Businesses: Don’t you fret!
According to Mr. Umair Haque, as discussed in his (external) blog post in the HBR, the only way businesses can prosper in today’s not-quite recovered economy is by strategy. Haque states that strategy is “about building an institution that can compete.” According to him, “Competitiveness isn’t merely short-term profitability. It is about all the things that underlie lasting, healthy prosperity.” Well, which competitive advantage is Haque talking about? Sustainable competitive advantage or transient competitive advantage? Here lies the knowledge deficit.. The esteemed author leaves this conclusion to be drawn by the readers and/or businesses themselves, albeit with three suggestions of what should NOT be done.
In my opinion, given the ever-changing nature of the business cycle, isn’t it only logical to keep one’s advantages “transient”? Please read Rita Gunther McGrath’s article (HBR, June 2013) on Transient Advantage for more information.
The Business Cycle
Customer perceptions and industries change greatly as an economy progresses from a boom, reaches a peak, slows down into a recession, crumbles into a trough, and so the cycle continues. If businesses focus on fixed industries rather than targeting ever-evolving arenas, they will fail to “get the job done” for their customers. Tools such as the Value Proposition Canvas can be extremely effective in evaluating the needs of customers, and should be used not on ad-hoc but continuously. The consequent customer satisfaction can not only help develop strong relationships (another aspect of Transient Advantage), but also lead to both short and long run prosperity. This will satisfy many other stakeholders including shareholders and other investors, the economy, etc.
Thus, I argue that the most effective way to overcome the problems discussed by Haque is by avoiding the development of a “much too” comfortable strategy that will only lead to complacency in the long run. I agree with some of the concepts of sustainable competitive advantage. However, given today’s high velocity industries, transient advantage seems to be the true road to success.
Bibliography
Haque, Umair. “3 Terrible Strategies for Companies Seeking Growth.”Harvard Business Review. N.p., n.d. Web. 11 Oct. 2014. <http://blogs.hbr.org/2014/10/3-terrible-strategies-for-companies-seeking-growth/>.