How to build your moat: A roadmap to creating a competitive advantage

 

With competition between organizations becoming ever more sophisticated, it is imperative for those aspiring to greatness to build a brand that differentiates the organization from the competition or risk either commoditization or worse, extinction.  

For too many, when asked what it is they sell, this question will unfortunately lead to a list or description of the products or services their organization provides. The reality is that your customers can get similar products or services from any number of other suppliers. When we reduce what we sell to merely being products or services, we reduce our selves to offering little more than a commodity; and as a commodity you will compete largely based on price.

Competing on price is a losing proposition. There will always be a competitor who will supply a similar product or service for less; perhaps they are willing to accept a reduced margin or they want to gain market share, but there will always be someone willing to do it for less.

Warren Buffet once said, the one thing every great organization does is build a moat around themselves. They create a barrier that protects them from their competitors by differentiating themselves from their competitors. They do this by building a brand that sets them apart. The most effective way to accomplish this is to understand what your customers are really buying from you and ensure your organization provides it every time, without fail. Your customers will be able to depend on you to do what you say you will do – every time.

​In order to achieve a level of consistency that your customers will come to depend upon, and recommend you for, an organization must install processes that are robust enough and have the management capital (leadership’s time, budget and enthusiasm) to ensure continuous improvement becomes part of the culture. This is not easy work. For most organizations, it necessitates a cultural transformation that transcends every level of the organization and engages employees in the execution of this critical work. But the return on this commitment far exceeds the investment: capable and engaged employees will ultimately delight your customers. Customers, who will buy more, cost less to serve, be less price sensitive and will serve as ambassadors for your organization…an organization that successfully differentiates itself from its competitors.  

Good intentions alone do not constitute a plan of action. Sustainable improvement in the employee - customer interaction requires disciplined local action coupled with a company wide commitment to changing how employees are recruited, positioned in roles, rewarded and recognized, and importantly, how they are managed.

The challenge for any organization, regardless of their products or services, is to create an environment where employees are engaged in the work they do and feel compelled to take ownership of each transaction by doing what they believe to be right for the customer. When an organization has a culture that fosters empowerment, they instill pride in their workforce, reduce turnover and generate customer loyalty….and that will be their moat.