Companies skilled at exploiting transient advantage put themselves in their customers’ place and consider the outcome customers are trying to achieve.
Long-term competitive advantages are obviously a great asset in any company. However, finding a truly long-term attribute that will set your company apart for years to come may not be possible or even enough for the success of your business. Companies should consistently be looking at their short-term advantages as well and be adapting, changing, and evolving in correlation with the current market’s needs. Strictly sustainable advantages would work great if the world was stagnant and technology remained the same across generations. This, however, is not the case. It is important for companies to continue in the learning process and adapt their company and advantages according to the needs of their customers.
In order for your company to be truly competitive, a company should be looking at their transient, or short-term, advantages, rather than spending months on long-term attributes that will most likely change sooner than anticipated. In this article from HBR, this idea is illustrated in great length. Here are a few key insights that may help in your strategic process of identifying transient advantages that could set your company apart and stay on top:
Companies that want to create a portfolio of transient advantages need to make eight major shifts in the way that they operate.
1: Think about arenas, not industries.
An arena is a combination of a customer segment, an offer, and a place in which that offer is delivered. Indeed, the very notion of a transient competitive advantage is less about making more money than your industry peers, as conventional definitions would have it, and more about responding to customers’ “jobs to be done” (as Tony Ulwick would call it) in a given space.
2: Set broad themes, and then let people experiment.
Today’s gifted strategists examine the data, certainly, but they also use advanced pattern recognition, direct observation, and the interpretation of weak signals in the environment to set broad themes. Within those themes, they free people to try different approaches and business models.
3: Adopt metrics that support entrepreneurial growth.
When advantages come and go, conventional metrics can effectively kill off innovations by imposing decision rules that make no sense. The net present value rule, for instance, assumes that you will complete every project you start, that advantages will last for quite a while, and that there will even be a “terminal value” left once they are gone. It leads companies to underinvest in new opportunities.
Instead, firms can use the logic of “real options” to evaluate new moves. A real option is a small investment that conveys the right, but not the obligation, to make a more significant commitment in the future. It allows the organization to learn through trial and error.4: Focus on experiences and solutions to problems.
As barriers to entry tumble, product features can be copied in an instant. Even service offerings in many industries have become commoditized. Once a company has demonstrated that demand for something exists, competitors quickly move in. What customers crave—and few companies provide—are well-designed experiences and complete solutions to their problems.
5: Build strong relationships and networks.
Realizing that strong relationships with customers are a profound source of advantage, many companies have begun to invest in communities and networks as a way of deepening ties with customers.
6: Avoid brutal restructuring; learn healthy disengagement.
Preparing customers to transition away from old advantages is a lot like getting them to adopt a new product, but in reverse. Not all customers will be prepared to move at the same rate. There is a sequence to which customers you should transition first, second, and so on.
7: Get systematic about early-stage innovation.
If advantages eventually disappear, it only makes sense to have a process for filling your pipeline with new ones. This in turn means that, rather than being an on-again, off-again mishmash of projects, your innovation process needs to be carefully orchestrated.
8: Experiment, iterate, learn.
…they need to focus on experimentation and learning, and be prepared to make a shift or change emphasis as new discoveries happen. The discovery phase is followed by business model definition and incubation, in which a project takes the shape of an actual business and may begin pilot tests or serving customers. Only once the initiative is relatively stable and healthy is it ramped up.
Source: HBR