The increased competition which has resulted from globalization has had a profound effect on nature of firms’ competitive advantage. This is reflected in the decreasing confidence of managers about their firms’ competitive advantages. A recent survey from S+B has shown that over half of senior exectutives don’t believe that their company has a winning strategy.
However, there is positive news. S+B have released a video in which they discuss the rise of the new ‘supercompetitors’. They have noticed in their research that there is a new breed of winners whose example can be a beacon for how to adapt your business in the current global corporate environment. These supercompetitors:
- have unique capabilities
- define the industries they are in and divide up the lion’s share of the profits
These winners are exemplified by Apple with its ‘deep consumer insights’ and attractive, ‘intuitive designs’ and Ikea with its ‘highly efficient supply chain, unique retail experience and cost-focused design’.
The core of the success of each supercompetitor is built on a ‘system of distinct capabilities’. These capabilities are normally very difficult to build and highly scalable. A good example is Frito Lay with its fantastic direct store delivery. This direct store delivery is made possible by Frito Lay’s significant investment in its data analytics and technology.
The cost of these capabilities and the significant investment which is needed to implement them means that companies are keen to use their capability across their whole portfolio. Structuring their business around these capabilities means doubling down on lines within their portfolios which are complemented by their distinctive capabilities and divesting those which are not. the result of this is highly focused and supercompetitive operators.
Brief Case study
Procter and Gamble has been refocusing its portfolio since 2000. It has been orienting its portfolio towards a capabilities system based on ‘technology, design and features-based marketing’. What this means in practice is that they have focused on personal care products where they can innovate and then market their products based on proven, superior products.
They have made several, highly significant investments in the personal care side of their business where they can leverage their distinct advantages. This is evidenced by major acquisitions like the purchase of Gillette. It also means doubling down on existing lines which are supported by their distinct capabilities.
Conversely, they have also divested many profitable food-sector lines from their portfolio because these lines required very different capabilities.
We hope this post has been informative for you, and we recommend checking out the link to the full video from S+B