New Sustainable Competitive advantage of today

Sustainable competitive advantage no longer arises exclusively from position, scale, and first-order capabilities in producing or delivering an offering. 

Instead of being really good at doing some particular thing, companies must be really good at learning how to do new things.

Those that thrive are quick to read and act on signals of change. They have worked out how to experiment rapidly, frequently, and economically — not only with products and services but also with business models, processes, and strategies.

HBR and MIT articles talk about Adaptability as the new Sustainable Competitive advantage. The 4 pillars of adaptability include:

Quick Identification: The UK-based grocery retailer Tesco continually performs detailed analyses of the purchase patterns of the more than 13 million members of its loyalty-card program. Its findings enable Tesco to customize offerings for each store and each customer segment and provide early warning of shifts in customer behavior.

Experimentation: After Ikea entered Russia, managers noticed that whenever it opened a store, the value of nearby real estate increased dramatically. So Ikea decided to explore two business models simultaneously: retailing through its stores and capturing the appreciation in real estate values through mall development. It now makes more profit in Russia from developing and operating malls than from its traditional retail business.

Manage Complex Multicompany Systems: Toyota’s automotive supply pyramids, with their kanban and kaizen feedback mechanisms, are early examples of adaptive systems.

Build Ability to mobilise: Netflix has only two types of rules: those designed to prevent irrevocable disaster and those designed to prevent moral, ethical, and legal issues. It has no vacation policy and does no tracking of time—the company’s focus is on what needs to get done, not how many hours or days are worked.