There are Competitive Advantages and there are Sustainable Competitive Advantages. This post forming the 7th edition of The Strategy Project, is about the latter.
The first gives you customers and fame for a while and then vanishes like a shadow at night. The second one, well, that’s the kind you want as the life partner to your company or career.
Sir John Kay outlines 4 simple parameters on which lasting companies have built sustainable competitive advantages:
Innovation — Do not confuse this by technology. Innovation can be anywhere. Here is my favourite example — Back in the 90s, when Marico expanded manufacturing to Kerela, they struggled to get more productivity since labourers simply preferred drinking and whiling time. The then HR head looked deeper and came up with a brilliant solution. All workers were divided into 4 houses. And every evening, various competitions were held between the houses. The engaged workers cut down their drinking. That’s HR innovating for you.
Brand — Humara Bajaj, Parachute coconut oil, Apple. The name is enough.
Architecture — Who are your stakeholders? If you are an employee, they are your seniors, peers, juniors, customers, family and friends. If you’re a business, all the above, plus your employees, distributors, retailers, agencies you work with. How strong are your relationships with them? Companies like Asian Paints, Marico have built a culture that encourages people to take care of each other. And these companies have lasted over 30 years.
Strategic Assets — These are your intellectual properties, assets that set you apart. Again, they do not have to be technology assets only. The reach of your dealer network could be an asset, for example.
The framework is called the IBAS framework.
The Unusual Billionaires, by Saurabh Mukherjea
Foundation of Corporate Success, by Sir John Kay
The Strategy Project