This is an article I have published this week at, and which can be found here:


Understanding, developing and exploiting your company’s strengths and competitive advantages is at the heart of any strategy for business growth. Yet many business leaders do not fully understand how and why their company wins.

Executive teams often draw up a list of strengths and competitive advantages based on gut feel but have few robust facts to support their beliefs and they risk building their business strategy on flawed assumptions.

A UK supermarket chain I worked with needlessly invested in a multi-million pound bonus package. Management held a belief that the quality of their store teams gave the company a competitive advantage versus other grocers. To underpin this belief the company created a bonus for store managers based on the satisfaction of their store staff.

The problem was that there was no discernible link between staff satisfaction and customer satisfaction for this retailer. Customers were focused on speed, convenience and price, which don’t always tally with satisfied staff.

Identifying your core advantages needn’t take months of detailed analysis. Like a good episode of “Columbo” simply follow the trail of clues and answer these five questions:

  1. Which of your products or services are outperforming the market? Where are you experiencing high sales and profit growth? Where do you have high market shares, and where are these growing? Importantly, the areas where you are winning may not necessarily be where your sales are highest! You need to look for unusual and unexpected areas of success, and these may be in some of your smaller business areas
  2. What are the characteristics of these products or services? Are they new product ranges or old? Do they require high levels of pre or after-sales service, or are they self-select? Are they exclusive or freely competed? Are you able to offer a premium price, or have you discounted to the market?
  3. Which customers are buying them? In most cases you will not be winning with all customers, but with certain customer groups. What are the demographic (who are they?) and psychographic (what makes them tick?) characteristics of your buyers?
  4. Why are these customers buying them? Ideally you will have some reliable customer research, otherwise you need to get as close to the customer as possible. Talking to your sales teams will give you a good indication of the reasons if you probe appropriately.
  5. What are the skills and capabilities that have enabled you to deliver these results? Is it your low costs that enable you to offer such low prices? Or is it your product development approach that allows you to gain high share and maintain margins?

Understanding what drives your success will help you make better investment decisions to further improve your key capabilities and reduce excess investment where you are not affecting customer behaviour.

© Stuart Cross 2009. All rights reserved.