Competitive advantage and the need for differentiation

When markets are in embryonic or growth phases, companies often do not feel the need to differentiate themselves from the competition. However as markets mature competition becomes tighter and a company without a differentiated offering is only able to compete on price.

Ways of pursuing competitive advantage

Superior efficiency Superior quality Superior innovation Superior responsiveness to customers

Differentiation by design

In the short term companies can employ cost reduction strategies through the redesign of their factories and outsourcing of none core activities, however although important non of this will provide a sustainable advantage.

To maintain a competitive advantage a company not only needs to have low costs and great quality it also need to institutionalise the focus on the emerging needs of their customers and the development of customer value propositions that are centred on meeting those needs. The key enabler for this is a strategic approach to competency development.

The successful company strives to differentiate itself in as many dimensions as possible