A key element of a corporate strategy is defining your unique competitive advantage in the marketplace. As CEO, you must be certain about what you do better than your competitors, and rally the entire organization around that advantage. So, as the leader of the company, how do you determine where your competitive advantage really lies? The Revenue Growth Diagnostic interactive tool will help you determine if you are likely or unlikely to make your number.
Determining Your Competitive Advantage
There are three basic sources of competitive advantage:
- Customer experience
Unfortunately, many executives have not proactively defined their competitive advantage. Instead they have let their customers pick it for them. They will select price and your product or service will become commodity. Even worse, if you haven’t optimized the cost structure for price, you will lose revenue and margins. It is a recipe for disaster.
Another common mistake is trying to deliver on all three. Organizations try to be all things to all people. This is a very risky strategy, and again, usually results in a slow death for the company.
Instead, as CEO you must pick one advantage and become exceptional at it. Then, create strategic alignment across the organization by making sure everyone understands, and rallies around, this advantage.
Once you have selected your competitive advantage, it must be validated by the marketplace. Too often companies suffer from one of three issues when it comes to competitive advantage:
- False differentiation; the organization has selected the wrong competitive advantage, one the market does not care about.
- Uneconomic differentiation; selecting a differentiator that customers are unwilling to pay for.
- Unsustainable differentiation; selecting a differentiator that is easily copied by your competition.
Losing sight of the customer is a sure way to get your competitive advantage wrong. You must make sure the market values it, and is willing to pay for it.
Delivering on Your Competitive Advantage
In order to deliver on your advantage, the functions inside the organization must be in strategic alignment. Top performing companies have clearly defined their competitive advantage. Their buyers are willing to pay for it. It can’t be easily imitated by the competition. And the entire organization has aligned themselves to deliver on it. Each and every function understands the advantage, and understand their role in delivering it.
In order to do this, you must break down the silos typically seen in organizations. No matter what your advantage is, as CEO you are responsible for driving it throughout the company. This type of rigor, when exhibited, generates above average results.
There are a couple of simple ways to ensure your organization is delivering on its competitive advantage.
- Develop functional strategies that deliver on your competitive advantage.
- Maintain cross-functional alignment, and communication, around the differentiator.
- Align with the marketplace and constantly validate your competitive advantage.
As CEO, you must be certain about what you do better than your competitors. Get it wrong, and you will not hit your revenue growth objectives. Instead, determine your advantage, validate it in the marketplace, and make sure your entire organization is delivering on its promise.
Have expectations gone up and you might be wondering if you can make your number? Here is an interactive tool that will help you understand if you have a chance at success. Take the Revenue Growth Diagnostic test and rate yourself against SBI’s sales and marketing strategy to find out if:
- Your revenue goal is realistic
- You will earn your bonus
- You will keep your job