The term competitive advantage seems to be widely overused in business today – particularly by companies that produce products and services. However, what does this term really mean? According to an article from the September 2005 issue of the Harvard Business Review, Bruce Greenwald defines competitive advantage as:
“… something that a firm can do that rivals cannot match. It either generates greater demand to give firms unequaled access to customers or creates technological or cost/supply advantages that competitors cannot duplicate.” [1]
Achievement of competitive advantage over one’s business rivals must be rooted in the creation and implementation of a firm’s specific business strategies. For companies, competitive advantage is gained through the creation of compelling products and services.
While performing research for our book entitled, Program Management for Improved Business Results (ISBN: 0-471-78354-4), it became evident that firms that utilized program management as a product or service development model viewed it as a competitive advantage. The following quote comes from the vice president of engineering for a major semi-conductor firm. This vice president describes the competitive advantage of in the following way:
“Good program management goes right to the bottom line; it improves a company’s P&L (profit and loss). A company that delivers more products, better products, and does so in a more rapid manner - wins the competitive race. Program management makes better, faster and cheaper a reality.” [2]
Better: Aligning Project Execution to Business Strategy
For product and service development companies, competitive advantage is achieved through the creation of products and services that customers value, offer recognizable differentiation - and are more efficient than other products and services. As stated earlier, competitive advantage begins with business strategy. If a firm aspires to become the market leader within their industry, or to remain the market leader for that matter, attainment of that goal is dependent upon the creation of the right set of strategies needed to achieve market and cost advantage over competitors. Development strategies therefore need to be focused on the creation of the right portfolio of products or services to achieve competitive advantage, and the right development model to deliver the business value (e.g.: revenue, market share, market penetration) projected for each product or service.
However, one of the most critical business problems we hear from managers today is that a firm’s strategic business objectives - and the ability to successfully deliver project outputs are misaligned [3]. Figure 1 demonstrates the difference between fully achieving one’s strategic objectives through the alignment of project output and strategy – as well as the misalignment between project output and intended strategic results.
Figure 1: Misalignment between strategic objectives and project output
The use of good portfolio management processes has significantly helped to align projects to the strategic objectives of a firm. However, problems often begin to appear once the projects are in execution stage. In fact, there is a tendency to focus on the project management tactics (schedule, cost, quality, & performance). This situation, in turn, opens up the opportunity for a project to unintentionally drift away from the strategic business results intended – and therefore diminishes a potential competitive advantage.
