The Three Pillars of Competitive Advantage
Management is a field in which the players are constantly learning from experience and improving. The result is that most functions today are pretty well managed. Compare your shop operations of today with where they were a decade ago. The distribution of management knowledge and tools and the leveling effect of technology has made things pretty efficient today and certainly so by historical standards.
So where’s competitive advantage coming from now? It’s coming from two sources. First, the fundamental aspect of any business (the one thing it can’t outsource) is the alignment of its capabilities with the desires of the marketplace. It is this alignment—along with both operational and strategic dimensions—that forms the foundation of the value proposition that you offer to your customers. Getting this alignment right is critical to your ability to compete.
Second, competitive advantage derives from the realization that functional competence or even excellence is but a baseline for business excellence. Assuming a set of excellent process, it is the effective or ineffective management of these processes that constrains or enables your shop’s performance.
For those well-managed shops now in the front half of the pack, competitive advantage comes from three sources: nailing value proposition, high value-adding functional and business processes and effective value-producing management of these processes.
Further, these three sources of competitive advantage are interdependent in that one of the management processes that must be running with high quality output is the value proposition process by which your shop aligns its capabilities with the desires of your market.
Achieving competitive advantage naturally comes from excelling at the sources of competitive competence.
Nailing your value proposition. This is the core responsibility of your marketing function. You cannot abdicate the definition of your value proposition and the delineation of the ways and methods by which it is realized. This broad activity is marketing, and getting it right is your main source of competitive advantage.
High value-adding processes. Processes are the ways in which individual tasks are linked in order to accomplish a goal. They can be loosely or tightly defined. They can be ad-hoc in nature or strictly deterministic. They can employ rigidly quantitative decision-making rules or looser qualitative ones.
Processes, by definition, occur in your enterprise. They are either understood or not, and they are either under control or not. But it is your business process that generates business results, and it is thus the management of your business processes that constitute your main job. Your job is to determine those processes that are necessary, define those processes, and manage them for effective results.
If managing processes is the nature of executive management, and competitive advantage now comes largely from your marketing process, then the effective management of your marketing process is the battleground on which the winners and losers in your industry will be determined over the next several years. The battleground is now your marketing process.
Effective management of the process. If effective management of the marketing process is the focus for competitive advantage, then effective tools for managing the process are essential. Management science has discovered, tested and proved out the tools that work to elegantly achieve excellent results from any process. These tools are most obviously in use in the management of your shopfloor processes, but they are the foundation of any effective process management. The tools that are the most critical are constraint analysis, continuous improvement, and lean thinking. These tools apply, with intelligent tuning, to any process, from manufacturing to human resources. They specifically apply to the management of marketing and sales, despite the initial resistance that many old-timers may have to the idea.
Companies, and management teams, seldom get a second chance. Getting on top and staying there is the job today. Aggressively achieving and sustaining competitive advantage is the name of the game. Nail your value proposition, create a highly effective marketing process, and manage that process for maximum ongoing results.