What is a competitive advantage and why should it matter to you? Competitive advantage is defined as the ability to stay ahead of present or potential competition. This is typically done by evaluating strengths and weaknesses of competitors and seeing where you can fill in the gap or step up and improve.
Companies develop a competitive edge when they produce attributes that allow them to outperform their competitors.
Here are seven ways companies and individuals can create an edge.
- Cost Leadership Strategy. Companies may place themselves ahead of the pack by offering attractive pricing. Wal-Mart and Amazon are two companies that have risen to the forefront by this strategy. While this is effective for companies, low pricing is seldom a desirable method for individuals.
- Differentiation Strategy. Branding is likely the most widely used method to differentiate one company from another. With this method, a name like Nike or Rolex automatically assumes a status distinct and apart from all other shoes or watches.Individual executives using this method must seek to find a core strength or talent that separates them from the pack. Then they leverage this unique skill or ability through increasing their visibility and the perception of its value to the company.
- Innovative Strategy. Companies may move ahead of the competition by doing things in new and different ways. Insightec has created a way to eliminate brain tumors and other cancers without cutting into the body. Clearly they gain a competitive edge over traditional surgeries by reducing pain, risk, and long recovery time.People can gain a competitive edge as they discover and offer innovative ways of doing things for the company. If your ideas consistently result in benefits to the company you’ll have that essential edge.
- Operational Effectiveness Strategy. Some companies just do what they do better than anyone else. FedEx started out with an innovative strategy. But it continued its leadership — even after dozens of other companies jumped into the overnight shipping business — by doing it very well.For individuals, this may mean creating systems of operating or new ways to analyze data. When you do what you do very well, you gain a competitive advantage over those doing it the longer and slower way.
- Technology Based Competitive Strategy. Since the time Henry Ford revolutionized the auto industry with the assembly line, companies have sought for a competitive edge using new technology or technology in a new way. Computers and applications continue to… perhaps briefly… give companies an advantage over the competition. Workers who embrace new technology and learn to master it nearly always redefine or increase their competitive advantage over those who resist new methods.
- Adaptability Competitive Advantage. As markets, economies, and other factors change in this increasingly unstable and unpredictable environment, companies that can adapt have a distinct advantage. Typically this includes smaller or trendy companies, however even Apple has successfully negotiated the waves of change. Executives can bring adaptability to their core strength by being open to change. They can cross train and bring new and more current skills to the table. Perhaps, adaptability is foremost a state of mind.
- The Information Advantage. Almost all the other strategies benefit from excellent information. The definition of competitive advantage is the skills needed to outpace your rivals. Most of those come through knowledge and information. Successful companies seek the latest in technology, strategies, and data.
Individuals who want to keep their competitive edge need to do the same. There are many training programs available to help you work faster, smarter, and bring more value to yourself and your employer. Listening to books on tape can also help you gain a competitive advantage.
In this cut-throat environment, it’s essential that both businesses and individuals work to keep their competitive edge. With these seven strategies, you can position yourself well ahead of the pack.
For more information on how to help yourself or your business take the competitive advantage, contact Joel.
Copyright ©2005-2016 Joel Garfinkle, All Rights Reserved.
Joel Garfinkle is recognized as one of the top 50 coaches in the U.S., and the author of 7 books, including Getting Ahead: Three Steps to Take Your Career to the Next Level. He has worked with many of the world's leading companies, including Google, Deloitte, Amazon, Ritz-Carlton, Gap, Cisco, Oracle, and many more. Visit Joel online at Garfinkle Executive Coaching. Subscribe to his Fulfillment@Work Newsletter and receive the FREE e-book, 40 Proven Strategies to Get Promoted Now!
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