What Drives Competitive Advantage?
Strategy Practice
How to identify the most important driver for organization success
If you ask a typical executive, what makes his/her company great, the likely response would most likely include shareholder value, profitability, market share, customer focus and a number of other common refrains.
by Alex Sugimoto
How would you describe the most important driver for the success of an organization today?
Well, if you ask a typical executive, what makes his/her company great, the likely response would most likely be one of the following:
"We are more profitable than our competitors"
"We are customer focused"
"We strive to improve shareholder value"
Very rarely will an executive lead off the discussion of greatness by describing the first keystone driver - process performance. Yes, process performance has become perhaps the most critical driver of organizational success in the last 40 years and is only becoming more urgent. Especially with today’s pandemics, economic cycles and geopolitical influences over the health of the global economy.
A high-performing organization in today's economy must not only understand how to identify processes that matter but also constantly improve and disrupt those processes in order to lead their market or industry.
A key question, however, for large organizations is which business processes drive strategic and competitive advantage and how do these processes need to be configured to overcome pandemics, economic cycles, emerging competition and of course complacency?
To answer these questions, we must first consider the uber challenging and rapidly changing work force and workplace culture comprised of “people” the second keystone driver.
There are two separate factors influencing the workforce as it tries to stay married to processes that matter.
The first is workforce demographics: The past couple of decades have seen a shift in the evolving composition of employees. Baby Boomers are now retiring at greater numbers while the percentage of Gen Z's and Millennials are not only accelerating but also changing workplace expectations and priorities.
For example,
65 percent of people want to work for an organization with a powerful social conscience.
One in five global employees now work remotely at least some of the time and the coronavirus pandemic has only accelerated this work from anywhere culture.
The second factor is the change evolution of how employees define work. While still rare, the days of a one company career are behind us. The new reality is a shift to a more mobile workforce within organizations and a higher proportion of full time employees transitioning to a gig economy as freelancers and free agents.
What does this mean for HR and high performing organizations? for sure, employers will have to reassess their strategy and work practices to see whether they are offering the right flexibility, a better work life balance, and a meaningful connection with the company or brand they work for. Ultimately, this will require both awareness and new skills to balance the volatile marriage of high performing processes and people in the world of cost leadership and competitive advantage.
The Punchline
In summary, to assure external change does not outrun the pace of internal change, organizations must ….
…. understand how to identify core business processes most influential to cost leadership and competitive advantage.
…. be able to configure, leverage and exploit core busiess processes against strategic priorities.
….configure the workforce and work practices practices to facilitate and sustain process excellence and innovation.
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