Look What's Back: Sustainable Competitive Advantage

Industry watchers from CNBC's Jim Cramer to eWeek's Peter Coffee have declared that tech is back in 2006. So too apparently is sustainable competitive advantage according to an article in the current McKinsey Quarterly. The article is titled: "The next revolution in interactions -- Successful efforts to exploit the growing importance of complex interactions could well generate durable competitive advantages." The authors are: Bradford C. Johnson, James M. Manyika, and Lareina A. Yee with an introductory note by Scott C. Beardsley, James M. Manyika, and Roger P. Roberts.

"Technology and organizational strategies are inextricably conjoined in this new world of performance improvement."

--McKinsey & Company

To many readers, that may seem a bit odd, given that competitive advantage has been all too fleeting recently in the face of what many see as tech-driven commoditization. Recent tech-based advantages have not been sustainable, the authors claim, because technology is easy to copy. (Once Wal-Mart does it, everyone does it -- so where's the advantage?) Technology's real impact has been to level the playing field (or flatten the world, as Thomas Friedman says).

That's the point. Technology is the playing field, but it is not the game. What you do on the playing field is a function of creativity, intuition, judgement and -- most importantly -- how you interact with others. Organizations that take a cookbook approach to interactions will commoditize themselves.

I can see how this would apply to even something as simple as a web page, one of the most common tools organizations use to interact. Every company has the same access to the same technology for making web pages -- from css style sheets to data mining solutions. That means the only thing that's left are the "uncodified patterns" (McKinsey's words) to which human beings respond. It's a lot harder to produce a desired human response than it is to produce technically competent web pages. You can't just be great at producing web pages, you also have to be great at getting people who know how to produce great web pages.

And that advantage is one that is a lot harder to copy.