The quest for competitive advantage is what moves companies forward. It is responsible for driving the creation of differentials capable of highlighting their products or services from those of their competition. Still, for many entrepreneurs, this concept seems too abstract: “My business is unique and values quality, wouldn’t that be a competitive advantage?”.
This is one critical factor of business that many entrepreneurs don’t understand. What makes some businesses more competitive than others is precisely their ability to be different, delivering or adding value in a unique way to their customers.
This thinking is essential for anyone who is going to open a company or has recently opened their business. You’ve entered a market that likely already has established and thriving companies.
How then do you achieve excellent results and penetrate your brand, products, or services into the market?
With the perfect blend of competitive advantages.
In this complete guide, we will explain everything about the subject, defining the concept of competitive advantage and how using innovative strategies can give your organization an edge over competitors.
Check it out!
What is an Innovative Strategy?
An innovation strategy is a well-defined plan of structured steps that an individual or team must take to achieve the organization’s goals for future growth and sustainability. Innovation aims to create original value, such as new solutions to adapt to changing industries or to solve social, health, or economic problems.
A strategy is a plan that details exactly how you will achieve your vision or objectives. It consists of a set of policies or behaviors that focus on achieving the future growth of the organization. The most innovative companies understand that great new ideas don’t just happen. Instead, innovations arise from environments and processes that are deliberately designed to facilitate their development.
What is a Competitive Advantage?
Competitive advantage is the ability of a company to provide better quality/value or cheaper products and/or services than its competitors. That is, it is the set of qualities that give greater value to the company’s deliveries, enabling it to be a reference above its competitors. In the long run, competitive advantage increases a company’s position in its industry, generating more sales and market share than its competitors.
In practice, competitive advantage can be determined in several ways: it can be detailed about your product or even the way your supply chain is designed.
For innovation to work, it is necessary to organize everything that stimulates innovation actions in the short, medium, and long-term to achieve the established goals. Aligning the company at different levels and competencies is essential for the success of any strategic plan. Therefore, with innovative strategies, it is no different.
The following are some innovative strategies that can give your organization a competitive advantage in your market.
1. Proactive Strategy
Organizations that make use of the proactive strategy tend to have a strong research bias and have the advantage of being a first-mover and technology-market leader. They access knowledge from various sources and place big/high-risk bets.
Also called early adopters, they tend to invest heavily in new solutions and are generally pioneers in their segments.
Dupont and Apple are examples of companies that have adopted a proactive strategy.
2. Active strategy
Active innovation strategies involve protecting existing technologies and markets while preparing to react quickly as markets and technologies have proven themselves. This strategy aligns with companies that have a prompt response to innovation in their segments. Once a novelty is validated by the market, the company acts quickly to adapt, implement and reap the rewards.
Companies that use this approach also have a broad knowledge base and moderate to low risk levels. They tend to protect their bets.
Examples include Microsoft, Dell, and British Airways. These companies primarily use incremental innovation with in-house applied research and development.
3. Reactive Strategy
Reactive innovation strategies are used by companies that follow a wait-and-see approach and look for low-risk opportunities. They copy proven innovation and employ fully incremental innovators.
An example is Ryanair, a budget airline that has successfully copied Southwest Airlines’ no-frills service model.
4. Passive Strategy
Organizations that use this strategy only implement innovations when their consumers demand it. The automotive parts industry, for example, is known for meeting public expectations only when there is a latent consumer need, without daring and betting too much.
Understanding which type of strategy is ideal for your company is not a simple mission. There are several factors involved, as well as people with different levels of knowledge and culture. In addition, it is important to have a clear purpose and strategic approach, know your target audience and top competitors, and define your value proposition.
Earn a Certificate in Business Innovation and Strategy at CareerCentra. This course focuses on the advancement of strategic and innovative management methods for business development and growing market share.
Start now…
