Base your strategy on your distinctive capabilities

Analysis of the competitive environment has traditionally played a major role in strategic thinking. Generations of business leaders have been trained in the wake of Michael Porter’s work to carefully analyze which drivers each competitor uses to occupy its market position.  From there, it’s about choosing how to stand out in this landscape. For decades, identifying the opportunities and threats within one’s competitive environment has been the kickoff point for creating winning positioning of products and services.

Yet, a growing number of experts are now underlining the limitations of this approach in a globalized, dynamic environment. Markets, technologies and consumer trends are changing at an ever-faster pace, rendering the advantages of tactical competitive positioning increasingly transitory. We even see whole industries being challenged in a very short space of time by the sudden emergence of new entrants. Traditional competitive analysis—focused on existing players—is of little help in navigating this new context. Many business leaders thus feel driven to take part in a race that exhausts their resources rather than strengthens their position. They conduct project after project to reconfigure processes, optimize production and improve service quality. But, too often, these initiatives serve only to catch up with competitors, without offering lasting differentiation.

“Get your mind off your competitors!” recommend the experts nowadays. While this advice may be a bit provocative, it most of all invites leaders to refocus their efforts based on the distinctive strengths of their own company. What makes it unique, beyond its existing products and services? What constitutes its distinctive trademark? How can leaders capitalize on this difference to lead the competitive game, rather than undergo it?  IKEA, for example, is more attentive to continuously reinforcing its distinctive model than reacting to the moves of competitors—which it doesn’t even bother to benchmark. Of course, this is not a question of completely ignoring the competition, but rather of paying more attention to internal strategic coherence than to the race for tactical advantage.

In this synopsis:
- Clarify your strategic fundamentals
- Capitalize fully on your strategic capabilities
- Target your investments to support your strategy