Is today Porter's 'Competitive Advantage' concept fading away to the detriment of 'Transient Advantage'?

1.
Strategy... from competitive
advantage to transient advantage
Approximate reading time: 15 minutes
65
January 14
Corporate strategy in the sports industry is in crisis. Many of longterm approaches are no longer valid in modern times. This article
intends to overhaul the principles behind strategic thinking that
any company in the sector should conduct periodically.
Launch
Ramp up
Exploit
Reconfigure Disengage
One of the great contributions to planning and strategic
management of organizations comes from Michael E. Porter. He
introduced the competitive advantage concept in 1980s that
revolutionized the management of enterprises and allowed
management to make decisions based on long-term effects of
customer orientation from its conception. Thus, during the last
three decades, the prevailing view has been based on getting a
privileged position in the market sustained in a long period of
time. To do this, you must analyze the organization - internally and
externally- and focus to gain competitive advantage in one of the
three existing generic strategies.
Uniqueness of service perceived by
the client
All sector
Specific
segment
Low
costs
Differentiation
Cost leadership
Focus
According to Porter's concept, an organization must ensure a clear
strategic position in any of the three areas to qualify for acquiring
a competitive advantage.
its resources to capitalize it.
Ramp up. At this stage the business opportunity and becomes a
positive and a quality experience by the first customers.
Exploit. Here the organization seeks to capture profits and
maximize market share. Competitors are forced to react.
Reconfigure. On success, competition intensifies and appear
similar services, a fact that undermines the advantage. Thus, the
organization must reconfigure the service to maintain leadership.
Disengage. Sooner or later, the advantage is diluted and the
Strategies to gain competitive advantage
Launch. The organization identifies an opportunity and organizes
The current turmoil and uncertainty makes sustainable competitive
advantage over time almost impossible today. The organization
must understand the concept of transient advantage, learning to
launch new initiatives that can be built up with agility while also
enabling rapid withdrawal when necessary. Success lies in the
operational management skills.
The acquisition of an advantage, whether competitive or
temporary, always requires the same stages and management
processes.
organization must divest the initiative.
Each of these phases requires different skills, indicators and
personal competences. In mature markets, such as the sports
industry today, there is a tendency to focus resources on the
exploitation phase. Thus, in a sector that values and rewards the
exploitation of resources, chief executives of organizations are not
encouraged or required to identify those competitive advantages
are diluting. Instead, they rely on them to get the maximum profit
and professional recognition until the problem becomes
irreparable. For example, it is easy to argue that economies of
scale that have obtained several chains of fitness centers are
gradually ceasing to be a competitive advantage to new forms of
sport and new business models with operating costs substantially
lower.
To compete in a transient advantage market, one must be able to
assess if current advantages of the organization are at risk and
what lifespan is left. In industries where change occurs rapidly ,
organizations must learn to navigate nimbly the different stages
of the process. In addition, given the speed of the process, they
will need to have different initiatives and opportunities in portfolio
to ensure a continuous process.

2.
'No one can be slave of their identity:
when a possibility of change emerges, we must change'
Elliot Gould
Process of a transient advantage
blink of an eye. Once an organization has proved that demand for
something is there, competitors will come quickly. What customers
desire are well designed experiences and complete solutions to
their problems. Organizations focused on acquiring transient
advantages, are prepared to put on their customers' shoes and
build from what they expect.
Income
Launch
Ramp up
Exploit
Reconfigure Disengage
When competing in the search for transitional advantages, focus on
resources cannot only be based on the operational phase but a
more holistic view with a balanced team and resources between
phases is needed. The seven elements that should be taken into
account to guide the organization into the management of
transitional advantages are presented below.
7 elements to implement transient advantages
1
Think in competitive environments and not
in industries. One of the most accepted ideas in
traditional management is to analyze the information within the
'industry' and, therefore, look at the results of competing
organizations. 'Competitive environment' can be defined as the
combination of a customer segment, a specific service to be
offered and a place where the service is offered.
2
Establish comprehensive analysis scenarios
and let people experiment. The shift to a
competitive environment analysis requires to modify the usual
processes of management results analysis. The culture of the
organization should change to integrate the concept of exploring
rather than exploiting. Therefore, the organization should
recognize those efforts on identifying new opportunities,
regardless of their potential success.
3
Incorporate indicators to ease organizational
growth. When the acquisition of an advantage is
temporary, traditional indicators may negatively influence innovation
processes. It must therefore reinterpret indicators such as ROI
(return on investment) or the ones measuring the operational
efficiency in resource management.
4
Guide the organization towards experiences
and solutions to problems. In a competitive and
technological world, any product or service can be copied in the
5
Create strong relationships and networks.
One of the few barriers to entry that remain in
environments of transient advantage relates to people and their
networks of relationships. The organizations capable to manage
networks are also recognized for their high levels of customer
loyalty.
6
Systematize the early stages of innovation
processes. If the advantage eventually disappears,
management by transient advantage makes sense when there are
different initiatives queuing in line. Organizations that excel in
innovation have an organizational structure adapted to this
purpose.
7
Experiment, iterate and learn. One of the most
common errors in the current management is planning
innovative projects with the same tools and concepts that are used
for well-established concepts. We must change, with higher focus
on experimentation and learning.
No leader can manage for himself the complexity of an
organization working on initiatives under different competitive
environments. Leadership is based, today, to be able to provide
some basic principles in the development of the organization,
establish appropriate processes for key activities such as
innovation, and to manage their influence on some crucial turning
points to direct the flow of activities in the organization.
Competences of the leader have changed. They will need to ask
questions of the initiatives to be put in place rather than to give
answers, expect disagreements on issues within their team and
capable to incorporate agility within the organization. In a world with
transient advantages, time gains prominence.
An element has not changed in pursuit of strategic advantage for
the organization: the need to make hard decisions about what
needs to be done and, above all, what not to do. The only stability
in the organizational environment is permanent change.
Comments to http://www.itik.cat/en/itik-genera
Twitter: @itikconsultoria
Idea based on the article:
Rita G. McGrath, Transient Advantage. Harvard Business Review, June 2013.