Competitive advantage is vital for a business, but on an individual level it is just as important, if not more so. For the individual, competitive advantage determines success or failure, if an individual achieves his goals in life, and ultimately the satisfaction one gets out of life.
I do not follow golf, but it appeared to me that, until fairly recently Tiger Woods had sustained a strong competitive advantage over just about every other pro – he consistently beat his competitors and set records (prior to self destructing, which is another story...). How did he develop this competitive advantage? From a young age he was immersed in understanding what it took to succeed at playing golf. Certainly, there was a lot of hard work and determination involved, a probable common denominator among competitive golfers. But what was the difference? Through persistence and effort he probably learned how to apply his individual characteristics, talents, and abilities into a unique competitive advantage over the competition.
The need for creating competitive advantage does not arise only out of a desire for success. When an individual or organization is not in tune with their competitive advantage, life becomes a struggle. We feel awkward, out of alignment, and out of tune with our life’s purpose. This leads to unhappiness and misery for the individual. At the business or organizational level it means bankruptcy or death. Please understand that I use the term “competitive advantage” in a positive sense. I do not intend to use it in a sense that would conjure up images of ruthlessly competitive environments or markets where only those who have some kind of “unfair” competitive advantage can survive. In this context, “individual competitive advantage” means leveraging who you are as an individual in order to achieve your goals and add value to the world in the process.
“Understand: you are one of a kind. Your character traits are a kind of chemical mix that will never be repeated in history. There are ideas unique to you, a specific rhythm and perspective that are your strengths, not your weaknesses. You must not be afraid of your uniqueness and you must care less and less what people think of you. This has been the path of the most powerful people in history.” ~ From The 50th Law, by Robert Greene & 50 Cent
Individual (or Personal) Competitive Advantage is what sets you apart, it gives you an edge, it gives you confidence, and it attracts success. It is your style, your way of doing things. It brings out the best in you because it is rooted in who you are as an individual and in a deep understanding of what it takes to succeed. In short, an individual competitive advantage is a result of an optimized synthesis of your individual idiosyncrasies with the competencies that lie within a particular context.
To be successful and create a competitive advantage you must ask yourself the following question relentlessly: How can I apply my unique individual characteristics in order to be successful? Add some passion and determination to this equation and you get a recipe for success.
Although I am not a follower or practitioner of martial arts, I can not help but admire and respect the late, great, Bruce Lee. Lee created his own style of fighting by immersing himself in training and research and understanding all the different styles of martial arts. He mastered the basics and adapted them to his personality and individual physical abilities. He then took what he felt were the best parts of each fighting style and combined them with his own unique talents and creativity to create a new style that was aligned to his unique strengths, in an optimal way, and gave him a competitive advantage, and made him a star. Of course, we see similar patterns among the super successful in just about every context, whether it be business, sports, arts, or some other field.
Whether you are a startup internet entrepreneur who is the sole employee of your own business, an athlete looking for an edge in your next competition, an actor, actress, rock star, or a hedge fund manager, in order to achieve success you have to know how to apply your unique talents and passions to the area that you are looking to excel in. No matter what you are trying to be good at, if you want to excel over the long term you need to create your own unique sustainable competitive advantage.
A further explanation of Competitive Advantage:
When one thinks of “competitive advantage” what usually comes to mind is the business world and how a firm can develop a “sustainable competitive advantage” that allows it to consistently gain above average profits within its industry. A business without a competitive advantage is doomed and will eventually fail, as competitors will eat away at its market share. Here I refer to competitive advantage on two different levels. An individual person’s competitive advantage, and the competitive advantage that an organization, business, team, or any group of individuals may have. Before discussing Competitive Advantage at the individual level, lets gain an understanding of Competitive Advantage in business.
Competitive Advantage in business:
We will talk about how you as an individual can develop your own Competitive Advantage and be more successful and happy, but first, let’s discuss it at the level of the business. We can then apply some of these concepts to the individual level and develop a method for creating a competitive advantage at the individual level.
In business, competitive advantage can be boiled down to the reason why customers come to you instead of one of your competitors. In the field of marketing, the USP or unique selling proposition can be seen as a short statement that synthesizes, in a compelling way, a firm’s competitive advantage over its competition.
In general, the business literature has said that a firm has a competitive advantage if it is more profitable than its competitors over time. For example, a firm like Goldman Sachs has a competitive advantage in investment banking because it consistently outperforms its competitors over time. As I am writing this initial draft, in late 2007, Goldman Sachs is preparing to report record profits. This is at a time when most investment banks are struggling and the financial markets are in the throes of a credit crisis.
