Competitive advantage — a new way of calculating it

Good news: We found a non-economic formula for competitive advantage

In today’s world where change is happening faster than ever before and where the complexity of the world is bigger than ever before it can seem very difficult to identify and develop a competitive advantage. Companies, who have been around for centuries suddenly vanish because they didn’t learn — in time — to navigate in a fast-changing and increasingly complex environment. At the time, we have companies like Amazon, Airbnb and Alibaba who didn’t exist 25 years ago who are now among the biggest companies in the world. They don’t produce anything, they haven’t won any Nobel prizes for their inventions. The only thing they have is an understanding of how to harvest money in a fast-changing and complex world.

Competitive Advantage formula - Gugin

The relationship between cultural intelligence and cultural diversity

A lot of people, organisations, researchers and leaders are talking about diversity and for some people, diversity is even restricted to gender diversity. Many of those people who are talking about diversity think that diversity in itself gives a competitive advantage. Nothing could be further from the truth. If you have no knowledge about how to leverage the cultural diversity you will not see any improvement at all — in fact, you may experience increased cultural friction, which leads to lower performance and more dissatisfied employees.

What is Innovation?

There is often confusion between the terms innovation and creativity. In short, creativity is just coming up with ideas while innovation is developing ideas for a particular purpose e.g. developing a new product, improving customer service or develop a new sales channel. So, in short, we can define innovation as:

Innovation formula - Gugin

What can you do to increase the competitive advantage of my organisation?

First, you have to assess your own situation. How much diversity and cultural intelligence do you have. And how good are you to innovate? It can, of course, become very difficult getting a truthful answer to these questions. Your view on your own organisation’s capabilities is biased in either one or the other direction. A better option will be to ask your external and internal stakeholders. Ask your customers if you dare. Ask your suppliers. Ask your employees at all levels.

Dr Finn Majlergaard
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Dr Finn Majlergaard

Dr Finn Majlergaard

Author, Professor, Consultant, Entrepreneur and Global Keynote Speaker on global leadership and cross-cultural innovation