Achieving a sustainable competitive advantage in any business often seems to be an elusive goal.
There are many ways to gain a competitive advantage, but in today’s world, information crosses the globe so rapidly that ideas and methods are soon copied and technologies quickly become obsolete.
Executives of high-tech companies claim innovation as a core value and point to an extensive portfolio of product and process intellectual property as evidence of a “culture of innovation.” It is this culture that they claim to be their source of competitive advantage. Why then do so many such companies find success short lived despite maintaining a robust IP portfolio?
I won’t deny that there is a strong correlation between technical innovation and competitive advantage, but the fact is, a true culture of innovation encourages and supports creativity from all associates, not just those in the technical community. To eliminate any confusion that might arise, I prefer the more encompassing “creativity” label for the core value necessary for sustainable competitive advantage.
Many companies struggle with the conflict between standardizing every process, method and procedure to minimize risk and/or assure consistent quality and allowing associates to be creative, encouraging them to think outside the box and rewarding risk-taking at every level of the organization.
The secret to achieving a sustainable competitive advantage lies in finding the solution to this apparent conflict that works for both your internal organization and all of its customers.
I have observed that companies that are not successful in finding this solution, and they often fail for one or more of these three primary reasons: poor communication within the company, an ill-defined process for implementing improvement ideas, or inadequate associate training in the use of the tools of improvement.
A communication plan should be a fundamental part of any company strategy, but it becomes even more important when the organization is in transition. Management must make the case for change to all associates, create a picture of what success will look like, establish metrics and provide frequent progress reports. It is important that all supervisory personnel are on the same page so the message is consistent throughout the company.
Continuous improvement programs must be built around stable processes. These processes provide a performance or output baseline from which the effectiveness of any proposed change can be measured. The first step, therefore, often missed, is to establish that a process is stable. This is how the risks associated with constant change are mitigated in an environment of continuous improvement.
Of course, disciplined use of the tools of improvement throughout the organization is the backbone of the change control system. Integrating the use of these tools into the fabric of the company can be done in a number of ways, ranging from hiring specialists to support improvement teams to training all associates in selected problem-solving methods.
Given that these elements are in place, delegating responsibility and decision-making to subordinates at lower organizational levels while accepting accountability for the business results often opens the floodgates to continuous improvement, resulting in quick, creative solutions to company and customer concerns, issues and problems.
The goal is to develop a work environment in which each and every associate is empowered to help the company succeed by finding and eliminating waste and inefficiency in his or her job function as well as throughout the enterprise, has the necessary skills to do so effectively and willingly accepts that challenge.
With the right checks and balances in place to protect its customers, a company that goes down this path will be on the way to achieving a sustainable competitive advantage.
George Perry has more than 40 years of experience in engineering, operations and executive management. He retired as president and CEO of Yazaki North America Inc. in December 2009. Reach him at [email protected].
