The single most significant strategic flaw in most businesses is that they don't have a competitive advantage, or they don't know what it is, or they fail to toot their horns about it. It's as true for General Motors as it is for the folks who run a general store.
 
It can be a fatal mistake. Why? If you properly identify and exploit your competitive advantage it will impact your bottom line, early and often. Because your competitive advantage can be your deal closer. It answers the customer's key question: Why should I do business with you? What are you offering that the other guy doesn't?
 
         If you can answer that question, you have your competitive advantage. Yet most CEOs and business owners cannot. It is not enough to say that you have good products, nice people, and snappy service. So does the guy across the street. Based on my research with middle market companies, I found only two CEOs in 1,000 who could name their companies' competitive advantages. The other 99.8% could only offer vague, imprecise generalities.
 
         It's awfully easy for today's business managers to lose sight of the basics, and to focus attention on other reasons why profit margins may be shrinking. You read and hear a lot about the threats of offshore outsourcing. You worry about falling behind in your use of new communications tools and in making the most of the internet. These threats are real, but you may not have to worry about those threats--if something else kills you first. As a business manager or owner, the biggest threat you face is losing your customers. She or he is the one who can blow up your business, simply by going elsewhere. You may play golf with her, bend over backwards to rush a delivery to her, and even consider her a friend. But you still might lose her to a lower-cost competitor.
 
         All too often, managers who see their business drifting and their margins shrinking will adopt what is often the last resort: Compete on price. But the manager who drops his prices while his market share is shrinking is inviting tragedy. You remember the old joke: "He's losing $3 on every shirt he sells, but he hopes to make it up on volume."
 
         Most business cannot exist by being the lowest-cost providers. Wal-Mart can, but you probably can't. If you make price everything, you accept commodity status.
 
         In my work with clients, we do not even discuss price. Play the price game and you are tossing margins to the wind. Of course, your customers might find it cheaper to buy from you not because of price, but because your products and services are more reliable. That reliability can save your customers costly downtime. Your service might be worth more because you provide it 24/7, which reduces your customers' need for inventory. Your products might be worth more because you might be the only company in the business that offers guarantees, or free installation, or free replacement, or employee training, or marketing support. Even unique packaging can sometimes make a critical difference.
 
         To remain competitive, you have to become more conscious about why you are in business in the first place and what you are delivering that makes you special. And you must make sure that your customers know why you are so special.
 
         Technology is often the source of competitive advantages. For a while. In the 1990s, for example, the late Ely Callaway made a bigger and better golf club using space-age materials and innovative design. Yet technology now moves at the speed of summer lightning. Callaway's competitors eventually introduced their own over-size metal drivers following the success of Big Bertha. That club alone was not a sustainable competitive advantage. Nor were Bigger Bertha and Great Big Bertha clubs, which likewise could be imitated. But what Callaway developed was a reputation and a culture for being cutting edge--for developing products that improve your game. Or at least make it more enjoyable. That reputation and culture is the company's competitive advantage--and it is sustainable. If your competitive advantage is a sustainable one, your business will thrive.
 
         If you are the owner or manager of a business, your mind is now probably racing trying to pin down your own company's competitive advantages. And remember this: Most companies do indeed have them (or had them) or they wouldn't be in business in the first place. Failing that, you can invent them. 
 
         So get out pen and paper, or spark up your laptop, and write down the answers to the questions below. Let your imagination go. Bounce your answers off colleagues, if you like, just as we do in the workshops. In fact, it is better if you involve several of your top staff in the exercise. The more ideas the better. You want a long laundry list of possible competitive advantages, which you will refine, winnow, reject and rethink, and finally vet with your customers. (Their opinions matter most).
 
         Note: You might settle on a single, clear competitive advantage with which to go to war. Or, you might have five to ten or more competitive advantages with which to arm your sales staff. Sometimes a single shot will level your enemy; sometimes it takes a shotgun blast.   
 
But before you begin, some words of caution. As you make up your list, bear in mind the following:
 
         Competitive Advantage is objective, not subjective. How many times do we hear a company say “you should do business with us because we deliver good quality and great customer service?” Well, your idea of quality and my idea of quality may be galaxies apart. Words like quality, reputation and trust are so hackneyed we tune them out.
 
 It is quantifiable, not arbitrary. Which is more compelling: "We have great customer service," or "Ninety-five percent of our business comes from referrals"? When you make objective, quantifiable statements such as these, the customer is more likely to believe your claims.    
 
         It isn't claimed by the competition. If your sales force goes out with a list of attributes that your dreaded competitors can match or exceed, you are courting disaster. (In fact, it is the principal reason so many sales calls don't result in closings). Find out exactly what you provide that the other guy doesn't and harp on it. Explore what that advantage means to the customer. If it can save him money--and it often can--make sure you stress that. Even better, tell the customer exactly how much he saves by using you. Even if your goods or services are more expensive than that of the competition, you can still save your customers money because of fewer breakdowns, guaranteed on-time delivery, training assistance, better payment terms and so on.
 
         It is not a cliché. Please don’t tell me that you "exceed your customer’s expectations.” How do you know what their expectations are? Your customers expect good service. How do they define good service, and how do you? I bet they are not the same. Who says he provides bad service? Again, be specific. If you provide service 24 hours a day, seven days a week--and the others guys don't, say so.
 
Now you are ready to start writing:

• What are your company's most critical competitive advantages?
  
• What do your employees think are your company's competitive advantages?
  
• What are your competitors' competitive advantages?
  
• How do you respond to customers when they ask, "Why should I buy from you?"
  

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