Appreciating Your Competitive Advantage
What's the number-one attribute Warren Buffett — arguably one of the most successful investors in the world — looks for in a company? “Sustainable competitive advantage,” he once told an interviewer. Buffett often says, “It's the moat that protects your company.” If one of today's most successful businessmen puts competitive advantage at the top of his list, you should, too. But what is it exactly?
Your competitive advantage is what you, your company, or your department does better than anyone else. It's what makes you unique. It's why you're in business, and more importantly, why your business continues to prosper over time. The sustainable part refers to your ability to continue to do those activities over a long period of time. And, yes, you can have more than one advantage, and you can develop advantages as well. You don't have to possess them all at this moment.
I can't emphasize enough the importance of understanding your competitive advantage. When you really have it nailed down, it helps you and your staff recognize the following:
- Which opportunities to pursue and which to pass by
- Where to allocate resources and where to cut back
- How to do what you already do well even better
- How to know the difference between an opportunity and a distraction
- When to outsource (to another department or externally) and when to keep the job in-house
Your competitive advantage(s) is the foundation, the cornerstone of your strategic plan. Throughout ...