Competitive Advantage

Posted on December 29, 2014 by Dr Shahid Sheikh, One of Thousands of Career Coaches on Noomii.

It is evident from the literature that achieving competitive advantage has become one of the most enduring goals for a firm or organization’s long-term survival and success. Because competitive advantage is paramount to the firm’s long-term survival and success, it has spawned a large body of literature that addresses a wide array of contributing elements that are essential to achieve this goal. However, the literature does not present a single, unified, and encompassing concept to achieve such a goal. The aforementioned literature points to the fact that competitive advantage can be achieved through well-crafted knowledge-management strategies. These strategies include gathering relevant information about the following: (a) the customer’s needs, wants, and buying drivers (both internal and external and can be achieved through CRM); (b) the core competencies of the firm’s competitors (external and can be achieved through competitors intelligence); © the market trends and external competitor capabilities (can be achieved through competitive intelligence); and (d) firms’ core competencies (entirely internal and can be gathered through business intelligence).
Competitive Advantage
Although Hamel and Prahalad (1989, 1990), Porter (1985), and Thurow (2000) have been credited with championing the concept of competitive advantage, Alderson (1937) first suggested in principle that the suppliers need to adopt competitive specialization. Alderson also first recognized that the firms should acquire unique characteristics to distinguish themselves from competitors (as cited in Douglas & Craig, 1999). Later Hamel and Prahalad (1989, 1990) discussed the need for firms to create new advantages that will allow them to stay ahead of their competitors. Following Day (1984), who first coined the word sustainable while recommending strategies that would help the firms “sustain the competitive advantage” (p. 32), Porter (1985) discussed the use of, “cost leadership and differentiation” (p. 3) to achieve sustainable competitive advantage. Lester Thurow later suggested that knowledge was the only remaining competitive source available to organizations, as all other resources no longer offered any competitive advantages (as cited in Buckman, 2004).
Competitive advantage may come, among other organizational activities, from or through faster learning, sustained innovation, reduced cycle times, improved sensitivity and co-evolution with markets, or a unique blend of technology and practice. However, KM can play a key role in all these aspects. The key to a successful KM initiative is a shared understanding within the firm of exactly what aspects of knowledge are important and open communications to take advantage of tacit knowledge and insights. A culture that allows failure, learns from mistakes, and appreciates the fundamental role of knowledge, as a strategic driver in the sustainable effort to create competitive advantage is also important to firms.
Competitive advantage is directly proportionate to the core competencies that an organization has over its competitors. According to Hamel and Prahalad (1990), core competencies are the set of specialized expertise that occur simultaneously and are concordant with and a unique blend of new technologies and work activities. Emulous activities that the organization can do better than its competitors take place within the organization; they are also difficult for competitors to copy. According to Brackett (1999), capital, human resource, and data resources are the most common and primary competitive resources available to most organizations today; however, these competencies can be anything from product development to employee dedication. Day and Wensley (as cited in Fahy, 2001) listed two sources that support creating competitive advantage: superior skills and superior resources. Hamel and Prahalad (1990) recommend that the firms combine these two sources to create core competencies. They define the core competencies as the activities in which firms excel over their competitors and are impossible for the competitors to copy.
Summary
Organizations can no longer rely on the rudimentary resources that gave them the advantage over competitors in the past. The emergent thinking in the KM movement is that knowledge is the only remaining source of competitive advantage for organizations. Use of the proper new knowledge in business can mean gaining competitive advantage.
Since knowledge can become obsolete over time, capturing and using existing knowledge to predict the future can be woefully wrong. Using old knowledge to predict the future is predisposed to failure. In order to take advantage of this remaining competitive resource, organizations need to create new knowledge. The process of creating new knowledge can start by using well-defined business and competitive intelligence-gathering processes. The newly gathered business and competitive intelligence can then be converted into new knowledge. In order to profit from the newly created knowledge, this knowledge must then be openly shared throughout the organization. In order to achieve this, organizations will need to create and foster a knowledge-sharing culture. Creating a culture of trust and sharing can overcome the notion that the people in an organization are unlikely to share knowledge. Competitors can replicate and take away all other sources but the knowledge an organization created and processed. Cumulatively, the new knowledge-creating process can help organizations gain long-running, sustainable competitive advantage.

