The Secret to Creating Your Competitive Advantage

Economists say for a country to grow, it must make full use of its “comparative advantage”. Management gurus say for a firm to thrive, it must play well its “competitive advantage”. Life coaches tell you that to succeed in career and life, you should invest and cultivate your “unique strength”. The rationale for such advices is very simple. But if only it were all that easy to implement. Because the challenge of creating real competitive advantage is not an intellectual one, but a psychological one. It requires not just smarts, but awareness and courage.

Conceptually, the way to cultivate competitive advantages is very straightforward. For a country, it often means developing industries and sectors that can take advantage of whatever resources that are abundant, being it labor, physical/human capital, or natural resources. For a company, it means continuing innovations that build on the existing strengths of the organization, which can be a combination of its people, customer base, current products, networks, brand name, etc. For an individual, it means making career choices that fully in line with your unique passion and talents. And no matter on what level, it seems very clear that to be exceptional you need to make decisions based on who you are–blindly following what everybody else is doing is a big no no.

But if you look at what’s going on in real life, you realize that most countries, companies, and individuals have a hard time following such simple advice. In fact, very often they do the exact opposite– making decisions based on what’s considered popular, prestigious, obvious, or if everybody else is doing it. Because those choices are the “safe bets”. If everyone is doing it, it can’t be terribly wrong. But the thing is it probably won’t get you to be terribly right, either. Creating competitive advantages takes real leadership and vision, which no amount of analysis or logical reasoning can substitute for.

The affliction of only following what’s “safe” can be especially severe when decisions are made by a group. For some reason, collective decision making just seems to magnify whatever human weaknesses in the play by a hundred times.  To give an example, I was in the picturesque Mediterranean country Montenegro recently.  A hot topic in the country is what to do with the country’s large, ailing Aluminum plant. The plant used to (and still does) employ a lot of people in the Yugoslav time, and is the only “serious industry” and goods exporter the little country has.  But the problem is that the plant was a protege of the central planning economy in the past, and now it is totally non-viable on its own without enormous and consistent subsidies from the government, which essentially means taxing the thriving sectors of the economy to save a dying industry that doesn’t have a future in the country. Now, the logical solution is to say: cultivate your strength instead of compensating for your weakness. So shut the factory down and move resources where they can be better applied. What’s so complicated about this? But then when I talk to the locals, I suddently realized that many people were quite suspicious about the “simple” remedy–

“Well, this plant is pretty much the only large manufacturer of our country. If we shut it down, we’ll have no manufacturing industry or goods exports at all! That’s very dangerous!”

And if you keep pushing and ask people why it is so bad not to have manufacturing industries– “Don’t you guys attract lots of foreign tourism? That’s much bigger exports than your industries. Many countries would be very jealous of you if they realize here you don’t even need to ‘make’ anything to earn money, because the country is sitting on such breathtakingly beautiful nature and everybody wants to visit it here. Just focus on taking good care of your visitors and you’ll be alright.”

“Oh no no no! You don’t understand. All the successful countries in the world depend on manufacturing. Look at China, India, America! You just cannot become rich and powerful without manufacturing. Besides, the aluminum plant has been there for a long time. Lots of people’s livelihood depends on it. Things will be unpredictable… maybe go out of hand if we close it down.”

“But the plant can hardly break even. And your government is now borrowing money to keep it. How is it sustainable? Yes, China counted on manufacturing and exports for their success. But that’s because cheap labor was their strength. It doesn’t apply here, no?!”

“Ummmm, you have a point. I don’t know. But still, manufacturing is important. And it’ll be very bad if we close down the plant. Very bad…”

In situations like this, no amount of eloquent argument would be much of a help. Because logic can never overcome primal fear– fear of the unknown, of change, of doing things differently. It’s a strange moment when you realize how often fear dominates people’s decision making and prevents them from fulfilling their true potential. Fear is such a huge influencer of our behaviors that most of time, for most of us, we don’t even realize it is there. If you give it the driver’s seat of your decision making, fear will rarely let you choose in favor of your own unique competitive advantages. The antidotes are awareness and courage: the awareness that fear is present, and the courage to follow your own vision. These qualities are the real scale tippers that separate the exceptional from the mediocre. They are, to be sure, quite indescribable and can’t be taught through a textbook.  But the good news is that you don’t need a PhD degree to learn them and they are accessible to pretty much everyone that are willing to take them seriously.

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