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 pronouncement that sounds meaningful. Yet, speaking about sustainable competitive advantage often requires little actual evidence given the underlying idea is a bit vague.
Sustainable Competitive Advantage
A competitive advantage isn’t the best-defined idea. Still, at least you can observe that a firm has some sort of advantage happening. You can see when firms are outperforming other firms. You can then say there is some sort of competitive advantage. Knowing what exactly the advantage is can be a bit more challenging. Let’s, however, 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 when an advantage 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?
Like Obscenity? You Know It When You See It
Kevin Coyne in his review of sustainable competitive advantage suggests that many see it as poorly defined. Still, people often feel they know it when they see it. (Like obscenity). He outlines some ways of thinking about such advantages. The author also gives useful pointers to when something might be more liable to be sustained. He identifies capability gaps as key but, honestly, notes these gaps might be leapfrogged. By which he means the game might be changed to make the capability gap irrelevant. Interestingly he outlines when he thinks an 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 competitive advantage in the first place).
Coyne has some good ideas and maybe he got people to think a bit more about what is sustainable about various competitive advantages a generation ago. I’d still say that even now whenever the term is used some pushback asking for clarification is probably in order.
For more on marketing strategy see here.
Read: Kevin P. Coyne (1986) Sustainable Competitive Advantage — What it is, What it isn’t, Business Horizons, 29(1), 54-61