CEO and Co-Founder at Cider Corp., a U.S.-based custom software development solutions provider.
In the increasingly cutthroat business world, creating a competitive advantage is a vital part of achieving success. But how can you ensure that any competitive advantages you manage to carve out for your business are sustainable? While there are many competitive advantages such as speed to market, speed of delivery or even price, many can fall away quickly or be replicated by competitors.
The answer comes in the form of leveraging technology. With technological innovation, your company can form a sustainable competitive advantage that can help cement your place as a segment or industry leader. But before we unveil what that looks like in practical terms, let’s take a more detailed look at what counts as a sustainable competitive advantage.
The Makings Of A Sustainable Competitive Advantage
The first point to note is that there are many different types of competitive advantages. They are not merely limited to a few processes that you may execute better than a competitor. It could be operational excellence or product leadership, for example. Or your offering may deliver superior customer personalization.
Regardless of your specific competitive advantage, it’s crucial to note that most are unsustainable. That is, they will only last for a period of time. For instance, a first-to-market product only holds an inherent advantage until a competitor either creates something extraordinarily similar or the patent runs out.
In contrast, sustainable competitive advantages are gained when a specific aspect of your business has an unfair advantage set to last well into the future. Warren Buffett has a keen eye for companies that have built such competitive advantages, describing these enterprises as having a “moat” around them.
He dismisses so-called benefits such as “first-mover advantage.” He looks deeper into investment opportunities for tangible advantages that cannot be replicated, such as unrivaled industry knowledge (trade secrets) or a technological advantage.
Speaking of technology, advances in modern hardware and software present perhaps the best opportunity to gain a fabled sustainable competitive advantage.
Why Technology Holds The Key To Business Success
Technology is helping reframe the business landscape. It’s no longer a case of technology being an esoteric phenomenon that stands apart from specific companies and industries. Rather, every company should now be looking to become a tech company.
As the distinction between those who make technology and those who utilize it vanishes, it will be the companies that use technology for a sustainable competitive advantage that will leave rivals trailing in their wake. With the onset of the internet of things (IoT) and big data gathering powered by cloud technology, early adopters will gain an advantage that could be developed into a sustainable edge over the competition.
Moving forward, I believe information will be the key to success. Gathering, analyzing and implementing insights from information developed by cutting-edge technological solutions will help companies operating in even the most analog industries to forge a path to success.
UX Design As A Competitive Advantage
User experience (UX) is an increasingly crucial factor for customers interacting with your product or service. That is to say, there’s an emerging shift in behavior from how well a product or service performs to how a product or service makes someone feel. Thus, the UX and design of your product or service have never taken on such prominent roles.
Given the current capability of technological solutions, you can use online tracking and analytics tools to monitor customer behavior and understand UX preferences, and then subsequently tailor your offering to better match those needs. Designing your offering based on this information could help you develop a sustainable competitive advantage.
Automating Processes As A Competitive Advantage
Digital transformation research suggests that the most significant impact of technology is achieved by rewiring a business’s internal operations. For instance, technology can automate all the back-office functions to make workflows better, faster and cheaper. I have witnessed the power of automation through my company’s work with our clients.
For example, a rug-cleaning company we recently worked with was losing leads and couldn’t retain customers due to a lack of a customer relationship management system. The company wase using QuickBooks for billing, Excel for customer information and notepads for notes and follow-up requests. Then it automated a lot of its internal processes.
Today, the company collects data from its customers and can easily engage, update and follow up with order updates and specials. Company technicians are also able to enter customer details and order requests while working off-site. Lastly, the management team can see reports from multiple locations and make smart organizational decisions. The company now benefits from more return customers and improved time management and cash flow.
Leveraging Data Analytics As A Competitive Advantage
There are at least 2.5 quintillion bytes of data created each day, and that number is only set to increase with the growth of IoT technology. In 2018, approximately 90% of the world’s data was generated in the previous two years. Any company that can analyze data and gain valuable insights will leave competitors who won’t (or can’t) behind.
Using advanced data analytics technology to track user journeys, better understand your clients’ needs and optimize your marketing efforts can help you build a sustainable competitive advantage over rivals left effectively stabbing in the dark.
Machine Learning As A Competitive Advantage
Speaking of data, the enormous burden of sifting through terabytes of data every second will rest heavily on machine learning algorithms. Mind-boggling volumes of collected data will mean nothing without computer programs that harness the power of artificial intelligence.
This emerging technology will deliver actionable insights and help companies build sustainable competitive advantages that other businesses don’t even know exist yet. This accomplishment, in itself, could become a company’s sustainable competitive advantage, providing an edge over rivals for years to come.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?