Creating Competitive Distinction: A Journey With Discipline
Bruce E. Jacobs
|Bruce E. Jacobs|
Ideally, competitors offering the best products and services for the best price win in the market by generating a profit. It’s pretty simple, but can it be done consistently and reliably year after year, where the profit generates a reasonable return to investors, provides sufficient capital for reinvestment in the company’s future, services its debt obligation, compensates employees for their work and also pays taxes on the profits?
How do you maintain a competitive advantage and create competitive distinction your customers, competitors and investors recognize? Any competitive advantage is only a temporary advantage. The question is not will the competition catch on, but when will it catch on and catch up?
“Must Get Rights”
Enterprises that create competitive distinction routinely create competitive advantages, and they create competitive distinction by focusing on four “Must Get Rights” in a relentless and rigorous journey with discipline.
Product Leadership focuses on continued strengthening of the enterprise’s brand name and branded products, because the brand represents the level of confidence customers have in the enterprise and its products. Product leadership represents a specific level of quality, performance and features. Consistency of performance, reliability to perform to specifications and the dependability to perform are fundamental principles that are not compromised. Customers recognize this value and purchase the products for these reasons.
Operational Excellence focuses on improving the performance and cost structure of the company to meet customer and competitor challenges. Superior supply chain operational capabilities and improvements are critical to support future growth, meet price competition and offset price increases that are incurred but cannot be passed on to the customer. The cost structure always is being challenged and improved to provide products and services at the lowest total cost. Business processes are redesigned, simplified and improved to increase throughput without additional costs or personnel. Information technology is deployed to enable new processes, integrate with customers and improve communications across all supply chain players.
Customer Delight focuses on exceeding the level of performance achieved in customer satisfaction by providing great pleasure from every aspect of the product and the customer’s interaction, beginning with the initial contact through the sale, order fulfillment, delivery, billing, warranty and product return. Customer delight is a significantly higher level of performance and experience with the product and service than customer satisfaction may achieve. It also includes providing new services and responding to and fulfilling customer-specific requests.
The primary goal is to make your customers’ experience in doing business with you—as well as their experience with your product or service—extremely satisfying in the customer’s terms. Customer delight exceeds. Business processes that focus on customer service, ease of doing business and proactively meeting customer needs and requests have a major emphasis and always are being improved. Achieving excellence at every point of interaction with the customer always is being evaluated and improved.
New Business Growth focuses on continuing to increase the size, dimensions, breadth and depth of the business in new markets, with new products and services and in new market channels and world regions. Business growth is a balanced mix of internally generated growth from new products, customers and services or externally acquired growth through the acquisition of other companies, product lines, service lines and capabilities.
Underlying the “Must Get Rights” of competitive distinction is the company’s ability to recognize its core competencies, to continue investing in its core competencies and develop new core competencies as required to meet market changes and competitive challenges. Core competencies are the lifeblood of the enterprise—they are the expertise, knowledge capital, processes and experiences that constitute a body of knowledge. And they are the capabilities and skills that create value for the customer and are the foundation of the company’s success. A company’s core competency can be a source of competitive advantage because it adds value to the product or service the customer buys.
Developing and maintaining competitive distinction is a journey with discipline. The firms in the medical products market that have developed competitive distinction have created it and maintained it with relentless and rigorous hard work. They may not always work on the “Must Get Rights” with the same intensity year after year, but they always are honing them.
As the business climate shifts and changes, more emphasis may be focused on one or two of the dimensions. For example, the brand name and recognition may reach a point when it needs to be revitalized and energized to meet new competition and products entering the market. Product improvements may be required and new products may be developed or acquired to maintain product leadership and new business growth. For most enterprises, if you aren’t growing, you’re either a candidate for acquisition or you’re going out of business.
As offshore products compete in the market and chip away at your volume and customer base, operational excellence and customer satisfaction may take the forefront for greater improvements. Cost pressures will need to be satisfied and improving customer services will be required. Today, having the best product isn’t enough to create a competitive distinction. Every product on the market can be replicated through reverse engineering, and counterfeiting branded products has become more severe. Product superiority can be duplicated, but the core competency of creating superior products with the expertise, skills, knowledge capital and business processes cannot be replicated easily or reverse engineered.
Chart Your Progress
To develop and maintain a competitive distinction and create numerous competitive advantages is a journey that requires the discipline to stay focused and commit the resources to make improvements in the four dimensions of the “Must Get Rights.” If you want to know your status on the journey, review your enterprise and define your position on the dimensions by answering these questions:
• Where do you rank in Product Leadership recognition at both the price point and quality you compete at in the market?
• What Operational Excellence achievements have you implemented, and what are the next requirements?
• What have you done to create added Customer Delight?
• What is your New Business Growth? How was it accomplished, and what’s next?
• What investments have you made to improve the present core competencies and develop new core competencies you’ll need to compete in the future?
Having a good product for a fair price isn’t enough to win in today’s competitive market. Companies will win in the longer term will be those that create competitive distinction and routinely create competitive advantages because discipline is firmly established in their management and business processes. The “Must Get Rights” of creating competitive distinction are not a program or a project—they are a way of business life embedded in the management processes of the enterprise.