The Evolution of Competitive Advantages, Or How Networking Can Change Your Business.
Over the past 100 years, organizations have faced tremendous challenges in the ways they compete. In doing so, we clearly saw different layers of competitive advantages appear. The pyramid below (found in a PDF on the InterWeb) presents how competitive advantages evolved over time and transformed organizations. It also identifies what will drive business in the second decade of the 21st century: relationships.
What are relationships? Is it social networks? Is it happy hour? Is it friends, colleagues, family relations? Relations is networking. Business networking is the new competitive advantage. Who you know and who knows you is the new competitive advantage. After decades of figuring out how to manage and optimize manufacturing, technical support, information, data and knowledge, we must learn how to develop, nurture and profit from relationships. This is the most important business opportunity of the next decade.
Excerpt from the document
Each step on this pyramid represents a major shift in the competitive advantage of an organization. Going back to the turn of the century, economies of scale and manufacturing led to price advantages. When price was equalized in the market, quality and service became the new differentiators. Producing widgets with fewer defects and/or providing value-added services to enhance an enterprises’ product offering allowed them to compete more effectively.
The explosion of information technology led to the central role of data in an enterprise. Collecting, disseminating, and managing data in cost-effective ways, aligned with continuous improvement of an organization’s business processes, were key measures of viability and growth. Information technology became a critical success factor in evaluating organizations. Organizations unable to leverage automation and information technology to reduce costs and realize new opportunities were at a huge disadvantage.
The next phase of competitive organizational evolution revolved around knowledge. This has been elusive, partly because knowledge in essence is unstructured data. Unlike the 0s and 1s of this document that can be digitally stored as one self-contained document, knowledge sits in the minds and experiences of people. Therefore, it neither lends itself to being easily packaged and stored in centralized repositories nor can it be marked up with metadata (the data that label and describes the data stored in the repositories). There are some excellent examples of enterprises that have learned how to tap into knowledge to spur innovation and create competitive advantage. Design industries offer excellent examples. Through math-based, knowledge driven CAD/CAM (computer aided design, computer aided manufacturing) initiatives automotive manufacturers have been able to significantly reduce design time cycles, costs of producing prototypes, and increases in safety. In these cases the information technology paradigm morphed well to match these data-driven knowledge opportunities. The short tenure of actionable knowledge strategies is less a function of failure and more an indicator of exciting times that lie ahead.
Cultivating and nurturing a complex and rich collection of relationships is paramount to success. In the future, employees will create value through interconnected relationships. These relationships will need to be capable of and organizationally empowered to synthesize information in real time to fabricate new products, services, information, or relationships to respond to real-time, emergent market needs.
I am moving in the business of developing, nurturing, managing and profiting from relationships. Anyone wants to learn more?
Dakx
