Building a sustainable competitive advantage
Today’s challenge for me is not only to be building the innovation capacity but also to be establishing clear ways on how we should set about sustaining it. Increasingly, organisations must have the capability and capacity to sustain innovation to provide the stimulus for lasting growth and resolve the complex challenges we face today and in the future.
To get there, though, it does seem this must be through continued learning. Hence, your capabilities become stronger, evolving and more unique, thus making them more difficult for competitors to understand and imitate.
Let me outline an innovation framework that builds capability through a sustained approach.
When you set out to build capability to be sustaining, you need to consider that there are two types of capabilities, distinctive, which are the characteristics of the organisation which others cannot replicate and reproductive, which can be bought in by the competition but always need to be appropriate to any objectives you are trying to achieve.
Focusing on improving the capabilities of your people needs, in my opinion, five essential elements and applying these through consistent application and measurement and sustaining this within your activity leads to a greater potential to sustain innovation and lead to sustainable competitive advantage.
To achieve greater sustainability, I believe the five elements within this model can provide this path.
SCA = II + EE + MLC + OC + RNE
So what is within this framework?
Sustainable Competitive Advantage (SCA) comes from the combining effects of the following:
- II Innovation Intensity– it’s the degree of adoption, uptake, the commitment to the investments made and explored, the how, what and where. How all the multiple levels of activities and the focus of the intensity given to building capabilities to innovate come together, wanting to innovate.
- EE Entrepreneurial Energies– this is more on how you set about, promote and generate the internal environment as entrepreneurial, to enable innovation in all its different forms to take hold and be seen as a learning environment people want to get involved with and can readily identify with.
- MLC Market Learning Competence gives a clearer awareness of what and where to acquire from and then take the market lessons from. The key need is to orientate always towards, and generally get to the heart of, where innovation occurs in the marketplace and with your customers, knowing their real needs and figuring out their unmet ones also!
- OC Organizational Learning– knowing the differences in the different ways of learning by linking the different intellectual capitals and combining the complementary assets needed to make them more dynamic.
- RNE- Relationship & Networking Effects– the supporting and enhancing aspects of making greater connections, collaborations and exchanges to speed up the process of innovation, reduce or contain costs and enhance your understanding through these external relationships and getting closer to knowing where latent knowledge lies, to assist and share this internally for greater impact and result for all.
The make-up of each of these five elements has a significant set of activities to structure around but can deliver a clear set of benefits. These provide the necessary intensity of purpose.
What is the result of adopting the SCA framework?
ROII = Investment x Activity x Change (learning environment)/over Results Impact
It is applying this ROII that can measure this investment. The sustaining impact can be measured as continued investment across this framework that pays off over time.