The idea of a sustainable competitive advantage is no longer relevant for many companies, according to Columbia Business School Professor Rita Gunther McGrath, and that number is growing. People have started "to cling too long to advantages that are starting to fade," she said in the recent MDM Premium article, Redefining Competitive Advantage. "And it causes people to make decisions that are really not suitable for the long-term best interests of their companies."
Instead, today's business environment requires companies to capture opportunities quickly, exploit them and move on before they are exhausted, she said.
In The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business, McGrath argues that five factors have contributed to a shift in the very nature of competitive advantages, making them more transient:
Accelerating technological innovation. While innovative projects used to be a once-in-awhile occasion for companies, McGrath says the rate of technological change has greatly increased, and companies’ technological innovations are now “flying fast and furious.” (Read about e-commerce’s impact on the wholesale distribution industry.)
Digitization. As more products move to digital platforms, it’s easier to copy them, making it more difficult for companies to protect them from duplication for very long.
Nontraditional competition. Globalization has played a major role in changing the competitive landscape, according to McGrath, as trade with countries such as China and India has increased. (Read more about the impact of global competitors in wholesale distribution in Global Competition on a Local Level.)
Instantaneous communication. Free and widely-available communication technologies such as Skype have enabled companies to instantaneously communicate, audibly and visually.
Easy and inexpensive travel. Travel doesn’t have the monetary barriers that it used to, McGrath says, enabling the average Joe to communicate with and create and nurture relationships on a global level.
McGrath recently spoke to me about how to identify and take advantage of these more transient competitive advantages. Read more in Redefining Competitive Advantage.
In a related report, MDM recently looked at how the competitive landscape in wholesale distribution in changing in our popular Special Report: The Shifting Competitive Landscape in Distribution.
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