For a competitive advantage to be long-lasting it has to pass the sustainability test. Why? Across all industries, dissemination of what was once an advantage is pretty rapid:

Roughly 70% of all new products and services can be replicated within one year.

60% to 70% of all process improvements eventually diffuse to competitors.

A truly sustainable Competitive Advantage will be difficult to replicate. It must meet three tests:

  1. A Consistent Difference: Clients must experience a difference between your product or service and your competitors. It must be significant enough to influence their buying decision.
  2. Difficult to Imitate: Your most difficult-to-imitate advantages will be in the area of relationships (who you know), proprietary knowledge (what you know) or specialized business processes (how you do it).
  3. Constant Improvement: You must constantly improve your Competitive Advantage to perfect it and outrun the effect of diffusion – until you want to share it with others in your profession.

This is in contrast to what makes up a Best Practice:

In order to be considered a “Best Practice,” a method must have two critical features:

  1. It must have proven highly effective for many other implementers
  2. It must be easy to replicate

Any method that fails to meet these two tests can’t be considered a “Best Practice.” Those who maintain a real competitive advantage must know where to take a best practice approach and where to take an innovative approach. Market leaders will use both approaches to build a sustainable advantage over their competitors.

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