No business can survive for long without some form of competitive advantage. Whether it’s explicitly defined or not is one thing and whether it’s a sustainable competitive advantage or not is another thing.

But essentially, that you’ve been in business for up to 3 years and still able to make a sale, no matter how small, is an indication that you have some form of competitive advantage. Because if you didn’t, you wouldn’t last more than your first year in business!

What is Competitive Advantage?

Competitive advantage refers to one or more qualities, attributes, features, or aspects of a company’s products/services that makes it a favorable choice to the target customers when compared to other existing competitions.

These qualities, attributes, features, or aspects of a company’s products/services are the ingredients for creating a superior value proposition in the market. Without them, you will either end up creating an equal value proposition or inferior value proposition compared to the existing alternatives.

Your competitive advantage is the answer to the question; why should your target customers buy from you rather than from other existing competitions?

Your target customers seek out for justifications when making a buying decision. They want to know why they should consider your company and her products or services above all the existing alternatives in the market.

All the things you’ve put in place to enable them prefer you above other competitions are your competitive advantages. They are the things that give your company and her products/services a fighting chance in the marketplace.

Your business is dead if it doesn’t have any. Your competitive advantage is your company’s license to compete in the market. Without it, no one will pay attention to neither your company nor the products/services it sells.

How Sustainable is Your Competitive Advantage?

Like I deliberately mentioned above, all existing businesses have some form of competitive advantage. Otherwise, they would have been long gone.

However, having some form of competitive advantage is not a guarantee against business failure. Because in the end, if your competitive advantage is not strong enough to keep you in the market, then it’s just a question of time before your business dies!

Meaning, not all competitive advantage is a sustainable advantage. Furthermore, not all competitive advantage can last forever without being copied by others.

So where does this leave you?

Very simple; don’t settle for some form of competitive advantage, rather aim to create sustainable competitive advantages.

The following points will help you determine if you have a sustainable competitive advantage or not.

• If your competitive advantage can easily be replicated by others in the same market or industry as yourself, then you don’t have a sustainable competitive advantage yet.

• If your competitive advantage is solely dependent on price, being the cheapest in the market, then you don’t have a sustainable competitive advantage yet. Unless you complement your cheap price with some other superior value propositions or your cheap price is as a result of some revolutionary business processes you developed like Wal-Mart.

• If your competitive advantage was bought with money, then you don’t have a sustainable competitive advantage yet because your competitions can equally pay for more to get it. For example, in Nigeria DSTv versus HiTv – both are pay TV brands but the later (HiTv) outbid the former (DSTv) to get the exclusive license to broadcast the premiership league football competition. The following year, DSTv retaliated with a higher offer and outbid HiTv to regain the premiership league license. HiTv struggled for a while, and eventually disappeared from the market.

• If your competitive advantage is dependent on your unique location, then you don’t have a sustainable competitive advantage yet. Unless you’ve completely bought the entire surrounding environment or own the exclusive right to be the only player in that location.

• If your competitive advantage is having the most product or service features in the market, then you don’t have a sustainable competitive advantage yet. Why? Because there will always be another competition that will come up with a product or service with less features and steal your market share or other competitions who will come up with more features than you.

How to Create a Sustainable Competitive Advantage

Don’t be dismayed if all your competitive advantage seems to have been discredited above. There are still strategies you can adopt to create a sustainable competitive advantage for your company that cannot be easily copied.

Focus on the following;

• Culture

An organization’s culture is like the personality of an individual, it’s absolutely impossible to replicate 100%.

Why?

Because it is not entirely dependent on one thing but rather a set of complex intangible things that takes a while to create.

The culture of an organization is a sustainable competitive advantage because it is the foundation on which all other sustainable competitive advantages will sprout from.

Culture is the character of an organization; it dictates the behavior of the organization and determines the attitude of the people. It defines the mindset of the entire organization and influences every action, decision and intention.