Was it just because of a few lucky bets their trading desk made in the financial markets? Luck has nothing to do with it. They consistently outperformed the competition over time because they have developed a superior organizational culture (authors note: this is also because there is revolving door between the highest levels of government and GS upper management, which of course could be considered part of the evolution and development of its organizational culture). Within this organizational culture are the values that underlie and drive the decisionmaking of their employees.
In competitive markets the only true source of sustainable competitive advantage for a business is its organizational culture. It is the only thing that cannot be duplicated by a competitor over the long term. The field of economics refers to the long run as the period of time when all inputs, or factors of production to the firm, are variable. In other words, given enough time, a business can enter or exit any industry it chooses, arrange its business processes however it would like, hire whatever employees it wants, and basically have access to anything that any other business would.
The concept of competitive advantage in business is a topic of massive interest and volumes have been written on the subject. This book is not a review of what is already out there, but we will very briefly cover some basic concepts to provide an understanding for the analysis ahead.
For a business, a short and intermediate term competitive advantage can arise from several areas. Maybe it has access to certain resources that other firms do not, or it may have a strong brand name, maybe it was the first to market and established a dominant degree of market share and some sort of monopoly power, or the structure of the industry is such that competing firms are discouraged from trying to enter the market.
It is also possible that a business may have unfairly lobbied the government to pass laws and regulations as a tool to suppress its competition. These kinds of things can certainly provide for competitive advantage in the short and intermediate time frames. But given enough time none of the above competitive advantages are safe from a firm’s competitors.
Even if you have a strong brand in the mind of the consumer, if your product turns to crap and adds no value, your brand and reputation will quickly turn into a competitive disadvantage. You have to ask the question of what determines a great brand beyond the short run? Or what determines the value that is added by my product? If you want to have any degree of success beyond the short run, you need a sustainable competitive advantage. Great marketing can sell a bad product in the short run, but consumers quickly catch on if the hype isn’t backed up by some kind of value.
In recent years, the short run has become increasingly similar to the long run in that businesses can adapt quickly to their competitors actions. Unless you have been living in a cave all your life, you are well aware that the world of business is ruthlessly competitive. Over the last 20 years the pace of competition has picked up considerably with advances in information technology and widespread access to information of all kinds in real time. Take the internet for example. Just about anyone can set up shop on the net for a very small price, sometimes even at no cost, except for one’s time. What is it that causes people to focus their attention on one website and not another? What about a website that attracts a lot of traffic? Great content, right?
If someone has great content on their blog, they have found a way to apply their own competitive advantage in the form of content which then adds value to the lives of those who visit that webpage. I am referring here to original content that adds value and is aligned to the desires and demands of a particular target market. Anyone can copy and paste text, but through the application of a their own competitive advantage, an individual adds something unique that makes the lives of others better.
Adding value to someone life means that you have made their life better. In return, they have given you attention and a portion of their time. And time is becoming the most highly precious resource there is, if it has not already.
Case Study: How The Hard Rock Hotel raised the bar back in 1995
As an example of competitive advantage in business, let’s take a look at the gaming industry. Although there are some large barriers to entering the casino industry, such as cost, licensing, etc, this can be considered a highly competitive market locally in Las Vegas, because customers have a multitude of choices and they can easily switch from one casino to another by simply walking a short distance if they are unhappy with their current choice.
Over time, any one of the hotel/casinos can design and operate their business any way they want. They can copy someone else’s strategy, or (literally) blow up their old building and start over, and many do in fact do this. But this is no guarantee of long term success. There is, however, one factor that cannot ever be copied, and that is organizational culture.
In 1995, the Hard Rock Hotel opened its doors in Las Vegas, and the author was fortunate enough to be a part of its opening staff. Hard Rock Hotel owner & developer, Peter Morton, saw an opportunity to create a competitive advantage over other Las Vegas casinos. He would do this by creating as part of the plan an organizational culture that would, at least for the first couple of years, provide its guests with a new level of customer service. Young & attractive employees with personality were hired, even if they had no prior casino work experience. Employees were hired based on personality, attitude, ability to learn, and of course, physical appearance. It did not take long for the Hard Rock, despite being located off the Las Vegas Strip, to gain the reputation of having the best service and most personable and attractive staff of any hotel/casino in Las Vegas.
Upper management purposely hired front line staff that would give an experience that was different than the norm. Young, hip, sexy, fun, & positive were the internal values an employee had to have to be hired at Hard Rock. It was these employee values which were aligned with Peter Morton’s vision and the overall marketing and business strategy, that were utilized in creating the organizational culture that initially served as Hard Rock’s competitive advantage.
