Sustainable Sources of Advantage

Both : And

In our haste to simplify our understanding of the world we tend to categorize things in binary fashion—right or wrong, talking or doing, yes or no, light and dark.

When in reality the question is more about the degrees of change (for example, temperature), the delta of in progress and done (for example, as humans we're work in progress), the space between knowledge and learning (there's even value in negative knowledge), hypothesis and testing (because big data will not replace thinking).

There is value in the nature of human experience—thinking and developing an appreciation for the science of observation to balance an overactive mind. Through experience we learn that life and work do not conform to a rational and neat spreadsheet, that context plays a major role in applied knowledge, and that the truth ends up being a combination of things.

We can pursue our self interest and at the same time serve a broader interest.

The Collaborative Fund is an organization that was founded six years ago in response to two trends that started a broader transformation in many industries that were previously operating in a binary mode—clubby system on one hand and philanthropy on the other.

Those trends are access to information and shifting cultural values. Once everyone could see what was going on, what everyone else was doing, things changed. We are also learning to appreciate the role of purpose as a force to drive action—being heard is the entry point, results matter, and impact is important.

But what magnitude results and what kind of impact?

For example, degrees of change to temperature leading to icecap melting and changes in coastal area erosion, or small earth tectonic shifts in one continent or zone felt along fault lines in another.

For progress and for benefit can go hand in hand when our mindset is flexible. Opportunity becomes exponential when we identify our key levers—where applied interest, competence, and constancy of action move the needle. To get the results we seek we want to maintain a coherent self, able to attend to projects and work. Achieving coherence is about using attention to make our aims smarter to increase value.

A recent article by the Collaborative Fund provides a good example. Advantage is not enough. For business to thrive, it needs to have sustainable advantage. They say:

Finding something others can’t do is nearly impossible. Intelligence is not a sustainable source of competitive advantage because the world is full of smart people, and a lot of what used to count as intelligence is now automated.

That leaves doing something others aren’t willing to do as the top source of sustainable competitive advantage.

And the sad part here is that we're operating with a “spare parts” mindset in a world that requires whole thinking and doing. In a world where a proof of concept in one zip code becomes a functioning product for sale by someone who is two continents away, what is sustainable?

There's a place for the One Thing, for building our core competence. Opportunity is in application of that competence through skill development. The Collaborative Fund outlines five big sources of sustainable competitive advantage. They have applications for organizations and also for individuals:

1. The ability to learn faster than your competition

[…] the ability to realize when you’re wrong and when things changed can be more effective than an ability to solve problems that are no longer relevant. This seems obvious until you watch, say, Kodak or Sears trying to solve 1980’s problems in the 2000s.

Focus is good when it doesn't become an illusion, and we retain our ability to close achievement gaps without trying to hide them.

2. The ability to empathize with customers more than your competition

[…] The inability to understand how your customers experience your product almost guarantees an eventual drift between the problems a business tries to solve and the problems customers need solved.

The term empathy has been used to refer to two distinct, yet related human abilities — mental perspective taking and the vicarious sharing of emotion. Scientists call the first cognitive empathy and the second emotional empathy. Cognitive empathy works in tandem with reason to enable our understanding and (in a sense) predicting the behavior of others. It helps facilitate conversation and social expertise.

When we put ourselves in our customers' shoes we see where we fall short. In this sense, empathy is the better half to our self-interested nature.

3. The ability to communicate more effectively than your competition

[…] Most business edges are found at the intersection of trust and simplicity. Both rely on the ability to tell customers what and why you’re doing something before losing their attention.

Clarity is the result of understanding how we create value and the consequences of our choices. It involves awareness, knowledge, and also a spirit of helping, honesty, sincerity, and the desire to make things easier for customers.

4. The willingness to fail more than your competition

Having no appetite for being wrong means you’ll only attempt things with high odds of working. And those things tend to be only slight variations on what you’re already doing, which themselves are things that, in a changing world, may soon be obsolete.

Every time we take a noun and we make it a verb, we make the thing it represents or describes dynamic. For example, going from thinking or talking about strategy, which starts with assumptions, to strategizing, which involves choice based on time dependent information.

Failing fast has become the prevailing metaphor for entrepreneurship because of the dynamic nature of the verbwe need to experiment a lot to create new things, or new combinations of things at the intersection of our strengths. But we should learn to fail better or we end up identifying with the difficulty and transfer the verb to the noun“it's on me.”

Finding what works is a process and not an event. This is especially true applied in a constantly and rapidly moving environment where context and timing play such a large role. So we may fail repeatedly in business, but that doesn't mean we are a failure as human beings. Barriers are the universal experience.

5. The willingness to wait longer than your competition

There is tremendous value in taking our time.

Rewards sit on a spectrum: Small, unpredictable ones in the short run, big, higher-odd ones if you wait longer.

It’s amazing how much of a competitive advantage can be found by simply having the disposition to wait longer than your competitors.

Waiting longer gives you time to learn from, and correct, early mistakes. It reduces randomness and pushes you closer to measurable outcomes. It lets you focus on the parts of a problem that matter, rather than the chaos and nonsense that comes in the short run from people’s unpredictable emotions.

We develop skills and capabilities when we're challenged to deal with the physical reality. Our advantage becomes sustainable when we actively seek opportunities to form and test hypotheses. This is where using conversation as a tool to figure out what's going on gets us more of what we want.

While as people we resist changewhy we think linearly economies resist stability why markets look more like waves and cycles. Vision and core can keep us grounded; agility and growth mindset can keep us moving and improving over time.