Sunday, October 25, 2009

Competitive Initiatives

During the past couple of decades many companies have created competitive advantage by focussing on techniques to boost productivity. These include outsourcing, reengineering, automation, and getting incrementally better at doing the same thing over and over again through six sigma like programs. The trouble with competitive advantage created in this way is that it erodes easily since the competition can easily match it. For the most part, these productivity gains were around routine, non-complex jobs.

Now several leading companies are focussing on making their talented, highly paid, most valuable decision makers more productive. These are employees whose decision making role, or their direct relationships with customer or suppliers gives them particular leverage to take actions that boost competitive advantage. This is less about productivity in the traditional sense, (e.g. make more, better, faster decisions) than it is about performance that generates that competitive advantage. The tasks targeted for improvement are complex interactions.

Whatever this amounts to, I think it is not the optimum approach to creating competitive advantage. We create competitive advantage by solving the customer’s problem better than the competition. To sustain competitive advantage you must continually solve the customer’s problem (need, want, desire) better than the competition. Great companies know that the best ideas for solving customer problems can come from the most unlikely places. Why? Because we are all problem solvers and you never know who in the company is going to have that flash of insight that comes up with the new and better way. That is why great companies put in place environments that foster problem solving and employee engagement for every employee.

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