Dr. Rita McGrath kicked off the PMO Symposium ’17 with a talk on the 5 Components to Competitive Advantage. In her keynote, she noted that the goal of strategy used to be achieving a sustainable competitive advantage. But the pace of innovation today makes any such advantage transitory at best.
To illustrate this, she shared an interview with RIM CEO Jim Balsillie, from 2008 when RIM was on the top of its game. In that interview, Jim Balsillie said they planned to just keep doing what they are doing, because it was working well so far. To contrast this, she shared a quote from Jeff Bezos,
“It’s day 1 forever, because day 2 is death”
Be On The Look Out
She noted that industry borders do not stay in place – the greatest competitors will come to you from outside your industry with a new approach, creating a strategic inflection point.
To illustrate this, she shared the example of how Arcades were completely supplanted by home gaming consoles.
The 5 Key Components To Competitive Advantage
In her strategic playbook, she outlined the following key components to staying on top of the transient advantage game:
- Continuous Reconfiguration – build in flexibility so you can respond and adapt to change
- Healthy Disengagement – have a safe way to exit a failing business or idea, and repurpose you resources. This is very important, because success is often preceded by failure.
- Separate Power from Resource Management. This is because resources are too often put into a position where they are defending a current position, rather than developing strategies that should be driving toward the next advantage.
- Accelerate the organization – this starts with Innovation driving ideation, which goes through incubation, then accelerating the business
- Finally, create new requirements for leaders. They need to be able to take in new information and act on it, rather than shooting for the status quo. As she puts it, leaders today more often take “tour of duty” assignments, rather than fill static roles.
The Innovation Matrix
Dr. McGrath then took us through her innovation matrix, which depicted where and how to diversify your portfolio to help drive agility and advantage.
- New Positioning Options should be explored, even if they are contrary to each other. Typically, one positioning strategy will remove the need for others. But, this is still important, as the right new positioning strategy can have a huge impact.
- Stepping Stone exploration should be done in a small, niche market with a specific problem – the solution for which could make a huge opening in a big market.
She closed with words of wisdom:
- Transient advantage makes fools of us all – because we expect those benefits to last. And they don’t.
- There needs to be a balance between supporting current operations and innovation – too much on either side is not good.
- There is no secret – well developed innovation practices work.
She also has a newsletter and a number of books you can find on her blog, here