Consultants and technology vendors refer to the terms “Competitive Differentiation” or “Competitive Edge” as something that comes naturally through any digital enhancement. While you can clean up processes and become more efficient, this does not always mean the same thing as creating true differentiation.
In many cases, such as with the replacement or upgrade of your core ERP system, you are more than likely simply “catching up” or leveling the playing field with your competitors, who did, in fact, create a competitive edge years ago when they beat you to the punch. These previous differentiators have now become current-day “best practices”.
Following this thought process, the term “differentiation” should refer to pulling ahead of the competition and utilizing technology in a way that others don’t, which is essentially creating tomorrow’s “best practices”.
Specifics will vary by industry, but the following are a few industry examples of creating true differentiation:
Insurance: Remember the days when you needed to meet with an agent or sit on the phone to get an insurance quote? It wasn’t that long ago, and many firms still follow that practice today. The providers who first invested in technology and process to allow for online quoting created a true differentiation in the industry. Years later, those firms that are still using paper and telephones to create quotes are looking to upgrade their technology to follow what is now best-practice in the insurance industry.
Retail: There has been endless talk recently on the Ecommerce boom, and those retailers that began the trend up until just a couple of years ago ended up light years ahead. With COVID and the rush to online ordering in 2020, any retailer who just now decides to start selling online is no longer creating a competitive edge, they are simply catching up.
Wholesale Distribution: A fascinating industry that is constantly under pressure to create new efficiencies and small gains in cost management, risk mitigation, and forecasting. A growing trend that is still considered as a differentiator for many distributors is the use of predictive analytics. The ability to predict supply and demand impacts is commonplace on Wall Street, but not so much for the average distributor. What if you had technology that could take in loads of data including trending in consumer interest (i.e. toilet paper or home fitness), weather impacts (i.e. crop production or transportation delays), or commodity pricing (i.e. lumber or soybeans). Any edge created through these types of predictions could yield significant gains and enhance supply chains.
Jewelry: A very new application that is still in the making is jewel traceability through blockchain technology. Blockchain is an emerging technology trend, best known as the technology behind Bitcoin that can be used to track nearly any form of good, whether virtual or physical. Several initiatives are currently in place to help track the entire supply chain from the mining of the raw jewel, through the manufacturing and distribution process and to the ultimate consumer. While this may sound like excessive effort to track, consider the advantage that will be created by providing absolute certainty that your engagement ring does not contain a “blood diamond” or was mined through child labor.
New opportunities for competitive differentiation are being created every day, and every day those differentiators from years ago are becoming best practices. The key is to find those areas of differentiation, take advantage of them, and continually adapt newer practices to stay ahead of the curve.
If you have been thinking about how to better use technology to create a competitive edge for your business and would like to discuss ideas, please reach out.