One of the most challenging activities during the strategic planning process is identifying your organization’s competitive advantages. Why? It takes a lot of thought and sometimes several years of being in business to fundamentally understand your organization’s core DNA.
A competitive advantage answers the core question “What are you best at?” It’s a lofty question, and you might be tempted to just answer the question quickly and move on in the planning process. But, it’s not truly a competitive advantage until you’ve followed these three steps:
- Identify your core strengths – First, you’ll need to conduct a SWOT analysis to understand what are your organization’s core strengths and competencies.
- Understand what you do better than your competitors – A competitive advantage is something that you do better than your competitors. The only way to know what you do better than your competitor is to do a competitive analysis, period. Plus, doing so will allow you to understand what your current competitors are or aren’t offering to your potential customers.
- Compare it against your customer feedback and data – A common approach is to identify competitive advantages internally. But, competitive advantages need to speak directly to customer feedback and data. Conduct customer feedback research to truly understand why your customers see value in your organization or product. Without it, your identified competitive advantage is really only a “best guess.”
If you’ve completed these three steps and your identified competitive advantage checks out, write it down. Repeat the process as many times as you need.
Here are a few examples of excellent competitive advantages:
- Honda is the best at developing precision engines and power trains because its products are the leaders in reliability and technological advancement.
- Bikram Yoga is best at producing the yoga experience and practice because it’s packaged for franchising.
- Google is best at optimizing searches for any type of information because it continues to innovate and push technology past what it thought was possible.
Remember, competitive advantages evolve.
Business and customer demands are constantly changing, which makes results in competitive advantages to be constantly evolving and often fleeting. Over time, they may need to change or evolve so you can stay ahead of your competitors while still adding value to your customers.