that could indicate that the competitive advantage could someday erode due to external influence.  Now, the Global Recession has impacted all the companies (even those that were considered to have ‘sustainable’ competitive advantage) and has put the spotlight on the flaw of existing belief of strategy management.

What Prof McGrath suggests is to change perspective and view their competitive advantage as “nasty, brutish and short”.   She says that this enables organizations to begin to develop skill of getting out of things that are losing competitive advantage and re-focusing the organization to take advantage of spotting new opportunities and moving to capture them.  This also impacts talent management.  If an employee knew that a declining advantage for a firm could mean their skills were no longer interesting or relevant, that would pique their interest in continuously improving on talents that would be relevant. It would be more attractive for firms to be able to avoid the trauma of mass layoffs and the uncertainty of being able to find the skills they need on the open market.  I think more research and analysis needs to be done to authenticate this finding, but this holds lot of promise to relook at business strategy in a new light due to hyper-competition and accelerated creative destruction.

O2 STUDIO Video Bar

Loading...

BOOST YOUR OXYGEN >> MONEY MAKING KNOW-HOW to CHANGE your LIFE

O2 >>> BOOST YOUR BUSINESS OXYGEN

blogernity

AMP Precious Metals

How you preserve your wealth

Reports