Competitive advantage is about gaining an edge, and this can only be achieved through a forward-thinking strategic vision, which aligns the whole organisation to work towards common goals.
The C-suite is tasked with developing this strategy. But, as renowned economist and business academic Michael Porter says, “many strategic plans are lists of action steps without a clear articulation of what competitive advantage the firm has or seeks to achieve and how [1].”
Senior management must identify their organisation’s existing or desired competitive advantage and develop a strategy based on this. Below are five strategies your company could seek to adopt.
1. Elevating the customer experience
Research from McKinsey reveals that companies that are leaders of customer experience (CX) achieved more than double the revenue growth of “CX laggards” [2] , or companies that fall behind in delivering effective customer experiences.
A strong customer experience strategy will help to establish a competitive advantage, driving customer retention and loyalty. Listening to what customers need enables companies to deliver a consistently excellent experience.
Collecting customer feedback is a powerful way of better understanding customers, using findings to improve products, services and processes. From social media insights and in-app responses to focus groups, there are numerous ways to gather data. Amazon is one example: the platform uses customer feedback to inform pricing and inventory management decisions, encouraging customers to leave product reviews or seller feedback.
Loyalty programmes are also an effective way of encouraging repeat business and fostering brand preference. Amazon exemplifies this with its paid loyalty scheme, Prime. Member benefits including Prime TV and unlimited one day delivery, and the company reportedly has over 200 million Prime members globally [3].
In today’s crowded marketplace, where the digitally-enabled customer holds the power, customer-centricity must be central to C-suite decision-making. Many organisations now appoint Chief Experience Officers (CXO), tasked with aligning the whole organisation with a customer-centric mindset to deliver a consistent omnichannel experience.
2. Enhancing operational efficiency
Operational efficiency is integral to establishing and maintaining a competitive edge. The benefits of improved operational efficiency are numerous, including a reduction in costs, faster time to market, and improved customer satisfaction.
Ensuring that processes, resources and activities are fine-tuned allows companies to streamline operations, eliminate inefficiencies and improve productivity. It drives maximum output with minimal waste.
Technology plays an increasingly important part in driving operational efficiency and can impact every aspect of the company, from CRM systems — delivering a seamless omnichannel experience — to analytics, empowering the C-suite to make informed decisions based on real-time data. Technology can drive incremental gains that set the company apart from sector rivals.
Managing employee costs and expenses is one area that can be time-consuming and fragmented. Ensuring that this is as slick as possible can enhance overall operational efficiency.
American Express® Corporate Cards streamline expense management with robust reporting tools and real-time access to account information. Financial directors and decision-makers can gain a comprehensive overview of company expenditures, identify savings opportunities, and efficiently reconcile charges. This enables a more strategic approach to financial oversight, freeing employees from time-consuming administrative tasks and allowing them to focus on their primary roles.
3. Adapting to new technology
Digital transformation is key to driving operational efficiency and enhancing the customer experience. It is critical to stay competitive.
Research from Deloitte reveals that 74% of UK business and technology leaders believe digital transformation is “the single most important investment now and into the future that organisations can make to drive enterprise value [4]”.
Some key aspects of digital transformation include AI, automation, big data and cloud computing. AI can rapidly process large volumes of data, enabling fast, informed decision-making and identification of trends. Automation of manual tasks can boost productivity, enabling the redeployment of resources to more complex activities.
Companies are increasingly leveraging data analytics, which drives strategic decision-making and helps to improve efficiency. Real-time insights are particularly potent, empowering the C-suite to make swift decisions that allow the company to quickly respond to market shifts, increasing the company’s agility.
Cloud technology can also make companies more efficient, giving them flexible, scalable and secure computing resources. It is a cost-effective way of reaping multiple benefits, including greater mobile access to data, automatically updated software, and access to cloud analytics.
4. Managing talent strategically
Attracting and retaining top talent is critical across every aspect of a business, including: driving innovation and creativity; improving productivity; enhancing the company’s reputation; and boosting team morale.
Managing talent strategically to give the company a competitive advantage requires a concerted effort from executives to foster an inclusive and collaborative workplace culture. Equally important in making staff feel valued are the benefits they are offered and the tools they are given to work with.
For example, American Express Corporate Cards empower your employees, giving them access to a suite of management tools that make it easy to manage accounts, track spending, and log and monitor expenses, giving them autonomy and allowing them to work smarter.
Strong leadership is imperative too. A recent Chartered Management Institute (CMI) survey revealed that while one in four people in the UK workforce holds a management role, only a quarter of workers (27%) describe their manager as ‘highly effective’. Of those workers who do not rate their manager, only a third (34%) feel motivated to do a good job [5].
Ensuring that all employees, from leadership down, are performing is vital, while training and development must be ongoing if individuals are to deliver maximum value.
5. Effective financial management
In addition to financial data analysis, budget preparation, forecasting, and providing strategic insights, it is incumbent on today’s FP&A team to identify opportunities to create value. This might be through revenue generation and cost optimisation, for example, both key to sustaining competitive advantage.
Strategies for robust financial planning and analysis hinge on aligning financial planning with business goals, informing decision-making and supporting the organisation’s overall strategy. Objectives and goals must be clearly defined, such as growing market share or increasing profitability, while a thorough financial analysis must be carried out. Understanding the current financial position lays the foundations for budgeting and forecasting, as well as the ability to assess potential risks such as supply chain disruption or market fluctuations. A financial plan must be regularly monitored and adjusted to ensure the organisation can quickly react to changing market conditions.
As well as mitigating risk, a robust financial plan helps organisations to identify growth opportunities. For example, analysis of sales data can highlight new revenue streams or ways to enhance existing ones. This data arms the C-suite with the knowledge to develop strategies to boost profits.
How Amex® Corporate Cards can help
Establishing a competitive advantage relies on understanding both the sector and competitor activity to identify how to offer greater value and originality than rivals. Harnessing this advantage should be at the heart of the C-suite’s strategic decision-making.
From lowering costs and creating differentiation to focusing on a specific market segment, each organisation will have a different way of achieving competitive advantage. But underpinning any strategy is operational efficiency, supercharged by technology.
With an American Express Corporate Card, organisations gain access to a powerful tool that aides in performance optimisation, offering real-time insights into financial accounts and spending. This streamlined oversight allows senior leadership teams to more effectively allocate resources and focus attention on strategic initiatives that enhance their competitive advantage.
To learn more, visit the American Express Corporate Card page.
Sources
[1] “Competitive Advantage: Creating and Sustaining Superior Performance", by Michael E. Porter, 1998
[2] McKinsey, Why CX leaders use an experience-led growth strategy, 2023
[3] Statista, Amazon Prime - statistics & facts, 2024
[4] Deloitte, Measuring value from digital transformation, 2024
[5] Chartered Management Institute, New study: Bad managers and toxic work culture causing one in three staff to walk, 2023