The Evolution of Excellence involves four stages: look, learn, leap, and lead.
A sustainable competitive advantage is one that involves a leap that allows for a lead to be held for an extended period. This is a goal.
Most of the time, in most endeavors, what we do is transparent. An innovation from a leap that results in a lead is easily noticed and copied.
The lead is narrowed as others look and learn and copy. The innovator separates from the competitive pack for shorter and shorter times.
It’s almost like a never-ending race to stay in the same place. This phenomenon is sometimes referred to as the Red Queen Effect.It comes from Lewis Carroll’s Alice in Wonderland. Alice meets the Red Queen in the story and finds herself running with the Red Queen. Alice is confused as she runs faster and harder yet feels like she’s going nowhere.
We see this in sport, in business, the arts, and more. Successful innovations incent immediate imitation.
Changes aren’t done in a vacuum. We don’t live in lab like conditions. A change in one variable may lead to changes in other areas which cancel each other out. These reactions to changes aren’t foreseeable, let alone predictable. Additionally, changes may lead to improvements which are quickly copied. The benefit is neutralized. Yes, a rising tide lifts all boats. The group performance may improve, but separation remains elusive. The costs to compete accrete as do capabilities but successful outcomes don’t sustain separation.
The standard strategy initiatives involve quests for efficiency, innovation, or expansion. How can we be faster than competitors? What can we do differently? How do we grow our business and increase market share? Should we grow vertically or horizontally? The default to most decisions in business is to the assumption that bigger is better. More is mandatory. A position of market dominance, a monopoly, is the holy grail of commerce. Control over purchasing power and customer decision making are the results which embed one’s organization in a market and boost profitability. Each of these directions have been pursued with success by companies across industries. Each inevitably lead to Red Queen results. Yes, a lead may be created. Unfortunately, the tactic is then copied and lead reigned in. The march forward is faster, but the leader is no further ahead. Greater revenues may be generated, but greater effort is put forth to sustain these. Each of these strategic directions is about growing the top line or raising revenues.
Can we consider flipping the coin? What if instead of strategizing to raise revenues we seek to reduce revenues? Is there a way to improve our profitability while reducing revenues? Are these questions you’ve ever heard uttered in a strategic conversation? Is there such a thing as too much growth? At what cost does growth come? Is the growth achieved done while holding profit margins or does the growth come with shrinking margins? How could you consider improving the profitability of your organization by reducing revenues?
Where is your organization spending money like other organizations and not generating a meaningful return? What areas should it consider NOT investing in? Independent of revenues, are there expenses that are incurred which do little to add value to the organization? Can these be evaluated and eliminated? Where can your organization allocate resources where other organizations aren’t and generate a competitive advantage? Where are opportunities for improvement? Consider applying these types of questions to individual roles and departments as well as to the organizational strategy as a whole.
Here are links to ten other articles we’ve written on this idea:
Sports Sorts: Evolution of Excellence II
Academics v. Athletes and Artists
Learning as Competitive Advantage
