What is Competitive Immunity and Why Should I Care?

Warren Buffet was once asked why he had been so successful and he said:?“What we're trying to do is build a business with a wide and long-lasting moat around it, protecting a terrific economic castle with an honest lord in charge of the castle”. Competitive Immunity can help build that moat.?

What is Competitive Immunity and what’s so special about it??

I am sure we have all heard of, and some of us have focused on, Competitive Advantage. Many companies do. Now, although this is admirable and can provide some tactical advantages, they tend to be short-term in nature and as such, are focused almost entirely on pricing and services.?On the other hand, Competitive Immunity is strategic, sustainable and long-term.

Companies seeking Competitive Advantage make products they think they can sell to people, whereas companies seeking Competitive Immunity make products that people want to buy. One is self-serving, the other all-inclusive.?

Back in 2005, W. Chan Kim and Renee Mauborgne introduced us to the notion of a Red Ocean vs. Blue Ocean strategy. These two oceans represent different types of market spaces. The blue ocean is the name for a newly discovered or created business with little or no competition, with the opportunity to set the standards. The red ocean indicates an already existing industry, which is highly competitive with low prices for products and services, and therefore low margins. Competitive Immunity can move us from a red ocean to a blue ocean.

I would suggest to you that employing a Competitive Advantage strategy has reduced the chances of building major brands over time, particularly in the FMCG or CPG space. Having worked for Coca-Cola for 21 years, I cannot see a brand like that being built again. No one will allow a company time to do it. The stock market and the Board demand short-term profits, which means that its leaders are measured on short-term metrics, all at the expense of being able to re-invest in building their brand, as Coca-Cola did for years.?

The short-term approach to business — where the focus is just on hitting the numbers, the metrics, and the goals — has led many companies astray. One such example is in the US auto industry. In the recession of 2008, both Chevrolet and General Motors had to be bailed out, whereas Ford did not. Why was that? In short, Chevrolet and GM were focused on short-term market share and revenue, whilst Ford was very much focused on the future. In 2006, they hired Alan Mullally (of Boeing turn-around fame), who was hired by the Ford family for the same reason. He brought a fresh approach that broke down fiefdoms and encouraged teamwork, he introduced weekly Business Plan meetings, created a compelling vision, and had his leadership team think ahead to bring that vision alive. Today, Ford is the 3rd most profitable global auto company, measured by profit per second.

This Competitive Immunity thinking is also very similar to Simon Sinek’s recent writings in his book?“The Infinite Game”. In his book, he describes infinite players as those who live and work for?“a just cause”—an affirmative, optimistic, inclusive, service-oriented, resilient, ultimately unachievable purpose. They center on allowing the game to continue and give rise to multiple possibilities. Whereas, finite players' focus is on the outcome of the game, such as winning or losing.

Sinek argues that this finite thinking has caused the average life of a company to drop. McKinsey reported recently that the average life of an S&P company had dropped over forty years since the 1950s from an average of 61 years to less than 18.

Similarly, In the past five years, CEO transitions have become more common than they had been in the preceding five years. According to a recent Korn Ferry study, the CEO average tenure was 8 years in 2016, down to 6.9 in 2020. Following the same trend, executive tenures in financial services are down from 9.7 to 6.5 years.

Finite thinking leads to short-term tactical approaches that can be driven by the stock market. As a result, we have seen pushback by companies that have taken their stock off the market, such as Richard Branson who has moved many of his large 60+ companies, including Virgin, to private status.?

Many famous public companies have gone private and de-listed their shares from a major stock exchange. This includes Dell Computers, Panera Bread, Hilton Worldwide Holdings, H.J. Heinz, and Burger King. Some companies de-list to go private, only to return to the market as public companies with another IPO, having enjoyed more control over their own destiny.

Whether it is swimming to a blue ocean as Sinek says in “The Infinite Game”,?“there’s no such thing as winning at business.” Leaders today need to be focusing on how they can achieve Competitive Immunity by having that Infinite mindset.

Running a business is like navigating through whitewater. We are constantly faced with changing and challenging obstacles in an increasingly difficult environment. Success Authorities can guide you through those choppy waters, providing innovation and strategic direction to ensure you achieve that Competitive Immunity.

We build Competitive Immunity, and we do it by helping companies achieve this in 5 key areas; Innovation, Leadership, Learning, Culture, and Strategy. These are our 5 pillars of excellence.

Peter M. Beaumont?is the Founder and Principal of ConnXN Consulting and is a Leadership Advisor to Business Owners and Leadership Teams as well as part of Success Authorities. He is also the author of?The Relationship Roadmap, a comprehensive guide to building relationships with strategic clients. He is also President of SEGC, a community that provides expertise and connections for Small, Emerging Growth Companies in the Twin Cities.

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