It is a powerful competitive advantage that can make or break your company. And it begins with your very reason for being in business – your purpose. Companies with the greatest cultures didn’t stumble upon it by accident; they were all driven by purpose.

When your purpose for being in business is defined by your passion to make a difference in a particular industry and in the lives of your target customers, then you’ve got yourself a recipe for culture.

Just as it is with some of the greatest humans whose lives had major lasting influences on the world; Abraham Lincoln, Nelson Mandela, Mother Theresa, Mahatma Ghandi, Martin Luther King etc the strength of their character comes from their purpose for being.

The same is true for great companies; their character as defined by their culture comes from their sense of purpose. Your purpose for being will attract the right kind of people with common shared values committed to building a business that MATTERS!

Purpose defines values.

Values define character.

Character defines culture.

Culture defines sustainable competitive advantage.

• People

The caliber of people in your organization to a very large extent will determine the sustainability of your competitive advantage as a business.

Sustainable competitive advantages don’t create themselves, people do.

And to attract the kind of people that will create the kind of sustainable competitive advantages you desire, your company has to be driven by purpose – a greater reason for being other than profits.

In my last unusual article about competitive warfare, I talked about the need to create a tribal team in your business. I cited the US Navy Seals as a perfect example of what a tribal team should be like.

A core attribute of such a tribal team is their commitment to the mission. The mission above everything else is what defines, dictates and influences their every action, intention and disposition. The mission is the key that unlocks the potentials of the tribal team.

Tribal teams don’t respond to money alone, they respond first to a mission. They respond to purpose because they are driven by purpose. And if you want to attract such into your company, you’ve got to be about building a business that MATTERS.

Companies with the greatest competitive advantages of their industry are powered by tribal teams – people driven by purpose and committed to a mission of greatness.

Examples abound;

• Apple: one of their competitive advantages is design. This is as a result of their mission to create products for the “crazy ones” – people who want to change the world. It isn’t surprising to note that Apple is home to the most creative minds in the world enabling it to consistently come up with innovative products with breath taking designs.

• Google: one of Google’s competitive advantages is their search algorithms, the best in the entire search engine industry. This is as a result of their mission to help organize the world’s information. It is equally not surprising to note that Google is home to the best software engineers in the world enabling it to consistently improve her search algorithms.

• USA: countries also have competitive advantages and United States of America is one country that boasts of the world’s smartest people. One of their competitive advantages is innovation. America leads the world in terms of innovation and this is as a result of their mission to create free country where anyone and everyone is welcomed to pursue whatever they like and become whatever they want. This mission is essential to the unending influx of the greatest minds in the world into the United States to explore their dreams. No wonder they lead the world with ground breaking ideas, inventions and innovations.

I can go on with more examples, but I am sure you got the point already. Your ability to keep coming up with sustainable competitive advantages is directly linked to the caliber of people in your company.

And to attract such caliber of people, your company must stand for something; it must be driven by purpose and committed to a mission far greater than just making profits. You cannot buy such caliber of people with money alone!

• Processes

The internal operations of your business are another source of sustainable competitive advantage. This is known as business processes; it’s the sum of all procedures, systems, structures, policies and technologies that powers the whole activities of your company.

Business processes define how work is being carried out in an organization. Without the existence of such processes, getting work done in an organization can become chaotic. Business processes create order in an organization and with orderliness comes efficiency.

This is the sustainable competitive advantage that is gained from having solid businesses processes in place in your company – efficiency.

Efficiency is the speed of execution within your company. How well and how fast are things being done in your company? The answer is efficiency. The more efficient a business becomes, the more things it can accomplish on time and for less.

Efficiency gained through sound business processes can become a source of sustainable competitive advantage because it impacts on the eventual outcome and quality of the products/services you sell.

• Dell computers for instance was able to build a strong competitive advantage over the other existing PC manufacturers through her business processes. Rather than manufacturing ready to buy PCs, Dell computers engaged with their target customers directly and allowed them customize their own desired PCs with custom specifications.

