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November 8, 2005

Competency as Advantage

Competition brings parties together in a certain way. Each party assumes that getting what it wants means that the other party won't get what the other party wants. Yet if one party does not get what it wants, it doesn't mean that the other party will. This is why competition can always have three outcomes: victory, defeat, or stalemate.

What we musn't forget, though, is that regardless of which outcome is obtained, we still have to determine whether the actual outcome is a win or a loss for us. Why is this important? Because it keeps us focused on whether we are actually competing to win, and whether our competitive moves are actually advantages or not in terms of winning.

A similar refinement in our thinking separates "offense and defense" from "aggression and resistance"... As shown in the illustration below, they have a straightforward relationship to each other but not the simple one of being synonymous:

The basic level of competitive thinking is about deciding how to generate a gain and how to keep current holdings. We can gain and hold metaphorical ground as well as literal ground; the difference is simply a matter of how the adversaries define "territory" -- be it influence, locations, or whatever. As shown here, the two basic modes of action are aggression and resistance -- but those modes are then organized as offense and defense.

The purpose of offense is to work on the gain, while the purpose of defense is to work on keeping one's holdings. This gives, as shown within the picture's matrix, four different objectives to which activity is dedicated for pursuing advantage. As an example of the way the matrix can describe our activity, resistance might be pursued through using offense to recover lost ground. And from sports, we're already accustomed to the idea of an attacking defense, the value of which is mainly in its discouragement of the adversary.

An equally important observation about the organization of our competitive activity regards strategy. Strategy looks for the difference that generates an advantage, and rallies action around achieving the difference. If we understand that activity revolves around the broad competencies for aggression and resistance, then what we want to know is how strategy finds the leverage that it is looking for in those competencies.

Strategy basically has two places to look: in the rules of competition and in the vision or perspective that the competitors bring to the situation. As the picture below shows, leverage can be built on the behavior around the rules, or on the knowledge around the perspective. Typically, if one party can develop superiority in behavior and/or knowledge, an advantage is likely to come up. What we see in the picture here, though, is that another consideration plays into what advantage may arise. The aggression and resistance that underly the competitive action can be harnessed strategically through decisions that exploit either change or mastery in the behaviors and knowledge.

This second matrix coughs up eight more specific objectives -- points of leverage that express the general requirement appropriate to building advantage in either the aggressive or resistive mode.

Much of what we hear about these days in commentary on the critical success factors of competing companies turns out to reflect these points of leverage, and now we can see why. For example, nearly all companies are urged to develop "agility" - and here we can see that it is about exploiting change aggressively, and that disruptive innovation of course features positioning tied to invention. Likewise, all companies are urged to develop into "intelligent enterprises" - and here we can see perspective and especially surveillance covering the hope that their cousins knowledge management and business intelligence will somehow together bear the unique trade secret that boosts the company to a win.

In the end, competitors usually engage in a situation where they are each bringing advantages, but their respective advantages are different. Given all that, the best competitive effort will still be most likely to succeed because the other party unwittingly cooperates with the mode and flavor of action we decide upon. The toughest competitor simply doesn't cooperate.

What are the five key characteristics of the toughest possible competitor? Listed in order of what makes them progressively and increasingly dangerous:
1 - Competent
2 - Secure
3 - Committed
4 - Unpredictable, and...
5 - Aware.

Thus, having a net competitive advantage must always come at least in part from identifying the weakness in the opposition, and through understanding if the competitor is organized well enough to make their weakness irrelevant to the competition. Our job, of course, is to make it relevant.

Naturally, we have to understand the same things about ourselves, and that should naturally prioritize our opportunities to mount a competition. Strategy does a lot to determine how we win; but readiness determines whether the strategy can be effective.

Posted by Malcolm Ryder at November 8, 2005 1:39 PM

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