I have been following Rita McGrath – professor at Columbia Business School – since the 1990s when I was writing my Phd on dynamic capabilities. She’s very inspiring. In her new book “the end of competitive advantage” (to be released in June) she highlights a truth many practitioners already know (the hard way)… Sustainable competitive advantage is now the exception… Transient advantage is the new normal.
Here’s the anatomy of a transient advantage:
- Begins with a launch process – this is an exploration process;
- Then you have the ramp up where the advantage is scaled. Interestingly, Porter argues that growth often blurs uniqueness, creates compromises, etc and in the end will undermine competitive advantage;
- The next step is exploitation – this is when value capture takes place; and finally
- The reconfigure phase to keep the advantage fresh or sometimes the disengagement process.
What is interesting is the need for both analytical thinking (exploitation) and design thinking (exploration) in this process. Changing the perspective, however, that you have (at best) a transient advantage and not a sustainable advantage is an important first step.