Understanding and Developing Sources of Sustainable Competitive Advantage A Short Stack PPT Developed by the Center for Strategic Change at George Fox University

The Center for Strategic Change at George Fox University The Center for Strategic Change at George Fox University has a simple mission: To help college and university leaders succeed. We will accomplish this mission by serving as both a platform and resource for strategic innovation. As a platform, we will provide current practitioners an opportunity to present their ideas and insights to the higher education community. As a resource, we will provide content in the areas of leadership, visioning, strategic planning and organizational design. Questions about this short stack can be addressed to Bob Sevier at rsevier@georgefox.edu.

The Importance of Competitive Advantage Good strategy rests on a solid understanding of some basic truths. One of these truths is that there is nothing more important to organizational success than a source of sustainable competitive advantage. This short stack will provide a brief overview of competitive advantage and then outline a basic strategy for developing your own source of competitive advantage.

So What is Competitive Advantage? Here’s the academic definition of competitive advantage: At its most basic, competitive advantage is a condition or circumstance that puts an organization in a favorable or superior market position. Here’s a definition that is more pragmatic: Competitive advantage is what makes you better than the competition in your customers' minds. Finally, here’s a definition I’ve used when working with clients: Competitive advantage is something you do/offer that is of value to the marketplace that is not done/offered by your competitors.

Competitive Advantage: Five Understandings Michael E. Porter says that competitive advantage depends on three determinants: What do you produce? Who buys what you produce? Who are your competitors? I would add two others: Strategic focus Strategic messaging

What Do You Produce? Whether it's a good or service, you must be clear on what you are offering your customer because if you are not clear it is likely that your customers won’t be clear either. Consider, for example, what you offer prospective students … Do you offer them majors or are you offering them opportunity? One approach would cause you to list all your programs. The other approach would cause you to tell stories and show data about your graduates.

Who Buys What You Produce? Determining who your customers are is essential. As you think about customers, consider the difference between first-time customers and long-term customers. In other words, think about who persists and graduates from your institution, not merely who enrolls as freshmen.

Who Are Your Competitors? One of the major challenges facing college marketers is developing a clear understanding with whom you really compete for students, donated dollars, and public and media attention. In most cases, colleges and universities create a list of competitors that is too large and ill-defined. It is much better to identify that small handful of institutions with which you compete most often. Chances are these institutions are more like you than unlike you.

Strategic Focus Strategic Messaging Once you have identified your source of competitive advantage you need to build your larger long-term strategic focus around that competitive advantage. Finally, develop strategies so that, when your customers think about the advantage you have identified, they think about you. You want to own that position in their minds. Strategic Messaging

A competitive advantage is the difference between noise in the marketplace and buzz.

Your Core Competencies Key Overlaps Chances are, your competitive advantage will be found in the overlaps represented be this Venn diagram Your Core Competencies Marketplace Interest Competitor Offerings

Distinctive Competencies and Competitive Advantages Colleges are often confused about the difference between distinctive competencies and competitive advantages. A distinctive competency is something you do or offer that is important to you. As such, they tend to have an inward focus. A competitive advantage, however, is something you do that 1) Your competitors do not do; and 2) Is something your customers will pay for. Competitive advantages have both an inward (we care about it) and outward (our customers care about it) focus.

Necessary Alignments Mission and vision Organizational culture Budgets Operational plans Marketplace interests Sustainable competitive advantages must align with your: Mission and vision Organizational culture Budget Operational plans Marketplace interest Your prospective students and donors must find your competitive advantage compelling, intuitive and obvious. Five Alignments

The Importance of Sustainability A true competitive advantage is sustainable over time. A one-time price cut is not sustainable, but a commitment to job and career placement is. Sustainable Competitive Advantage Hard to find substitute High marketplace demand Difficult for competitors to acquire or imitate

Who Has What Competitive Advantage? Did you notice that it is difficult to identify a competitive advantage without also identifying the competitors? Who Competitive Advantage Harvard The University of Phoenix The Ohio State University The University of Southern California Notre Dame

Developing Sustainable Competitive Advantage

Developing Competitive Advantage Four Steps The five steps for developing a source of sustainable competitive advantage correlate with the five determinates of competitive advantage What do you produce? Who buys what you produce? Who are your competitors? Strategic focus Strategic messaging

What Do You Produce? Based on data – students Why do full-pay students attend your college? Why do full-pay students not matriculate? Based on data – donors Why do alumni give? Why do donors who are not alumni give? Why do people only give once? What motivates donors to move up the giving pyramid?

Who Buys What You Produce? Who are your customers? What do they “look” like? Define them demographically Define them psychographically (values, attitudes and lifestyles) What motivates them? Who influences them? What are their media habits? What are their unmet needs? Who do they view as our competitors? Do they exist in sufficient numbers to assure our long-term growth? Use this data to create a profile of your ideal customers.

Who Are Your Competitors? Generally, there are three types of competitors: Win from Not really your competitors; you beat them up Lose to Not really your competitors; they beat you up Split 50/50 Competitors against which you win half the time and lose half the time In most cases, you will have the greatest success against the split 50/50 group. Once you have identified a handful of competitors do a deep dive on each and try to identify one or more advantages you have over each (Cost? Location? Point of compelling differentiation)

Strategic Focus The fourth step involves centering your organizational purpose around your competitive advantage. In other words, how can you allocate existing resources (time, talent and treasure) to strengthen your competitive advantage? In most cases, this will involve revising at least of your strategic plan.

Strategic Messaging The final element involves getting the word out on your source of competitive advantage. This includes not only your brand strategy, but your recruiting and advancement communication as well as your internal communication strategies. As you think about your messages remember to keep them as audience-centric as possible. In addition, stress outcomes more than process. Audiences of all ages want to know, “What’s in it for me?”

Remember: 1) Sources of competitive advantage likely flow directly from lower cost or compelling differentiation 2) Your brand should be built around your source of competitive advantage 3) Competitive advantages are always validated by the marketplace

Resources: Drucker: The Essential Drucker: The Best of Sixty Years of Peter Drucker's Essential Writings on Management Kim and Mauborgne: Blue Ocean Strategy - How to Create Uncontested Market Space and Make Competition Irrelevant Porter: Competitive Strategy – Techniques for Analyzing Industries and Competitors https://www.thebalance.com/what-is-competitive-advantage-3-strategies-that-work- 3305828