A Framework for Diagnosing Competitive Superiority

George S. Day & Robin Wensley

Assessing Advantage: A Framework for Diagnosing Competitive Superiority
Strategy is about seeking new edges in a market while slowing the erosion of present advantages. Effective strategy nnoves are grounded in valid and insightful monitoring of the current competitive position coupled with evidence that reveals the skiHs and resources affording the most leverage on future cost and differentiation advantages. Too often the available measures and methods do not satisfy these requirements. Only a limited set of measures may be used, depending on whether the business starts with the market and uses a customer-focused approach or alternatively adopts a competitor-centered perspective. To overcome possible myopia, the evidence of advantage should illuminate the sources of advantage as well as the manifestations of superior customer value and cost superiority, and should be based on a balance of customer and competitor perspectives.

HE notion that superior performance requires a business to gain and hold an advantage over comf)etitors is central to contemporary strategic thinking. Businesses seeking advantage are exhorted to develop distinctive competences and manage for lowest delivered cost or differentiation through superior customer value. The promised payoff is market share dominance and profitability above average for the industry. This advice is sound, but usually difficult to follow. Management first must understand the reasons for the current advantages or deficiencies of the business and the vulnerability of the advantages to copying or leap-frogging by competitors. Without a proper diagnosis, managers cannot choose the best moves to defend or enhance the current position. For many reasons the prevailing approaches to understanding competitive advantages are unlikely to yield valid and insightful diagnoses. We therefore evaluate the current approaches and methods within an organizing framework that clarifies the nature of

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