Thursday, September 4, 2014

Time to change our thinking about competitive advantage

Rita McGrath (2013), in her book, The End of Competitive Advantage, introduces the concept of transient advantage. Professor McGrath suggests that in today's fast evolving marketplace long-term advantage is no longer a realistic goal for most organisations. Instead she recommends companies create a portfolio of transient advantages by making eight shifts in the way they operate.
Those shifts are:
  1. Focus on arenas, not industries - competitive threats are very likely to come from outside your industry.
  2. Set broad themes and let people experiment - many creative minds on constant alert.
  3. Foster innovation by setting appropriate metrics - accept that sometimes you'll get it wrong (something that traditional metrics tend to punish).
  4. Focus on customer experiences - they'll help you find solutions to problems.
  5. Build strong relationships - they'll help you through the tough times.
  6. Avoid brutal restructuring - it might make financial sense in the short term bu could harm your core competencies in the process.
  7. Get systematic an early stage innovation.
  8. Experiment, iterate and learn - by creating a learning organisation you can take advantage of knowledge that is often lost.

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