Part 1
Background on Traditional Competitive Advantages
According to textbooks, competitive advantages generally fall into 4 types of strategies: cost leadership, differentiation, innovation and operational effectiveness.
This applies to small, medium, and enterprise businesses. Your company may be 1 of 10 contracting firms operating in a region across 2 to 3 niche business lines, with you being that low bidder competing against another business who’s relying on its sterling reputation for quality built over 50 years of success as a family business.
When you consider what it takes to build and maintain a competitive advantage, it is obvious that it takes a considerable amount of work, investment, time and perhaps a touch of good fortune depending on your industry. Some companies take a generation or two to build these advantages.
Examples of Competitive Advantages
- Brand
- Top tier talent
- Intellectual property or technology
- Distribution or territory rights
- Top tier continuous improvement system
- Access to cheaper resources
Some Way to get these Advantages
- Many years
- 1-2 years of sustained effort
- Up front dollars or sacrificed margin
- Uninterrupted success in 2 market cycles
- Higher operating cost structure
