How to Develop a Competitive Advantage
What is your competitive advantage? Have you taken the time to craft a statement for your organization that clearly defines how you serve your customers’ needs better than your competition can? In this whiteboard video, Erica Olsen lays out why you should define your competitive advantage and how to do it. In minutes, you can learn how to create or revise this powerful component to your organization’s strategy!
For more resources on building your strategic plan, view our Essentials Guide to Strategic Planning.
“Hi, my name’s Erica Olsen. Today’s white board session is on competitive advantages. Now, before we get all confused about what a competitive advantage is or isn’t, let’s just know that it’s going to take you some time to develop it. I don’t mean time such as hours expended, I mean time thinking, and perhaps several years to really get to that core. So if you’ve put it on your strategic planning agenda, competitive advantage, just know that you’re going to have a conversation about it but you may be having a conversation about it for several years until you get down to that essence.
So, what is a competitive advantage? It answers the question “What are you best at?”. So let’s stop there for a moment. You don’t necessarily need to be the best in the world, you may not need to be the best in your state or in your country, you just need to be better than your competitors at what you do in delivering value to your customers. Another way to think about it is “Why do your customers buy from you?”. Right? Why do they buy from you?
Well, I’m here to tell you that if you have a competitive advantage clearly identified, that means you don’t do anything that doesn’t actually get you to customers paying for something, or giving you money for a value that they want to receive in exchange for dollars, of course.
So, let’s look at how we actually put a competitive advantage together. What are the components? I really think asking this question “What are we best at?” and let’s not forget, really at the core, it is our DNA. What’s your DNA? This is my little handy dandy formula. Your company name, I’ve got my example. Your company name plus what you’re best at and why. That why question’s pretty hard.
So let’s take my example, Bikram Yoga. Bikram Yoga is a practice of yoga that is of course done in yoga studios and what they’re best at, they’ve done an amazing job at productizing the yoga experience. So, what do I mean by that? They have franchises all over the United States that do exactly the same type of practice and they were able to productize it by, again, that means, setting up a pretty consistent process in a very specific yoga practice that nobody else had. By doing so they were able to package it and franchise it. So the folks that actually did this, their competitive advantage, and of course they’ve trademarked it as well, their competitive advantage was the ability to take something that was a little esoteric in nature and actually put it together so that everybody in the world, if they wanted to, could buy that particular process and sell it within their community.
So, competitive advantage, again as I mentioned, it’s going to take you a while to get to. Ask those hard questions of yourself and your management team, and keep coming back to that question of “What are we best at?”. And again, as you’ve heard me say, don’t forget to ask your employees and your customers, because they can really help you answer this question better than, probably you can.
So Erica’s tip, once you have your competitive advantage, what the heck do you do with it? It needs to be built into your strategic plan. All of your goals and objectives and your mission and your vision all need to support the development and the reinforcement of your competitive advantage.”