By Salimon Maruf Gbadebo, PhD
Competitive advantage is an old concept that refers to an organization’s ability to outperform its competitors in one or more fronts. Traditionally, Michael Porter conceptualized two dimensions of a competitive advantage which include cost advantage and differentiation advantage. The cost advantage enables your company to operate at a lower cost than competitors while differentiation advantage indicates your ability to distinguish yourself, for instance, through innovation, responsiveness, quality design, strong brand, etc. Recent researches have updated and added additional dimensions to Porter’s dimensions. Talking about the competitive advantage, Coca-Cola, Honda Motor Company, Hyundai, Subaru, Google, the Tata Group, The Dangote Group, and others have used this concept to improve their bottom lines.
However, considering the impacts of the COVID 19 pandemic, the storyline of what is regarded as a competitive advantage for many companies today and in the nearest future would have to be readdressed. This is important since the COVID 19 pandemic has seriously disrupted the world market with its big effects on consumer behavior. Going forward, competitive advantage may not be religiously and traditionally classified, rather, it would be more encompassing and challenging but companies that adjust their lens in line with the new normal would be reckoned with. Let’s consider a few factors:
Work with purpose: Purpose is the main reason why a brand exists, what problem it intends to solve and how it wants to be recognized. In line with Deloitte, the purpose is not a new concept, however, it’s more significant now than ever since it assists any organization to be differentiated from others in the mind of the society. A well and human-driven purpose make a given organization to succeed than others. Such an organization in this pandemic era and beyond creates deeper networks with consumers, engage in more social responsibilities for the communities where they are working, recruit, and retain their best employees. Forbes corroborates this by asserting that customers of today are more driven by purpose than quality, price, and experience, hence, they are more enticed to buy from such companies that are purpose-driven. A company with a unique purpose enjoys a supreme competitive advantage over others as it witnesses increased market share, and grow on average 3 times quicker than its competitors.
Act with urgency: McKinsey and Company recently positioned that a company’s competitive advantage would be in the realm of urgency by ensuring that your brand keeps working faster and better than you deemed possible. What this implies is that you must be super active in designing the new needs for your customers as warranted by COVID 19 pandemic. This is important with changing purchasing patterns, complaints, grievances, and so on. A company with an urgent strategic module will have a competitive advantage over others. Such a company will be able to leapfrog to the market before others, and solve customers’ problem quickly as required.
Show empathy: Empathy to both internal and external customers is an essential element of success in today’s ultra-competitive marketplace. It is however more crucial in this pandemic period as companies need to put themselves in the shoes of their customers especially with negative effects which the pandemic is causing. John Steinbeck, a Nobel laureate, once buttressed this by asserting that “You can only understand people if you feel them in yourself”. Recent activities and supports offered to communities during this pandemic by many great brands like Coca-Cola, Ford, Eve Sleep, Gtech, Starbucks, and so on are examples of excellent ways to show to the world that business is not just about profits. Social element and Polpeo notes that these empathetic actions “… isn’t about brands shoring up goodwill for the future; it’s about doing whatever you can for society. It’s about being inspirational leaders in a time when people need help, and to see good things happening in the world.” The consequences of being empathetic according to Deloitte, include the ability to satisfy customers and employees, and an advantage to doubly outperform competitors.
Develop an Ecosystem: To gain a competitive advantage especially in this pandemic period, brands must develop a business ecosystem. Harvard Business Review notes that this is important as COVID 19 pandemic has exposed the vulnerabilities of many companies whose strengths reside in just “ownership of unique physical assets.” A business ecosystem is however the web of organizations comprising “suppliers, distributors, customers, competitors, government agencies, and so on” saddled with the responsibility of delivering a given product or service through both competition and alliance. With the ecosystem, a brand can leverage partnerships and enjoys a synergy that is required for agility to respond to emergency and crisis. It also creates a dynamic revenue diversification opportunity while posing entry barriers since the potential entrants would have to contend against the whole system of autonomous complementing businesses and suppliers that constitute the web. Great brands like Alibaba Group, Japan’s Recruit Holdings, Ping An Group, Dangote Group, and so on are examples of business ecosystems that are dynamically responding to the changing needs of consumers in this pandemic period.
Concluding thoughts
The effects of COVID 19 are very substantial and cut across all sectors. The effects are disrupting consumer behavior at large. Considering this situation, organizations must keep improving themselves to serve the consumers better. This, therefore, requires brands to work with human-driven purpose, prioritize empathy, work with urgency, and develop an ecosystem. With this, brands will be able to move beyond the traditional competitive advantage, record brilliant performance, and maximize shareholders’ values.
Gbadebo, PhD is International Senior Lecturer, Department of Marketing, School of Business Management, Universiti Utara Malaysia.