Here’s how I explain Competitive Advantage in my book ‘T-Shirts and Suits: A Guide to the Business of Creativity’, using the metaphor of fell running (the British sport of running up and down mountains: ‘fells’):
One of the questions to answer is: “What can we do better than our competitors?” Ironically this might not be what you are best at! Competitive Advantage is found in that area where you beat your competitors hands-down – even if it’s not your best skill, or the thing you enjoy the most.
The analogy I use here is about my fell running. I run faster downhill than uphill (obviously) but so does everyone else! Running uphill is slower and more painful – but it is for my competitors too. In the uphill stage I can finish near the front of the pack but I’m slower than average running down. So maybe I should compete in Italy where fell races finish at the top, because there my combination of strengths and weaknesses would give me a competitive advantage.
Thinking about competitive advantage in this way and focusing on customers’ needs at the same time, the question becomes: “Which customers’ problems can we solve better than anyone else?”
Business strategy – your route to success – involves deciding what specifically to do, and with which customers. It also involves deciding what not to do, including deciding which markets not to compete in because the competition is too strong, concentrating instead on areas where you have competitive advantage. Selecting the right customers needs to be done in the context of competitors.
Competitive Positioning is the technique of analysing where you currently fit in amongst competing businesses, deciding where you should be and identifying your own ‘high ground’ on the competitive battlefield.