What is competitive advantage today? Culture!

I grew up in the business world expecting that anything worth doing of any consequence could be easily studied, analyzed and the range of any expected outcomes was completely understood. The only way that there were outcomes or risks that were not understood was if you missed thinking about them as part of your work. If something unintended occurred, it was because you overlooked finding examples of where that had happened previously in other organizations or worse yet, in your own organizations with other change efforts.

The world has changed in so many ways but perhaps most of all around uncertainty. Today, as leaders, we are faced with a very VUCA world. Information is overwhelming and it is hard to keep pace with the amount of change taking place in real time, right before our eyes. As a lifer in the cooperative finance space, at one point, I felt pretty comfortable with knowing most of our organization, how it worked and how value was created for our members.

Fast forward to today.

Today, leaders spend considerable time operating in the blender of volatility, ambiguity, complexity and uncertainty. New information emerges daily, consumer expectations change by the moment and to top it off, your technical expertise has eroded considerably as the business has evolved over time. How are you feeling now as a business leader. Uncomfortable?  Ummm…Yup.

The good news is that other things have changed as well that work in our favour. Here are a few:

  1. The capability of employees has increased drastically over the same period. What I learned in graduate school is now being learned much earlier (i.e. high school or undergraduate programs) by emerging leaders and their level of skill and ability is much greater than mine was when I was younger in my career. Emerging leaders are being exposed to innovation, entrepreneurship and courage as a way of life and are more apt to be comfortable in the business environment of today. The challenge will be whether the leaders of today will enable the level of creativity and curiousity that will be necessary to engage emerging leaders but also to harness their skills in a way that has tremendous opportunity to drive value inside of organizations.
  2. Risk Frameworks are so much better defined than they ever have been. In purpose built organizations, like the one I work within, boundaries have been established both around how people behave as well as where organizations are intended to play within. This helps create a playing field that is well established and well known by all. So while employees are more entrepreneurial, there is also a known “sandbox” for all to play in.
  3. Purpose has emerged as the key attribute of best in class organizations. It is no longer possible to have sustainable competitive advantage for extended periods of time. The cost of technology has been reduced to near zero and now organizations that are best in class in creating value are being asked to have cultures that support the continuous creation of value, iteration, innovation and partnerships with others (people, communities, governments, other organizations). The question now is not whether you have a product or service that is unique, but rather, do you have an organizational culture that is unique and can “out quick” your competitors in creating value. This is a very important shift in how organizations can sustain themselves through a very disruptive time.
  4. Leading requires much less technical expertise than people think and more of engaging with people, stakeholders, communities to help deliver on #3 above. The biggest job of leaders today is to create environments that can harvest the diverse perspectives of teams (more on that in another post 👍) and then create a safe place for the group to think critically about how to create value in today’s volatile world. CEO’s are still required to think critically, but in high performing organizations, the critical thinking happens in a group setting. Critical thinking is now a team sport and the CEO or Leader is the Head Coach.

The new competitive advantage is building organizations such that they can continually scan the market, meaningfully engage with customers to define business problems worth solving and then quickly get solutions into production and not stopping there.  From that point, you must continuously refine the product/service through real time feedback with customers. The critical thinking / debate / exploration has to happen in a way that enables speed and innovation and that mindset has to existing throughout the organization. If it does – it becomes the competitive advantage that we all long for.

3 replies
  1. Alex
    Alex says:

    Great article Eric, looking forward to reading your future posts! I really like the concept of leader as Head Coach – there is so much growth that can come from business leaders engaging in this way of thinking, planning, and developing.

    Reply
  2. Ogechi Isu
    Ogechi Isu says:

    Hello Eric, this is indeed a masterpiece on competitive advantage in today’s business environment.

    The last couple of months have dramatically changed the business landscape, no thanks to covid-19. What use to offer some firms competitive edge have been eroded by the devastating impact of the pandemic. And what is increasingly becoming clear is that innovative leadership – one that continues to place premium on IT – is the way to go.

    The firms of the future are the ones whose C-suites executives are willing to embrace change and deploy technology like never before to solve real problems for their clients. The world has been reshaped by corona virus and business leaders must be vigilant enough to understand the new normal, and agile enough to implement innovative strategies that aligns with the needs of their existing and potential clients. This is an unarguable way to stay ahead of the competitive curve in the years ahead…

    I will like to end here and look forward to more interesting articles from you in the nearest future.

    Keep up the good works, Sir.

    Reply

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