Up to that point in time, many of the casinos had a reputation for having poor service. In general, Dealers and Pit Bosses had negative personalities. Miserable front line staff that had an attitude of entitlement were the norm. There was an unmet need in the marketplace, and Peter Morton exploited the market by purposely creating and applying an organizational culture that was optimized to exploit that unmet need.
As part of pre-opening training, the front line staff at Hard Rock were instilled with Morton’s vision for organization culture. His number one value was “have fun, and make sure the guests have fun too….” Newly hired employees began to ask themselves the question “how can I apply myself to make this a fun place.” The result was a unique guest experience at each blackjack table, each restaurant, and each department as each individual employee brought forth and applied the best of what they as an individual had to offer.
When a player walked up to a table game in the casino they did not see a quiet dealer with his arms folded who didn’t want to be bothered. What they got was a smile and a “welcome to the Hard Rock” greeting. If a customer had a problem, front line staff met them head on with an attitude of empathy to solve the issue.
The design of the building, the organizational culture and employee values oozed into the atmosphere of the place, and it quickly became the coolest place to be. That atmosphere was why people chose the Hard Rock, and organizational culture is what drove the feeling in the atmosphere of the hotel.
But Hard Rock’s competitive advantage was not to be sustained. Turnover in management and the front line staff combined with a lack of focus caused the culture and competitive advantage to suffer. New staff was not trained on the importance of sustaining the organizational culture and competitive advantage. Over time, the vision was lost. It was not long before it turned into just another casino. The Hard Rock Hotel became a shadow of its former self, and in the process lost a lot of its business glory to its competitors. Other casinos, such as George Maloof’s Palms Hotel, went on to create competitive advantages of their own and have eaten Hard Rock’s lunch. Hard Rock’s organizational culture grew weak, and this allowed its position in the marketplace to be overtaken. Despite this, Peter Morton profited handsomely from the real estate bubble and resulting increase in Las Vegas commercial property values, but one cannot help but think that the decline in Hard Rock’s competitive advantage played a role in his exit strategy....
Thus, organizational culture is the “personality” of the organization. It is the “chemistry” that arises between the interaction of the individuals and organizational processes that comprise the operating framework of the firm, all in light of its leadership. Through circular feedback, this chemistry influences how individuals act and make decisions. Organizational culture is indeed vital to a firm’s success.
It takes effort to sustain or improve organizational culture and the competitive advantage that it creates. It must be actively maintained and not left to chance.
The bar is being raised everywhere, in every way:
Many, if not all, industries are now highly competitive, and it is no different for people on an individual level. Individual people regularly face highly competitive environments in all areas of life. We are constantly asking ourselves how we can be more successful, and achieve our goals, in our careers, our social lives, and anything else we decide to do.
Whether it is on an individual, team, business or organizational level, finding and leveraging a sustainable competitive advantage will become increasingly vital to success as we move into the future. This is especially evident when one considers the trends that are taking place in the world today.
The level of competition, is being raised everywhere, in every way. The effects of information technology, the internet, globalization, and capitalism have left no field untouched. Everything has become more competitive, and as a result standards of living are increasing for those who embrace these trends. However, in this environment you either offer unique value to the marketplace or die. There is no room for you or your business in the marketplace if you cannot add value in some way for consumers in the marketplace.
Becoming a “New Barbarian”
The focus of this book is on the individual micro level. But for the moment let’s zoom out and take a very high level view to help with our understanding of these concepts. It is very important to understand these trends because of the impact they are having, and will continue to have, on our lives.
In his 2000 book, The New Barbarian Manifesto, Professor Ian Angell discusses how we have entered a “new elite cosmopolitan age” where knowledge workers would be the real generators of wealth. “It is now abundantly clear that knowledge workers are the real generators of wealth. They always have been, only now they realize it. For their knowledge is the basis of innovation, and innovation underpins the creation of alternatives – not only alternative products but also alternative procedures. Alternatives deliver new competitive advantages, and destroy the old. …The income of these owners of intellectual wealth will increase substantially. They will be made welcome anywhere in the world, no matter what their age, race, sex, color, or creed.1 ”
Of course, knowledge, in and of itself, achieves absolutely nothing. Knowledge, in and of itself does not produce competitive advantage. It must be applied by individuals that utilize their talents to add value and create wealth. Personal competitive advantage is what allows us to create value and wealth.
