Sustainable Competitive Advantage.
When I first understood this concept, I was enamoured by it. It seemed to possess a life of its own. Like all concepts promising long term salvation (like nirvana, re-birth & karma etc.) , SCA looked mesmerising.
However the back end of such concepts is very difficult to execute. The Karma Theory believes in putting an honest effort without bothering about the end result. Easier said than done.
Building a sustainable competitive advantage also calls for a fair amount of sacrifice, focus and discipline. SMEs need to sacrifice their unprofitable product lines , discipline their salesforce to look at contribution, build focus around creating customer value. This will give them a hope to catapult them into big league and make them stay there.
Again , easier said than done.
An SME owner is an entreprenuer who has fought a bitter battle for survival and has lived to see another day. Often the habits learnt to survive in grim and tough conditions are not the habits that are necessary to build a civilization.
The SME owner often procrastinates and finds it tough to make choices which will build a prosperous empire.
1. Can he close down a production unit which delivers very little contribution and fire all workers who have been with him through thick and thin ?
2. Can he say 'No' to customers , who are currently very costly to serve but at one time gave him his first initial orders ?
3. Can he dump the comfort and the security of being a 'full service' offering and instead focus on a limited product line?
4. Can he dump managers who were good in being jack of all trades (important atrribute during startup) but are like fish out of water when given specialized roles?
5. Can he move to a completely different vertical, given his comfort level and domain knowledge in the existing verticals?
So differentiation looks great in theory. Very difficult to execute. For a business to differentiate and build a sustainable civilization the top three things that are necessary are
1. Great understanding of customers, their current needs & eveolving needs. Most business owners would secretly admit to not knowing this well.
2. Great understanding of their products/services and ability to continously innovate and improve them. Most business owners are sitting on past laurels
3. Building an organization that is flexible and is aligned with changing business dynamics. Most organizations are rigid and have little/no strategy alignment.
Most business owners have a hunch that they are not good in executing any of the three imperatives. So although they keep chanting the mantras of 'differentiation', 'discipline', 'focus' etc., they do not have the determination to catch the bull by the horns.
They cannot hold a hand on their hearts and say that their business has been built to create sustainable value for their shareholders.
In absence of any strong courage and conviction , they keep practising and honing the habits that they learnt while fighting a bitter battle for survival.
They remain the barbarians, who ocassionally take great comfort in raiding/attacking civilizations, but will never be able to build one themselves.
When I first understood this concept, I was enamoured by it. It seemed to possess a life of its own. Like all concepts promising long term salvation (like nirvana, re-birth & karma etc.) , SCA looked mesmerising.
However the back end of such concepts is very difficult to execute. The Karma Theory believes in putting an honest effort without bothering about the end result. Easier said than done.
Building a sustainable competitive advantage also calls for a fair amount of sacrifice, focus and discipline. SMEs need to sacrifice their unprofitable product lines , discipline their salesforce to look at contribution, build focus around creating customer value. This will give them a hope to catapult them into big league and make them stay there.
Again , easier said than done.
An SME owner is an entreprenuer who has fought a bitter battle for survival and has lived to see another day. Often the habits learnt to survive in grim and tough conditions are not the habits that are necessary to build a civilization.
The SME owner often procrastinates and finds it tough to make choices which will build a prosperous empire.
1. Can he close down a production unit which delivers very little contribution and fire all workers who have been with him through thick and thin ?
2. Can he say 'No' to customers , who are currently very costly to serve but at one time gave him his first initial orders ?
3. Can he dump the comfort and the security of being a 'full service' offering and instead focus on a limited product line?
4. Can he dump managers who were good in being jack of all trades (important atrribute during startup) but are like fish out of water when given specialized roles?
5. Can he move to a completely different vertical, given his comfort level and domain knowledge in the existing verticals?
So differentiation looks great in theory. Very difficult to execute. For a business to differentiate and build a sustainable civilization the top three things that are necessary are
1. Great understanding of customers, their current needs & eveolving needs. Most business owners would secretly admit to not knowing this well.
2. Great understanding of their products/services and ability to continously innovate and improve them. Most business owners are sitting on past laurels
3. Building an organization that is flexible and is aligned with changing business dynamics. Most organizations are rigid and have little/no strategy alignment.
Most business owners have a hunch that they are not good in executing any of the three imperatives. So although they keep chanting the mantras of 'differentiation', 'discipline', 'focus' etc., they do not have the determination to catch the bull by the horns.
They cannot hold a hand on their hearts and say that their business has been built to create sustainable value for their shareholders.
In absence of any strong courage and conviction , they keep practising and honing the habits that they learnt while fighting a bitter battle for survival.
They remain the barbarians, who ocassionally take great comfort in raiding/attacking civilizations, but will never be able to build one themselves.
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