Dealing with competitive rivalry: Operational effectiveness is not a sustainable competitive advantage.

Dealing with competitive rivalry: Operational effectiveness is not a sustainable competitive advantage.

Dealing with competitive rivalryOperational effectiveness is not a sustainable competitive advantage.

The difference between operational effectiveness(OE) and competitive strategy(CS):

OE: You perform SAME activities as your rivals, but execute better.
CS: You perform DIFFERENT activities from rivals.

OE:The value you create for your customers meet same at lower costs.
CS:The value you create for your customers meet different needs and/or same needs at lower costs.

OE: You have cost advantage (meaning you operate at lower costs) but it is hard to sustain due to meeting same needs and performing same activities as your rival.
CS: You sell at sustainably higher prices and/or lower costs.

OE: You are the BEST, because you compete on EXECUTION. (It is not sustainable because next time your rival can execute better than you)
CS: You are UNIQUE, because you compete on strategy. (Not easy to imitate because strategy has to do with how you configure your business activities and internal choices you make.

We can deduce from the comparison that improving operational effectiveness does not provide a robust competitive advantage because rarely are ‘best practice’ advantages sustainable, because once one company establishes a new best practice its rivals tend to copy it quickly.

I hope that helps you to make necessary changes in approach to your business when it comes to acquiring and maintaining a competitive position in the market.

#KgadiOnStrategy

byKgadi Mmanakana

I am a researcher, thought leader and consultant on New and Emerging Markets, Business Model Innovation, Turnaround and Corporate Strategy. I embraces and integrate the 4th Industrial Revolution in my work. My belief is that there's some truth to every business idea, one shouldn't be quick to throw it away.

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