Formerly socialist countries all over the world are now embracing capitalism and seeing their standards of living improve dramatically. But many governments are doing this out of necessity rather than kindness. Governments, being the inherently inefficient, wasteful, and coercive institutions that they are, don’t like the idea of competing against one another to attract knowledge workers, businesses, jobs, and capital. But compete is exactly what they are being forced to do. Businesses are increasingly more virtual. Capital flows more fluidly around the world. Knowledge workers are now mobile, work virtually, and can live anywhere they choose. And they will increasingly choose those places that offer the most favorable environment.
The United States is no longer rated as the most capitalistic or freest country in the world2. The US is still a relatively wonderful place to live, and still has a strong competitive advantage over other countries, but the trends that are currently in place suggest that the US is becoming relatively more socialistic while formerly socialistic countries are becoming more capitalistic. Countries as a whole also have competitive advantages that can be enhanced or suppressed. When a country embraces and focuses on its unique strengths and applies them to the global economy in an optimal way they develop competitive advantage, and with it higher standards of living. If not, the standard of living declines.
So in other words, one could argue that other countries,’ such as China for example, are embracing and strengthening their competitive advantage while the US’s has decreased in strength. Capital is highly mobile and quickly moves to where it will be valued the most. We see this every day in global financial markets. On an individual level the premise is the same -- embrace and develop your own Competitive Advantage and you will prosper.
To once again quote from the New Barbarian Manifesto: “(National Economic) growth has been decoupled from employment, it is created from the talent of a few knowledge workers, not from the labor of low grade service and production workers. Growth is delivered by entrepreneurs, but only if they are given the incentives, and otherwise left alone…. Companies and individuals, not countries, generate the wealth. New technology has released these organizations and knowledge workers from any geographical constraint, and they are roaming the world looking for free-thinking countries as partners.”
Understanding how to develop and sustain a competitive advantage at all levels is now more important than ever, and this importance will only increase in the future when you consider the trends discussed above. The old models of narrow minded, dogmatic management and bureaucracy have fallen by the wayside. What matters now is how you as an individual can add value to the world and make someone else’s life better in the process. What can you, as a unique individual apply and leverage through some context to add value to the world? Can you develop a Personal Competitive Advantage that enables you to do this?
This is not a time to fear competitive forces, it is a time to embrace them. The current environment presents opportunity. The opportunity lies in being able to utilize and apply our individual and organizational idiosyncrasies in the global marketplace. We do this by creating competitive advantage.
Goals & Competitive Advantage:
The usual way people try to achieve their goals is similar to banging their head against a wall. It is narrow minded in nature. Trial and error combined with determination is certainly a way to achieve success, but there is generally a lack of focus or a lack of confidence in what someone, as an individual, can bring to the table. People are usually too busy trying to copy exactly what other successful people are doing instead of finding a way to create a unique individual competitive advantage that is aligned to who they are as an individual. Understanding and mastering basic competencies are indeed important, but you must tweak them and make them your own in order to create a competitive edge.
Many people are very determined to succeed. They may spend countless hours studying and practicing the skills needed to be successful at whatever it is they have decided to focus on. However, it is usually not enough to simply learn the skills that are necessary to excel at a certain task. Learning from and modeling someone else’s success or behavior is great for learning the important skills needed to succeed in a particular context, but will only get you so far.
It is when you model successful behavior in a way that works for you and fits your individuality that you excel. Let me emphasize, Individual Competitive Advantage is not about being different just for the sake of being different. It is about leveraging your uniqueness and synchronizing it with what works within a particular context. Skills and competencies must be applied in light of who you are as an individual. To do this requires a methodology that utilizes creativity with an understanding of your unique characteristics and the competencies necessary for success.
To go beyond learning and be great, these competencies must be “individualized.” This means that you must make the skills your own in light of who you are as an individual. There is a need for a methodology that facilitates this process of individualization, and we will cover such a methodology in this book.
Anyone Has The Potential:
To sum up this first section, we are all different and have unique characteristics, qualities, talents, skills, and character traits. The key to creating your own Personal Competitive Advantage is in the appropriate mix of these individual idiosyncrasies with the knowledge of skills and abilities (competencies) that comprise a particular context. This is usually done by trial and error, and a lot of practice. While there is no substitute for effort and experience, there is room to speed up and strengthen the process with a methodology that consciously applies and directs the ingredients that combine to form a sustainable individual competitive advantage at just about anything. In a future post I will explain such a method.
~ John T. Bardacino, CAIA
1Angell, Ian (2000) The New Barbarian Manifesto: How To Survive The Information Age, Kogan Page, London
2There are several organizations and think tanks that study this area and produce annual reports on the relative rankings of countries in terms of economic and social freedom.
Click here for On Individual Competitive Advantage Part 2