Secret to sustained competitive advantage

When I was in school I recall never being able to beat my classmate who consistently stood first from 3rd grade to 10th grade. The best I could do was come second but could never overtake the first ranker. When I was in the 7th grade my father encouraged me to collect intelligence on what was unique about the topper. Thus began my journey to unravel the secrets of my class topper.

I started to observe and list everything he had and I didn’t. First thing that stood out was discipline behind everything he did. He always started and ended the day with a plan. He had half an hour session every day to counsel with his dad who was a chief scientist and well known in the local community. He was an early riser and always came prepared for the class for the day. He took notes in the class while I trusted my brain to absorb and retain everything. His answers in the class resonated teachers perspective in addition to his own perspective. While I would be burning midnight oil to prepare for the exams he would face exams effortlessly as he always appeared prepared for it.

And then I discerned that his complex inter-dependent set of habits gave him an advantage that was getting very difficult for me to imitate and overtake.

Compare this to the corporate world. If the central goal of any corporate strategy is to gain a sustained competitive advantage the strategy should be valuable, rare, inimitable and well organized. Is it possible for United Airlines to imitate south-west’s human capital strategy and achieve the best low fare airlines with reputation of highest NPS in customer satisfaction? Is it possible for Target to achieve the Walmart's IT and Analytic driven operational efficiency by imitating Walmart IT strategy.  Was it possible for Blockbuster to imitate Netflix when it woke up to the realization that their market was being completely disrupted by Netflix? 

I was talking to a cab driver in Chicago and asked him if his business was impacted by Uber and he said Big time. He was perhaps the 20th driver who had the same answer to the question. When I asked follow up question what they will do about it none of them had anything else to say except to keep doing what they were doing. And as I hear this I recall Google CEO Cockroach theory explaining the difference between reacting and responding.

 When we are in the respond mode we slow down and reflect to understand what are the keys elements of our competitor’s strategy and how are they linked to create a web which appears difficult to rupture. Organization small or big needs to constantly take stock of existing capabilities and missing capabilities that will help them compete, disrupt and build the business for tomorrow. Every company like anything else goes though the peaks and valleys but some emerge stronger while most perish and never emerge from the valley. IBM is an example which has historically mastered the art of continuously reinventing itself and has often emerged stronger from the trough.

The key to creating an inimitable strategy is to create and leverage the cultural elements keeping people at the center and harnessing their collective wisdom and creativity. History stands testimony to the fact that innovators were rarely driven by money but by a mission to be challenged and persevere to overcome it. Organizations that recognized respected and promoted this environment reaped the fruits. The case in point is 3M, J&J and few others. The lesson I want to drive is to count on your human capital to create an inimitable competitive advantage. It takes long to create a people driven culture but it endures the economic cycles and disruptive impact from new technology.