According to Colombia BS Professor Rita Gunther McGrath, achieving a Sustainable Competitive Advantage (SCA) (establishing a unique competitive position that can be sustained for long periods of time) is nearly impossible these days.
Allthough that idea is not new (see for example this discussion on 12manage: Is Strategic Planning Passé?
and compare Real Options
and Emergent Strategy
), Professor McGrath does introduce an interesting new term: TRANSIENT ADVANTAGE (TA).
I looked up the word "transient", it means: brief, temporary, passing, provisional, temporal. Quite the opposite of sustainable if you think about it.
McGrath argues companies need to embrace the notion of TA instead of SCA, "learning to launch new strategic inititiatives again and again, and creating a portfolio of advantages that can be built quickly and abandonded just as rapidly"
What I liked most of this article is the seven dangerous misconceptions
, most of which indeed I have witnessed several times over the years:
1. The first-mover
trap (The belief that being first to market creates a SCA)
2. The superiority trap (The belief it is impossible to create a better product)
3. The quality trap (The belief that offering the highest quality provides a SCA - it won't because cheap and poor competitors will improve over time)
4. The hostage-resources trap (The habit of allocating most of the resources in a corporation to the big divisions / cash cows
5. The white space trap (innovation don't fit anywhere in the org chart)
6. The empire-building trap (in many large firms, the top positions and rewards are for those managing the large operations, resulting in hoarding, bureaucracy, and resistance to change)
7. The sporadic-innovation trap (innovation is an on/off process; not a continuous pipeline
To create an innovation pipeline or portfolio of advantages, companies need to apply eight shifts in the way they operate
and think about strategy:
1. Think about arenas, not industries (threats can come from players outside of your industry)
2. Set broad terms and then let people experiment (allow freedom to be creative)
3. Adopt metrics that support entrepreneurship
4. Focus on customer experiences
and solutions to real problems
5. Build strong personal relationships and networks
6. Avoid brutal restructuring and learn healthy disengagement
7. Get systematic about early-stage innovation
8. Experiment, iterate, learn.
And most of all: leaders must recognize that fast and roughly right decision making must replace deliberations that are precise but slow.
Source: Transient Advantage: Rita Gunther McGrath in HBR June 2013, p62-70