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Sustainable Strategic Advantage

June 08, 2012 | Comments: 0 | Views: 162

We define a sustainable strategic advantage as a strategic competency. A competency is a combination of skills, processes and knowledge: the skills we possess as a company; the knowledge we possess as a company - the sum of the individual knowledge throughout the company; and the processes we use to take advantage of our skills and knowledge. It is important to understand that competencies arise from the intellectual attributes of a company, not its physical attributes or locations.

If a competency is to be considered strategic, it must pass three tests to a high degree of value. First test is: Does the competency create significant value for our customers? Second is: Does the competency truly differentiate us from our competitors? Third is: Is the competency difficult to copy? With each of the three tests, we grade the combination of skills, processes and knowledge as meeting a standard which is low, medium or high in its effect.

Does the competency create significant value for our customers? If the competency does not create value for our customers, why would people or other companies buy what we have to offer?

Does the competency truly differentiate us from our competitors? If the end result is that we are really differentiated, customers will buy from us because we bring something very special to the market place, putting us ahead of our competitors because of the perceived value of our strategic competency.

Is the competency easily duplicated? If it is, the difficulty to copy will be low, and the test will not be met to the degree needed to define the competency as being strategic. It is highly likely that, given sufficient time and both human and monetary capital, any strategic competency may be duplicated. But, if it is time-consuming and expensive to copy, then we likely have a sustainable competitive advantage, which translates into a strategic competency.

What burden does this impose on the company that has attained a sustainable competitive advantage, a strategic competency? As compared with physical assets, which over time deteriorate with usage, the more a strategic competency is used, the better it becomes. It is somewhat like a golf swing. If an ordinary golfer plays once or twice a week, he or she will likely play to a particular level, plus or minus a few strokes. That level will depend on the physical attributes of the player, but probably won't improve or degrade much as long as the player continues to play about the same amount of golf.

A PGA player, on the other hand, practices hundreds of shots a day, when not actually playing in a tournament. He or she has taken their game to a higher level of competency through practice and repetition, honing their skills to the highest possible level. It is through the practice, repetition and constant honing of their play, that they have the skills, knowledge and processes to play at levels that we ordinary players can only dream about.

Now, because there are a large number of players who, as professionals, have attained the high level of skill necessary to compete, this particular example would probably fail the third test of being difficult to copy for the most part. The main point here is that one must be objective in analyzing whether a particular combination of skills, processes and knowledge actually meets the extremely high standards of becoming a true sustainable competitive advantage. If your company has such a strategic competency, you should have a real advantage in the market place, as long as you continually hone the skills, processes and knowledge which make up that competency.

If you are interested in learning more about strategic competencies please contact me at:

Dana Baldwin is a Senior Consultant with the Center for Simplified Strategic Planning, Inc. (CSSP). CSSP has been leading companies through Simplified Strategic Planning since 1981. Dana has more than 13 years of successfully helping companies develop effective, actionable strategic plans in a wide variety of industries.

Dana came to the Center for Simplified Strategic Planning, Inc. after a distinguished career in the machine tool industry. As the leader of two different machine tool manufacturers, in positions of COO, President, CEO and Chairman, he helped pioneer the precision sawing of many different types of metals for a wide variety of industries.

Dana has worked with a broad group of industries, from meat packing to aluminum anodizing, parts kitting, regional banks, regional telephone companies, packaging materials suppliers, medical parts manufacturers, aircraft landing gear re-manufacturing, logistics, industrial seating, industrial pumps manufacturing, property and casualty insurance, life insurance and many others. His perspective and ability to objectively probe and question brings out the best in the teams he works with at each company.

Source: EzineArticles
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