There is nothing called a competitive advantage in business.

By: Kamil Toume 

Warren Buffet has said that he evaluates a company by looking for a sustainable advantage. Most businesses think that their IT systems and modern technology that set them apart from all their competitors is their unique CA.  It is clear that this term called competitive advantage is vague and can hardly be understood. Also, I think the failure of many firms’ strategies stems from their inability to determine the meaning of a competitive advantage in business. Is it your business financial position, is it your customer service, Is it your staff that uniquely position you against your competitors or the IT systems and many other stuff that continue to be viewed as the unique advantage?

 

Kamil ToumeIt is not about formulating, developing, and implementing the strategies to maintain and sustain the competitive advantage but It is about understanding the term fully. For example, has any business leader questioned the term before and its soundness? Is it correct to keep using the word competitive? By the way, leading companies do not compete, they innovate and inspire people.  They solve problems. They do not digest what others have copied and imitated before. So, I think this term called competitive advantage should not be used any more. The term competitive advantage became a business term when Michael Porter published his book in 1984 of that title. Porter described in his book the three generic strategies for achieving competitive advantage which are : Cost leadership, differentiation, and focus.

As per Porter, there are two central questions underline the choice of a competitive strategy

  1. The attractiveness of industries for long-term profitability, so it is the industry itself
  2. And the relative competitive position within an industry.Let me do the translation now:

Kamil Toume

To discover your competitive advantage per Michael Porter. Be different, produce with less cost and choose a profitable industry. Is it a good way to find your competitive advantage? Is it a good business theory? we know that the market by nature is very competitive but teaching good competition means making business aware how good competition leads to improvement, continuous learning, and innovation not competing for trivial differences to make profits only.

My argument is that many companies have ruined their businesses out of securing and protecting their competitive advantage but they do not know what they are talking about. They are unsure and unclear of what set them apart from the crowd. This molds the actions of most companies and their focus on maximising short-term profits and delivering returns to shareholders. Their decisions are always exposed in financial terms.

Kamil Toume

Based on this definition, most companies are wasting their time, effort, sources, and resources in building a product, repackage it and decorate it to find the valleys that competitors have overlooked. They invest in systems and technologies that might give them the supremacy, but which supremacy are they talking about here?

kamil toumeCompanies whose competitive advantage is not a 100 % about people and their fulfilment tend to equate their business strategy and marketing with neurolinguistic programming and many market tricks. Manipulation is their daily practice, but if people develop the ability to detect manipulation, they will dramatically improve effectiveness at judging and discovering companies that have a true leading advantage from those which chase profits. To detect manipulation, look for one or more of its major hallmarks by answering the following questions.

  • Do companies advance society interests while running businesses?

  • Do such companies exist in the market to compete with other businesses or solve a big problem facing people in a business model?

  • Do they produce products that satisfy people’s true needs or desires?

  • Do they put their staff first or customers? Both employees and customers are people and both are first.

The answers to these questions determine whether a company is using manipulation to sway their customers into buying their products and using their services. If you doubt the answers to these questions, then it is clear that such companies exist to make profits only and profits are the centre of their universe, not people. Their competitive advantage is measured in dollars, pounds, or euros.

2

The true leading advantage that any business should strive to produce is to do something for the greater good for all and solve a big problem thus contributing to the fulfilment of other people whether they are the associates or the customers. This is the only and real success factor for developing a great business advantage. And this is the genuine advantage that any business shall bring to the whole society

There is nothing called a competitive advantage in business. There is a leading advantage that the business leaders strive to contribute and bring to the whole world

Kamil Toume

Now, the question is not how your business is going to make a competitive advantage but how it will create the positive advantages for the business, the associates, the customers, and the whole society. This is the true advantage that any business should have.

Does your business have one? If not, think about having one.

 

 

 

 

Advertisements

One thought on “There is nothing called a competitive advantage in business.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s