Every company, during the early portion days of its formulation, embarks on a trajectory that focuses its energies on building the framework for sustainable competitive advantage. The possible paths to pursue are:
- Product Innovation: the strategy which demands a high level of research and development in order to product discontinuous innovation within the corporation
- Supply Chain: the strategy which focuses the companies energies on minimizing costs, increasing organizational throughput, and ultimately ensuring that the company can out produce the competition while under-cutting their prices
- Relationship Management: the strategy which focuses the organization’s energies on building and leveraging relationships with customers, suppliers, and other stakeholders in the value chain.
The best strategy requires a company to elect to outperform the competition in one in the most extraordinary way. While companies can try to maintain leadership in more than one area, it is foolish to try and be all things to all people.
No matter which framework is chosen, Milton Friedman taught us that the social responsibility of a business is to increase its profits. In the act of creating profits, the company fosters economic growth and empowers the market in which it operates. These benefits ultimately deliver the quantity of financial rewards required to lift all of the market participants to a new economic level. At least, in theory, this is the financial juggernaut which has propelled the United States into a long-standing position of dominance within the world. However, like many things, it appears as though the growth and level of innovation which once appeared to be without end may actually be slowing… at the very least, transitioning away from our shores to other regions. At no other time in the history of the United States has it been more important to understand and harness the elements of innovation. If we are able to do so, it will allow our local economies to capitalize on their vast knowledge worker resources and sustain/increase their growth.
What is the principle foundation of sustainable competitive advantage at your company?
What is the value of innovation in your organization?
