The business world as we know it today is as competitive as possible. And with the fast-moving markets to boot, it has become even more difficult to lock in the customer. Because for the average customer, today's cravings can leave a sour taste tomorrow when a better flavor pops up elsewhere.
In their quest to find that secret ingredient, today's businesses are starting to focus on creating competitive advantages.
These competitive advantages are built on the back of a business's most valuable and standout resources. And these resources, when well-managed, can help create distinctive capabilities. This brings us to the concept of distinctive capabilities, as discussed in this article.
What is it?
A business's distinctive capabilities are those attributes, resources, or competencies that are unique and valuable to its stakeholders. These capabilities are leveraged across the business's value chain to create value for its customers. And because the competition can’t imitate the value in question, the business can achieve market capture.
There are three main ways in which a company can achieve its distinctive capabilities:
Architecture
This refers to the organizational structure of the company and the quality of its relationship with its internal and external environment. A company's architecture can be managed to provide optimal value and function across its value chain. When this happens, the company can be said to have carved out a distinctive architecture.
Innovation
A key trait of successful businesses is the capacity to engage creative and distinctive approaches for your work because a company that fails to innovate will not evolve or be sustainable in the long run. Hence, the ability to innovate is a distinctive capability that we can not overemphasize.
Reputation
A good brand name is worth its weight in gold. And it is only by maintaining a good reputation that a company can keep its customers or attract new ones. Hence, the strength of a brand name can be described as a distinctive capability.
When do we use it?
Here are a few use cases where you can use a distinctive capability strategy.
To create competitive advantages
Today's leading businesses pull all the stops to create that process or product that gives them the edge over their peers. This is the competitive advantage that comes from maximizing a distinctive capability.
To promote the brand name
A good brand name commands interest in the market and speaks ahead of the product. And one way to build a strong brand is to develop distinctive capabilities that become sources of competitive advantage.
To build a competitive and productive work culture
Creating healthy workplace relationships is another distinctive capability crucial to any business's growth. There's great value in creating strong management to staff/suppliers/customers connections. And these connections can create a positive chain reaction that filters the workplace.
To promote healthy competition
Do you desire to extract the full potential of your staff? If yes, motivate them to become more creative and effective at work. Also, show them that you appreciate their efforts. Do this, and you can get your workers to develop innovative solutions that become workplace advantages.
What business questions is it helping us to answer?
Building distinctive capabilities in your workplace will help provide answers to the following business questions.
How can I change the work culture?
Work culture encompasses the organizational and operational setup, workflows, and other related influences. A work culture that encourages innovation and strategic planning will produce positive results for the company. And this can be achieved when distinctive capabilities are built and exploited.
How can I create sustainable competitive advantages?
Your competition can not easily erode a sustainable competitive advantage. And it is mostly by focusing on core competencies that a company can build these sustainable competitive advantages.
How can I build a strong brand reputation?
A strong brand image is a critical resource in today's fiercely contested markets. It can help you gain the trust of the customer. And this is often because they have found something valuable, unique, or attractive in your product.
How can I introduce innovative solutions?
Innovation is at the heart of several work-related advances and product breakthroughs. So if you're looking to make the next big break, you must commit to innovation and creative processes. Today's most successful businesses integrate innovative approaches to their work. And it has become a distinctive capability that serves them well.
How do we use it?
Here are a few guidelines to take while using a distinctive capability strategy.
Define the potential areas in your business's value chain to build distinctive capabilities.
Commit necessary resources to build these distinctive capacities
Outline non-capabilities that, although non-distinctive, are still crucial for your business.
Develop an action plan for executing the Distinctive Capabilities model.
Practical Example
A diesel engine manufacturing company boasts some of the industry's finest technicians and engineers. This personnel joins forces to build highly enduring and efficient engines using a rare conversion technology. And because this technology is unique and complex, it becomes a competitive advantage that promotes their engines in the market.
The company knows that this technology is exclusive to them. So they milk it to create their products. In this case, the company's distinctive capability comes from its special conversion technology, and its strategy is to maximize it.
Advantages
It helps with positive brand positioning
A company's distinctive capability can be its positive brand image. And this is often enough to sustain it in the market.
It helps create a positive/healthy work culture
Having everyone at work in high spirits will always be a good thing. And with a healthy work environment/culture, you can pave the way for more productive work. This can only happen when a company is structured to be fair, rewarding, and promising for all its stakeholders.
It helps you build sustainable advantages
Every business will have to deal with the competition at some point. And it is only by leveraging its distinctive capabilities that it can compete favorably.
It promotes consistent innovation
Today's hot prospect and market favorite can become tomorrow's regular thing. So a company must continue to innovate and reinvent itself to stay afloat in today's fast-paced markets.
Disadvantages
It may put undue pressure on staff
Some businesses may be forced to go the extra mile to outpace the competition. Staff may be stretched beyond their limit to find innovative solutions to existing problems. And this might produce unintended consequences in the long run.
It risks ignoring intangible capabilities
A company that devotes near-total commitment to leveraging its distinctive capabilities may come up short elsewhere. Certain strengths and advantages that could provide support may go under the radar. And this can come with certain consequences in the future.
It may create rigid workplace systems
Your company may adopt certain work patterns and structure because it has proven efficient. But while this is not bad, it can close up the space for spontaneous and out-of-the-box thinking.
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