• Wal-Mart is still occupying her positions as the world’s biggest retailer as a result of her solid business processes which efficiently integrates supply chain management with technologically advanced logistics and distribution system. This has enabled the company to continually reduce the costs of inventories thereby allowing her sustain her everyday low prices competitive advantage.

• Back in 2008 when we ran a cyber cafe business, the entrance of a close competition nearly cost us our business if not for one of our efficient business processes. The competition copied our pricing strategy, copied our ticketing solution (timer) and infringed on our location. The only thing they weren’t able to copy was our membership strategy which was built around a set of efficient business processes. In the end, this alone proved itself in our competitive warfare against them.

Business processes indeed do take time, effort and cost to create, this is precisely why they do so well as sustainable competitive advantages. When your competitions think about the whole time, effort and costs it will take to create a duplicate, they will decide otherwise.

The more complex those business processes are, the more difficult they are to replicate by your competitions. It will take a lot of hard work, but it is very much worth it to start creating and building your own efficient business processes for your company.

Apart from the competitive advantage they bring, they also help you scale your business and offer you the opportunity to expand quickly.

• Knowledge

Another often overlooked source of sustainable competitive advantage is knowledge. And I am a big proponent of this. Apart from being a personal beneficiary of the competitive advantage of knowledge, I have equally witnessed it at work in the businesses of my clients.

You see, what you know about your industry, your customers, your business environment, your competitions, and your strategic partners can powerfully create a sustainable competitive advantage for your company.

Knowledge is the source of ground breaking inventions and innovations. The most innovative companies are learning organizations – they perpetually invest in trainings and research and development.

In a fast paced business world that we currently live in, you cannot afford to remain competitive with outdated information. You’ve got to stay at the top of your game with up-to-date information about your industry, customers, business environment and even your competitions.

• Thought Leadership (Authority)

Are you a known, liked and trusted expert in your industry? If not, you should be.

Thought leadership is another often overlooked source of sustainable competitive advantage for your company. The mere fact that you are an influential voice in your industry commands an undue competitive advantage over your competitions.

Thought leadership cannot be bought, it is earned over a long period of time and this is what makes it a sustainable competitive advantage. Building a passionate audience around your business is a luxury that many of your competitions won’t even dare to confront.

When you are the leading voice in your space, no amount of advertisement from your competitions will distract your passionate audience from paying attention to what you’ve got to say next.

• Gary Vaynerchuk grew his family wine business from a small liquor store in New Jersey, USA to a powerhouse brand called Wine Library. How? He became a wine expert on his video blog show called wine library TV on YouTube that attracted a massive online audience of 100,000 viewers a day!While his competitions were busy chasing local customers to visit their wine stores, Gary was busy building an audience of passionate wine lovers. WineLibrary.com was an eCommerce trail blazer and Gary used tools like email lists and video to expand the reach beyond New Jersey.Leveraging on his thought leadership, Gary has built up his family’s liquor store into a $60 million business. He has published 4 bestselling books, started a media consulting company and co-founded a $25 million investment fund.

Conclusion

The true sustainable competitive advantage doesn’t come from a particular product or service (outcome), but from a particular kind of company (source). So the real question should be; are we building a truly sustainable competitive company?

A company that has the capacity and capability to perpetually come up with superior value propositions in their chosen industry or niche.

A company that is capable of continuously raising the bar in whatever industry or niche it chooses to operate.

A company that can consistently outperform itself even though the competition haven’t yet caught up with her existing superior products/services.

This is the true sustainable competitive advantage; to build a company that is fundamentally capable of creating competitive advantages. The goal is to focus on the source (the company) rather than the outcome (competitive advantages).

Outcomes can always and will always be copied; it’s all a matter of time. Great companies are aware of this brutal fact and that’s why they perpetually keep outdoing themselves rather than trying to outdo the competition.

The secret of winning is to consistently be ahead and let the competitions play catch up!