Unfair Competitive Advantage

I'm in Australia, where the big political news is about whether Dr. Mohamed Haneef (who practiced in Brisbane) was really connected to the other MD terrorists in England (personally, I think he's dirty, but there are many who disagree), and the big business news is former-Aussie-now-American-citizen Rupert Murdoch's purchase of The Wall St. Journal. I learned about the latter event at breakfast a couple days ago while reading The Australian--another Murdoch property, while simultaneously viewing the bridge collapse horror in Minneapolis on Sky TV--another Murdoch property. Hmmm....The other day, The Sydney Morning Herald cited three predictors of companies which make shareholders happy, and I think they are worth repeating here: 1. They operate in a large and growing market.2. They have an unfair competitive advantage.3. They have the business model needed to turn the first two criteria into sales and profits. Let me tackle #1 and #3 first with my own commentary. First, a good strategy should be focused on harnessing growing markets. Too often, companies (especially large, entrenched ones) focus their efforts on defending and protecting their familiar markets that used to be growing but which have since become mature or stagnant. It's their big Achilles Heel, which is why newer faster competitors (often from outside the industry, and often smaller) come in to grab market leadership by hitching their wagon to fast-growth opportunities--often in unchartered waters. Second, a great business idea, even if it capitalizes on growing markets, is only as good as the organization's capacity to monetize and execute it. I believe that the idea, the monetization, and the execution ought to be the three-legged stool of effective strategy, but unfortunately, too many executives focus their attentions primarily on the first one—and hope that their staff will somehow make the other two happen. Great leaders relentlessly focus heaps of their personal attentions on all three factors. Now, let’s go to #2-- this notion of “unfair competitive advantage”. I like that phrase. Here’s my take on it. If you define “unfair competitive advantage” in terms of collusion, price fixing, cronyism, government subsidies or protectionism—then “unfair” yields distortions in markets and a depression of both entrepreneurial activity and sustainable economic growth. This is a situation that I’ve seen in too many segments of the world, particularly in big pockets of Latin America and Africa, but every continent is afflicted. Companies that adhere to this definition of “unfair advantage” may prosper in the short run, but the national economies in which they operate stagnate. I suspect that this is not the definition of “unfair competition” that The Sydney Morning Herald had in mind.On the other hand, if “unfair competitive advantage” revolves around your company’s radically innovative, customer-pleasing technology, product, or service, then you can be sure that your competitors will scream “unfair!” because what you’ve done deviates from conventional wisdom and industry practice—and besides, it’s harder for them to copy you. Using this definition of “unfair competitive advantage”, that is precisely what your strategy ought to strive for. That’s the bar you want to set in your strategic planning meetings. Imagine a country’s economic growth if that’s the tax and legal bar that was set on a national basis. Good stuff from Australia. By the way, I also learned that good Aussie plumbers are in such demand that they can command up to $1500 a day. Are we in the wrong business?