Business planning, Jason Rose, Mentor

A sandcastle at high tide? Sustainable competitive advantages and the long-term view

Jason Rose /

I was participating in one of my favourite past-times recently – browsing the magazine stand at my local newsagent. I know, I know. It’s a bit 1990s of me. Sorry.

 

Anyway, I was flicking through the latest edition of a very esteemed management and strategy journal. I knew it was the latest because it had the sticker on the front cover that told me so.

 

One of the articles that caught my eye questioned the concept of sustainable competitive advantage. The central argument seemed to be that nowadays the ideal of building a business for the long term no longer exists.

 

Change seems to be so frequent and irrepressible that the old, safe, comfortable idea of a sustainable, bankable competitive advantage is extinct.

 

Who know? Maybe. Maybe not.

 

I did find it somewhat ironic given how much emphasis academics are placing on the concept of sustainability nowadays.

 

I think the inspiration for the piece was Apple. The company went from the world’s superstar innovator to just another stodgy corporation in about two years.

 

Whatever advantages Apple seemed to have were copied and even overtaken by other tech companies like Samsung.

 

(I just bought myself a Samsung Galaxy Note 2, by the way, so maybe there is something in the idea.)

 

Then again, you don’t need to look too hard to find counter-examples to the thesis.

 

Many of the biggest brands today – Google, YouTube, Facebook, Twitter – are certainly sitting on seemingly very sustainable competitive advantages.

 

Theorists get paid to theorise. And sometimes they are right. Then again, sometimes they are dead wrong and end up looking silly.

 

We’ve all read the warnings of believing that, “this time it really, really, really is different”.

 

I think the biggest mistake entrepreneurs can make is to think that because the world nowadays is so dynamic there is no point in trying to build something long-lasting.

 

Yes, you need to be flexible. Yes, you need to be adaptable. Yes, some totally unexpected and disrupting change may come along and blow your business model apart.

 

But none of that justifies not aiming to create a company that at its heart has a sustainable competitive advantage.

 

It may not be easy. Indeed, it may be even harder than it’s been in the past. That just makes it all the more valuable.

 

Without it, all you are doing is hoping that some corporate giant will come along and snap up your shiny new business for a handsome premium.

 

It happens. But it’s a lot rarer than you might think.

Advertisement
Jason Rose

Jason is an early-stage investor and corporate advisor with Concept Financial Services Group.

FROM AROUND THE WEB