Often during plan design, we see organizations poorly manage or simply overlook integrating their competitive advantages into their strategy.
The reason many organizations overlook competitive advantages during strategy design boils down to two distinct reasons: either they don’t truly understand what a competitive advantage is OR they skip this step in the planning process because it’s challenging. If you identify with either of these challenges, don’t be ashamed. It’s a tough subject and a common stumbling block for organizations of all sizes.
To help your organization better understand how to identify your competitive advantages and leverage them as part of strategy design, let’s outline the two truths and a myth about competitive advantages and provide an exercise for you to use with your planning team.
Two Truths – What is a Competitive Advantage?
There are two essential truths to identifying a competitive advantage for your organization. A competitive advantage must meet both criteria to be considered an advantage:
- Competitive Advantages are organizational strengths unique to your organization. These are the strengths that set you apart from your competition. It’s what you do well and is distinctly unique in your market.
- Competitive Advantages are traits or strengths important to your clients. If the strength you’ve identified is important to you but not important to your client, it’s not a competitive advantage. A competitive advantage is a strength or reason your clients choose you over your competition. It must have value to your customer!
One Myth – What isn’t a Competitive Advantage?
We see this one common mistake again and again in identifying competitive advantages – a competitive advantage is not a strength you have because your competition also has it. Those strengths, while important to keep you competitive in your market, are often referred to as tablestakes. Essentially, they are the required strengths to keep your organization at the table in the marketplace.
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An Exercise to Engage Your Planning Team in Helping Map Your Competitive Advantages
We recently saw Integral Blue complete this competitive environment mapping exercise as part of their planning process and were blown away by their results.
As a follow-up to your SWOT exercise, we recommend completing this exercise to collaborate with your team to truly identify your competitive advantages.
Step 1: Ask Your Planning Team to Answer These Questions
Ask your planning team to answer these questions as the first step in this exercise.
- What are our greatest strengths? List the top four.
- What are our customer’s top four wants and needs?
- In your opinion, what are our top four competitors?
- What do these competitors do better than us? List the top four.
Step 2: Discuss Your Answers as A Team
After completing the exercise individually, come back as a planning team to discuss everyone’s answers. Move through each question thoughtfully and come to a consensus on the answer to each question. This discussion will provide insight into the perspective of each member of your planning team and give a holistic view of your organization’s potential competitive advantages.
Step 3: Fill Out the Following Chart
After coming to a consensus on the answer to each question, fill out the following flowchart to help you clearly identify your organization’s competitive advantages.
Step 4: Clearly Identify Your Competitive Advantages to Articulate How You’re Going to Win in Your Plan Architecture
With your diagram complete, you can clearly see your competitive advantages, strengths that are tablestakes in your market, and the value differentiator your top competition offers in your marketplace. With all of these characteristics and strengths outlined, you can use this as part of your plan’s framework and to help you clearly identify where you play in your marketplace and how you will win against your competition.
So, why go to the trouble of completing this exercise.
We know identifying competitive advantages can be challenging. But, successfully doing so can give your planning team the tools to be thoughtful and strategic in the way you build your long-term strategy to be differentiated in your market while providing continued value to your customers. In short, it helps you clearly identify how you’re different from your competitors and how you’ll win in the long-term.
We nod our heads to the work Integral Blue completed in identifying their competitive advantages and how they are being used in the framework of their plan!