In Search of the Holy Grail - Competitive Advantage19 January 2016
Why business and brand strategies should be the twin strands of a double helix. In our experience, a lot of leaders battle to articulate their business’s purpose. They struggle to find what Professor Cynthia Montgomery, the past head of the Strategy Unit at Harvard Business School, terms ‘a difference that matters. They battle to bring to the boardroom the Holy Grail of business – long-term competitive advantage.
Whether you see things in terms of Michael Porter’s positioning – which argues that strategy is all about choosing the right game to play – or whether you buy into Professors Kim and Mauborgne’s Blue Oceans strategy – which argues that your business should avoid the bloody, contested battle of red oceans and create new, untapped blue places to fish – the challenge remains the same. Business leaders would like to establish a lasting stronghold for their business. They would like it to realise the potential it rightfully deserves. They would like loyal customers, healthy revenues and the not-unreasonable reassurance, when they go home, that the business has a foreseeable future.
It’s a lot like wrestling with a gorilla. You don’t quit when you’re tired, you quit only when the gorilla is.
The trouble is this. It’s extremely difficult to find a sustainable competitive advantage inside the four walls of a business.
Yes, all companies vary in many different ways – and all of those things matter when you’re creating a strategy. But are those factors going to make the all-important difference? An intrinsically-based long-term competitive advantage, in a commoditised and easily-cloned world, is a Big Ask.
If your strategy sessions have gone out in search of the Holy Grail and come back empty-handed, you can, if you like, blame two business school academics: Gary Hamel and C.K. Prahalad. In 1990 they succeeded in placing competitive advantage centre-stage. Your company, they said, has core competencies. All you have to do is find out what they are, then make the most of them. Competitive advantage, they said, ‘comes from within.’ It doesn’t come from analysing markets and then adjusting your business accordingly.
‘Comes from within.’ That, in our view, is exactly the wrong thing to say.
For a start, it explains why a lot of companies tackle their brand strategy as an afterthought to their business strategy, something to be handled by ‘the people in marketing’ – not the executives in the C-suite.
More crucially: if you have found that an intrinsically-based competitive advantage is an impossible ask, then it may be time to stop banging your head against the four walls of your business and take a look outside. Outside are a lot of people who are not only a source of revenue, but a valuable business resource.
Their experiences of, beliefs about and expectations of your business are what constitute your brand. Your brand is, in fact, the sum total of their perceptions. And your brand generates 30 to 40 percent of your company’s shareholder value. This doesn’t apply only to consumer brands; it’s an average across both consumer and corporate brands.*
In other words, your brand is your single biggest generator of shareholder value. Why would you not want brand strategy to be part of your business strategy?
Getting your brand into the boardroom and onto the agenda is a damn fine idea.
Your business and brand strategies should be the twin strands of your company's DNA. They should inform each other. They should be developed concurrently.
It's just possible that you'll find yourself fishing in Blue Oceans; that it will become obvious which game to play; and that you'll come into the office one morning to find the Holy Grail – long-term competitive advantage – glowing quietly in the middle of your boardroom table.
If you’re looking for an answer to Professor Montgomery’s question – Why does your company matter? – the people outside your four walls are a good place to start.
When you’re wrestling with a gorilla, you need all the help you can get. The twin strands of brand strategy and business strategy may just be thing to tie the fellow up.
Mark Varder is a co-founder of the brand development agency, Varder Hulsbosch. For more about their thinking, visit www.vh.co.za.