Is Sustainable Competitive Advantage A Useful Goal

I must confess to being a bit dubious about the idea of sustainable competitive advantage. It seems designed to allow people to pontificate with a meaningful sounding pronouncement but one that requires little actual evidence given the underlying idea is a bit vague.

A competitive advantage isn’t the best defined idea but at least you can observe it happening. You can see when firms are outperforming other firms. You can then say there is some sort of competitive advantage — knowing what exactly that is can be a bit more challenging but let’s be generous and assume that we have a pretty good guess. Perhaps it is a locked-in customer base, brand, intellectual property, or more talented employees. Sustainability is a much more tricky concept: how do you know what advantages will be sustained? A cursory look at the decision making literature, or any novel, or even casual introspection, lets one know quickly that we aren’t great at seeing the future.

This makes it problematic that “Sustainable Competitive Advantage is the goal of every competitive strategy” (Coyne, 1986, page 54). It is hard to pursue a goal when we really don’t know what the goal represents. Will any proposed action help us towards our goal of sustainable competitive advantage? Who could possibly know?

Kevin Coyne in his review of sustainable competitive advantage suggests that many see it as poorly defined but feel they know it when they see it. He outlines some ways of thinking about such advantages and gives some useful pointers to when something might be more liable to be sustained. He identifies capability gaps as key but, honestly, notes these might be leapfrogged — the game changed to make the capability gap irrelevant. Interestingly he outlines when he thinks a sustainable competitor advantage can lead to losses, and when pursuing one is wrong. This might be because the market you are dominating isn’t big enough. (Although some might argue this wasn’t a proper sustainable competitive advantage in the first place).

Coyne has some good ideas and maybe he got people to think a bit more about sustainable competitive advantage a generation ago. I’d still say that even now when the term is used probably some push back for clarification is in order.

Read: Kevin P. Coyne (1986) Sustainable Competitive Advantage — What it is, What it isn’t, Business Horizons, 29(1), 54-61