Is sustainable advantage sustainable?

It is widely acknowledged that having an advantage over your competitors is not enough. For your business to be great, it needs to weather competitive and environmental storms. However, in a world where a competitive advantage often evaporates in less than a year, where competitors and customers are becoming unpredictable and many industries commoditised, is the quest for sustainable advantage futile?

'Play offense not defense'

THERE is a new and dangerous management idea that is doing the rounds these days; it urges managers to end their quest for sustainable competitive advantage and instead embrace the notion of 'transient advantage'. This advice may well be true in a few hypercompetitive industries like mobile phones. Blackberry and Nokia have been brought to their knees with stunning rapidity. But very few industries are as nascent, and unforgiving and where one missed innovation can be fatal.

Occasionally, through deep insight and innovation, a company creates a new category or even a new industry. Think about Infosys and the global delivery model. When network economics and increasing returns take over, the advantage becomes almost unassailable till there is an inflection in the industry. Microsoft's desktop monopoly or Google Search are illustrative of this. In more prosaic industries, entrenched positions become even harder to dislodge. Think about Maruti Suzuki's advantage in cars, Raymond's in textiles, Marico's in branded coconut oil. In these industries, unless the leader makes multiple false steps over a long period of time, the competitive advantage is very durable.

The above mentioned examples are all products of multiple decades of commitment and investment. A positive culture can be a more durable competitive advantage.The key to success though is to play offense not defense. Microsoft has lost its leadership because it focused on preserving its desktop PC monopoly instead of whole-heartedly embracing innovations like tablets and smartphones. But this doesn't spell the death of the idea of sustainable competitive advantage. Innovation is an integral component of sustainable competitive advantage rather than an alternative.

Ravi Venkatesan
Chairman, Social Venture Partners India & former chairman, Microsoft India

'Improve agility by responding faster'

THE DEBATE whether sustainable advantage is dead or not is a bit futile. The pace of change is quickening and new strategies have to be evolved by companies continuously. No strategy can be fixed, and that is why the term, 'sustainable' is used. In a period of what appears to be volatile, unpredictable, uncertain and ambiguous (VUCA, a term invented by the US War College in 2002 at the time of the Iraq War), how should companies think and plan for the future?

Consider this: Max Klieber was a Swiss who set up shop at the agricultural college at the University of Davis, California in the 1920s. Through his observations and studies, he concluded that number of heartbeats per lifetime in most species tends to be stable. However, the rate of heart beats per minute varies widely, based on the body weight of the species. Bigger animals take longer to use up their 'quota of heartbeats'. So size enables longevity but does not assure it.

The second driver of longevity and sustainability is agility. This is the ability to see oncoming events faster than others and the capability to respond appropriately. For example, even though you move your folded newspaper at great speed to swat a fly, the fly escapes with alacrity and speed. Why? Because the fly's eye has five times higher CFF compared to the human eye. CFF stands for 'critical fusion frequency' and is the frequency at which a flicker stands still.

Thus, the rules of sustainable advantage are the same as before. First, companies must build scale and size and, second, companies must improve agility by responding faster.

R Gopalakrishnan
Director, Tata Sons

'Real equity is built around an ideology'

SUSTAINABLE ADVANTAGE does exist. There is always scope of enjoying a competitive advantage even if when the rules of the game keep changing. A transient advantage is exactly what it means, that it is fleeting and temporary, and a series of short-term tactical measures does not substitute strategy. While it is important for a strategy to remain dynamic and adaptable, it needs to be rooted in a long-term vision.

This is why it is more critical than ever that brands and branding play a central role in defining a company's strategy. A product category will die, but a brand does, or at least can, live forever. Which means that its real equity should be built around a philosophy or an ideology.

For example, Apple is not about making computing devices, but marrying art and aesthetics to technology. That allows it to span across IT and IT-enabled sectors. Nike is not about making running shoes, and even though that may account for a bulk of the business, it is rather about experiencing the emotion of competing and winning. Therefore its product lines can extend to any accessory that allows people to do so or at least feel that they are doing so. Adidas has hitched its wagon to excellence in sports, and Reebok to fitness. This helps brands go across categories and changing preferences effortlessly while still maintaining fidelity to the brand core. This is true for any category, be it FMCG, services, consumer durables or even technology products. 

Samit Sinha
Managing partner, Alchemist Brand Consulting

'Ensure consistency in communication'

ARE WE moving away from the age wherein having a sustainable advantage for a brand was enough? Yes, because the long term strategy has to be true to the core of the brand. Permanency is needed but what has changed in the last decade is the context of communication and this demands strategic interventions by brands time and again.

The recent Google campaign positioning the search engine as a one stop search shop on the internet and mobile devices is a classic case of how the core of the brand has been kept intact while making these ad campaigns which are more to prove the brand's fit in a changing consumer environment. Another example is that of Tanishq wedding jewellery. The 'second marriage' ad of Tanishq was a big winner. After that, the brand has created a wedding planning website, which gives information on wedding customs and acts as an event management guide. Simultaneously a consumer engagement activity called 'Confessions of a bride' has been launched where the brand is helping in fulfilling the dreams and desires of the prospective bride.

Brand PR and corporate social responsibility are other ways through which corporations are adjusting to the newfound market challenges and are attempting to keep the brand positively positioned in the minds of consumers. HUL has recently launched 'Project sunlight' that promises to be a strong initiative towards making a world livable for all. Still in its initial phase, the campaign has got millions of views.

So, yes, we are moving towards an age where a brand cannot rely on one single competitive advantage but a space where the brand has strategic intentions time and again in order to make a mark in this digital age. But the key is to make sure that all efforts are true to the core of what the brand stands for and all such initiatives/actions have to be integrated irrespective of the medium. Continuity needs to be established among consumers through periodic interventions and engagements.

Falguni Oza
Associate professor, Mudra Institute of Communications, Ahmedabad