What’s your competitive advantage?

Figuring out how to compete more effectively becomes more challenging given the turbulent times we live in.

We have split this challenge into two parts: 1) selecting a competitive strategy, and 2) changing the business in line with your chosen strategy.

Selecting a Strategy

We have identified seven strategies which each create competitive advantage in a particular way. Choosing among the strategies requires thinking through the additional benefits that may ensue to customers, the capabilities required to execute the strategies, and the relative competitive position and intentions of rivals.

Low cost

The low cost strategy aims to deliver equivalent product quality compared to competitors but with a continual and relentless focus on cost reduction. The low cost strategy is particularly effective in markets where products have long life cycles and customer needs are relatively stable.


Here the focus is on competing throughproduct innovations. The innovationstrategy is suited to circumstances where customer needs are relatively stable and there is scope to meet those needs in novel and superior ways. Typically it costs money to innovate so this strategy targets customers who value new product solutions and are prepared to pay a premium price to get them.


With specialisation the business focuses on a single product or product group and competes through superior product performance. Growth comes primarily from expanding the range of markets we serve. A perfect example is WD40 which has unique qualities that continue to attract a broad range of customers – home owners, mechanics, aero engineers – and is an outstanding example of specialization and market dominance built around a niche product.


The adaptive strategy is about increasing your ability to respond to changing circumstances, particularly to changing customer needs.  Zara, the fashion clothing retailer, is a stellar example of how to adaptive to fast changing fashion trends.


Excellence involves the continuous incremental improvement of product or service quality. Similar to the low coststrategy, it fits situations where customer needs, products and technologies are relatively stable. The excellencestrategy embeds professionalismin the system, Lexus being a good example.


The no-frillsstrategy involves shifting the business to serve price-sensitive customers with a stripped down alternative product or service. This may require changing the customers we serve, the products we sell and the processes we use to make them. ALDI is a prime example of a no frills strategy.


Here the business targets a specific market segmentand serves the needs of these customers more effectively than less focused rivals. Like the no frillsstrategy the target customer’s needs may be relatively stable, but our products have to be developed and refined to meet their particular requirements. An example would be Long Tall Sally which supplies clothes exclusively for taller women “where style starts at 5’ 8’’ and shoe size 7”.

You can’t successfully pursue more than one strategy as each strategy requires particular capabilities, systems, structures and cultures. The only way of managing two strategies simultaneously is to split the business into two units, and allow each to pursue its own appropriate pathway.

Managing Change

Firms are complex open systems. No-one can predict the future of any firm, and no-one can control how it develops. We might be able to control some events and processes ‘inside’ the organization, but we have no control over customers and competitors. So what can be done? We can work withcomplexity rather than pretend it isn’t there. We can engage with the system in ways that recognize the complex reality, rather than trying to control the uncontrollable.

In our new book ‘What’s Your Competitive Advantage?’(FT Pearson) we explain how this can be done. You can set a broad direction of travel, the competitive strategy and then identify possible initiatives which help to build the capabilities this strategy requires. You then try out an initiative, get feedback from the system and then either escalate the initiative, adjust it or abandon it. This approach results in an evolving portfolio of initiatives that are guided by a clear competitive strategy.

The approach allows for emergence and adaptation. What unfolds is shapedby the strategy and the emergent outcomesof initiatives. This ongoing process is informed by the strategy, but the resulting changes in the organization are allowed to emerge, rather than them being specified, designed and predetermined.

One key benefit that executives report from this approach is that it makes them more willing and confident to engage with change. The incremental but guided change process that is at the heart of our approach and the role of feedback gives them confidence that initiatives can be trialed at relatively low risk.

One final point, you don’t have to be as innovative as Apple, or as adaptive as Zara, or as specialised as WD-40 to succeed; you just have to be a bit more innovative, adaptive or specialised compared to your competitors. This can be done!


Article by Cliff Bowman and Paul Raspin, co-authors of What’s Your Competitive Advantage?: 7 Strategies for running a more profitable business in a complex world, published by FT Publishing, priced £19.99