Redefi Ning Competitive Advantage

VOL. 43, NO. 10 MAY 25, 2013

MDM Interview

INSIDE

Redefining Competitive Advantage

Author: People often ‘cling’ to advantages that have faded

In The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business, Columbia Business School Professor Rita Gunther McGrath argues that it’s time to go beyond the concept of sustainable competitive advantage. McGrath spoke with MDM staff writer Angela Poulson on how organizations can capture opportunities quickly, exploit them decisively and move on before they are exhausted. MDM: Tell me a little about the origins of this book. Rita Gunther McGrath: The book had its origins in a profound sense of unease that I had that we really haven’t made much progress in the field of strategy for a long time. Historically, strategy was about the search for superior performance and a thing called sustainable competitive advantage. And the idea was you found something that you did better than other companies in your industry and you threw up entry barriers like crazy, and you then got to enjoy the fruits of your advantage for a long time. In more and more parts of the economy, that set of assumptions is quite dangerous. What it causes people to do is to cling too long to advantages that are starting to fade, and it causes people to make decisions that are really not suitable for the long-term best interests of their companies. That got me started on a path of thinking about what would we do if we abandoned the idea of sustainable competitive advantage and what I landed on was the idea that we’d do lots of things differently. You’d hire people differently. You’d use different assets. You’d have different ways of budgeting. You’d have different disciplines around how you spend your money. And when you add it all up what you really have is a really different management approach. MDM: You mentioned that a sustainable competitive advantage is no longer relevant for some companies. How long has this been the...