The Eagle’s Dynamic Strategy
Business strategy is important as it can give you a competitive edge in securing clients over other companies who are pursuing the same business model. In order to develop that edge, you need to identify a competitive advantage and develop your business strategy around it.
Once you have done that, you need to sustain that advantage. Simply put: Business strategy is the process that allows you to leverage, develop and sustain a competitive advantage over other companies targeting a similar market. The problem is sustaining that competitive advantage over time.
Can you sustain your advantage?
The problem is that we no longer do business in a bubble. Therefore, your competitive advantage can be enjoyed only for a short period of time. Modern business strategy must be a continuous process evolving with new competitive advantages. One must build their business on the basis of moving from one competitive advantage to another as smoothly as possible. This is a continuous process and one that is critically important to long-term success. In general, you can only depend on new innovations giving you an edge for a year or two. For example, lower cost of base elements and new configurations can last a short period of time, sometimes as little as one-quarter of a year.
These are tangibles that will impact your current edge. There are intangibles that must be paid attention to as well including how you are perceived by your customer base. This includes issues like how satisfied your customers are, how strong your brand is nationally and in some cases, internationally, how strong your distribution channels are and whether they can be expanded. The best part of the intangibles is they are far more challenging for your competition to duplicate without a significant investment in time, energy and in some cases, money.
What is the bottom line?
In short: your overall business strategy and the competitive advantages you develop and nurture have to be more dynamic than ever. You have to identify a business strategy that works for you, analyze your competition’s responses to your advances and work out your next steps. Stop and think about it like an eagle on a migration route: The eagle already knows where he is going and how he is going to get there. However, his decisions remain dynamic, responding to altitude, air currents and stops. There may be other factors that come into play including the weather and his need for food and shelter. Simply put: The eagle is always on the lookout for a new competitive advantage and he has developed a dynamic strategy to ensure he reaches his destination regardless of the circumstances he is facing.
Without this type of dynamic strategy, the eagle would quickly exhaust himself; he must always be ready to adapt to changing conditions along his route. While this may seem like an oversimplification of the problem, business strategies must have a competitive advantage roadmap. This means determining early on how long we will have a competitive edge once we have a new innovation and being able to jump to the next area that will provide us that competitive advantage once again.
If it were only that cut and dry
One of the biggest obstacles that a company has with maintaining a competitive edge is internal issues. One has to be poised to extract maximum value from each advantage and have the flexibility to adapt to new advantages nearly immediately. For most companies, this means having a continuous process of innovation and research and development. Competition within the industry is not always the main competitive threat; in fact, there are far more significant threats that most businesses face like new business models, new technologies or new companies.
You might be surprised to find out that the least of your problems is current competitors; there may be others waiting in the wings to pounce at an opportunity. These “nonobvious players” may be a more significant threat than your current competition. This means you have to be constantly looking out for ways to keep your brand in a competitive model and be prepared to address changes nearly immediately. This is why businesses are now dealing with what we identify as “transitory competitive advantages”. If your strategy for staying on top is not flexible and easily maintained through a dynamic strategy, you will lose any competitive advantage you have quickly and may not have an opportunity to regain your position.
What is the new approach?
Whether you are operating a small company, a business unit inside a major corporation or a medium sized company, we all have to change how we look at how we develop proper strategies. Successful companies may have a static strategy that allows them to focus on a single, sustainable competitive advantage. While this may work in the short term as new competitors arrive in the market, prices erode and our products become more mainstays, we will lose our competitive edge. Today, business strategies are far more complex and a product roadmap should be drawn up that includes the potential that another player is going to step into the field and how long you will have the advantage both prior to their involvement and immediately following the involvement.
“Yes, God plays dice with business”
Albert Einstein in a 1943 conversation with William Hermanns said “God doesn’t play dice with the world” refer to quantum mechanics. He was not happy with the idea that probabilistic interpretation of Quantum Mechanics where identical measurements get you different outcomes. While we want to stay away from these complicated theories, they can be helpful in some manner. Bad strategies will produce bad results and a good strategy will produce good results.
The take-away is simple: A good strategy is important and critical for long-term business success. Your outcomes may not always be exactly what you anticipate but if you have a plan in place for dealing with both positive and negative outcomes, you should be able to succeed. Never forget about “probabilistic interpretation”: The strategy perhaps does not deliver the outcome you expect but the end result is close enough. When developing your strategy in the end, this must always be taken into consideration.
Gaining a competitive advantage in today’s marketplace means not only being able to bring new products to market but it also means tamping down the ability of your competitors to imitate your success. It also means being flexible enough to move onto the next project that will keep your business, brand strong and your competitive advantage high.
Only when you combine the right business strategy with a history of strong innovation and keep your competition at bay can you hope to maintain a competitive advantage. This may be done by keeping your company’s internal and external successes from becoming formulaic which could increase competition. Today’s business markets are more challenging than ever, once you have developed a strategy for “staying on top” you need to have the tools, talents and financials to stay that way. And do not forget your strategy perhaps does not deliver the outcome you expect but should be close enough.
The challenge in the current business world is not just to develop a competitive advantage. The main challenge is to sustain that advantage. Can we really sustain today a static strategy focus on a single, sustainable competitive advantage? Or do we really need a new approach to develop our business strategy?