In today’s business world, it is much more difficult to create and sustain a competitive advantage, regardless of which business model you use. Modern technology, super-fast communications, variables in the economy, etc. mean that fewer businesses can create, and hold on to, a clear advantage over competitors. Strategy expert, Rita McGrath, Professor of Columbia Business School, and author of, The End of Competitive Advantage: How to Keep your Strategy Moving as Fast as your Business, argues that the traditional concept of a ‘sustainable competitive advantage’ is no longer viable.
Traditional strategies for creating an advantage over competition, including costs/differentiation, allowed companies to capture pole position in the market and keep rivals at bay more easily. Not so in today’s business climate, McGrath argues; any advantage will be transient.
Considering McGrath’s premise, how can businesses compete and win the advantage over rivals?
The answer is innovation and agility. Businesses must be prepared to adapt quickly; to change the status quo of their business model in order to keep up with variations in a fast-moving economy.
Larger corporations may find making changes in marketing strategies more challenging than smaller or newer businesses. The financial costs required to implement change to corporations could be massive, which understandably could lead them to hesitate. However, this hesitation may prove even more costly to some businesses as they find themselves no longer able to compete.
Even established and successful businesses should always be looking for ways to innovate and keep ahead. Using the business model canvas can certainly help investigate possible avenues for business growth: there are still opportunities for getting ahead of the competition if business leaders are prepared to learn from failures and experimentation with different business models. Indeed, McGrath suggests that this is the way forward for all businesses, rather than aiming to capture a particular corner of the market in order to achieve and sustain a competitive advantage. She says advantages can be short lived and businesses must be prepared to disengage if they see signs of their advantage dwindling and seek alternative routes to compete.
New business owners should be prepared to accept they will have to continually modify their business model and not allow it to become static. Businesses also need to be proactive and understand the need for continual innovation to be included in their long-term business plan. Only the proper business coaching, innovation, agility and flexibility, will allow businesses to achieve competitive advantage in a modern economy.