References
Adam, G. (2003). Towards an integrated future. Knowledge Management, 6(9), p. 17.
Alderson, W. (1937). A marketing view of competition. Journal of Marketing, 1, 189–190.
Buckman, R. (2004). Building a knowledge driven organization. New York: McGraw-Hill Companies.
Chaston, I. (2000). Relationship marketing and the orientation customer require of suppliers: Assessing the influence on service satisfaction in the UK SME manufacturing sector. Service Industry Journal, 20(3), 36–47.
Chaston, I. (2004). Knowledge-based marketing. London: SAGE Publications, Ltd.
Dixon, N. M. (2000). Common knowledge. How companies thrive by sharing what they know. Boston: Harvard Business School Press.
Douglas, S. P., & Craig, C. S. (1999). Configurable advantages in global markets.
Drucker, P. F. (1995). The program outcomes t-capitalist executive in managing in a time of great change. New York: Penguin.
Fahy. J (2001). Role of Resources in Global Competition (Routledge Studies in International Business and the World Economy). New York: Routledge Publication
Firestone, J., & McElroy, M. (2003a). Key issues in the new knowledge management. Burlington, MA: Butterworth Heinemann.
Firestone, J., & McElroy, M. (2003b). The new knowledge management. Knowledge Management, 6(9), 12.
Hamel, G., & Prahalad, C. K. (1989, May-June). The strategic intent. Harvard Business Review.
Hart, C. (2003). Doing literature review [Electronic version]. Thousand Oaks, CA: Sage Publications.
Jackson, S. E., Hitt, M. A., & Denisi, A. S. (2003). Managing knowledge for sustained competitive advantage: Designing strategies for effective human resource management. San Francisco, CA: Jossey-Bass
Kahaner, L. (1996). Competitive intelligence: How to gather, analyze, and use information to move your business to the top. New York: Touchstone.
Kotler, P. (1994). Marketing management, analysis, planning, and control. New York: Prentice-Hall.
Lelic, S. (2004). Managing the knowledge life cycle. Knowledge Management, 6(9), p. 6.
McElroy, M. W. (October, 1999). The second generation of KM. Knowledge Management, pp. 86–87.
McElroy, M. (2003). The new knowledge management: Complexity, learning, and sustainable innovation. Burlington, MA: Butterworth-Heinemann.
McFayden, A., & Canella, A. (2004). Social capital and knowledge creation: Diminishing returns of the numbers and strength of exchange relationship. The academy of management Journal, 47(5), pp. 35-37.
Nonaka, I., & Takeuchi, H. (1995). The knowledge creating company. New York: Oxford University Press.
Porter, M. (1985). Competitive advantage: Creating and sustaining superior performance. New York: Free Press.
Shaker, S., & Gembicki, M. (1999). The War room guide to competitive intelligence. New York: McGraw-Hill.
Stenmark, D. (2002). Information vs. knowledge: The roles of intranets in knowledge management. Paper presented at the 35th Hawaii International Conference on System Sciences.
Sveiby, K. E. (1997). The new organizational wealth: Managing, measuring knowledge-based assets. San Francisco: Berrett-Koehler Publishers.
Thurow, L. C. (2003). Fortune favors the bold: What we must do to build a new and lasting global prosperity. New York: HarperCollins Publishers. 2003 Global Most The 2003 Global Most Admired Knowledge Enterprises.
Toffler, A. (1999). Power shift: Knowledge, wealth, and violence at the edge of the 21st century. New York: Bantam Books.
Wiig, K. (1994). Knowledge management foundations: Thinking about thinking: How people and organizations represent, create, and use knowledge. Arlington, TX: Schema Press.