Traditionally that’s included such things as differentiating your product or service and making it better than the competition. It also includes the right location, good branding, a large market share, exceptional service and other things.

Competitive AdvantageBut these kinds of “old school” competitive advantages that depend on better mousetraps and bigger markets are all but dead. Today, technology has made it easier and cheaper to start and build businesses, reducing traditional barriers to entry. In simple terms, that makes it easier for competitors to gain a foothold and counteract your competitive advantages.

New competitors can reach your customers from thousands of miles away. And technology has given customers tremendous power in comparison shopping your product or service and telling the world how happy – or unhappy – they are with your business.

That doesn’t bode well for the staying power of the so-called better mousetrap you’ve just built, or for the lifespan of your business. Standing still is a losing strategy in most cases.

Edward Hess, a business professor at the University of Virginia’s Darden School of Business, has another idea. Hess says that to stay relevant, today’s businesses must transform themselves into what he calls “learning organizations.” That means adapting faster to changes in the marketplace by using more critical and innovative thinking and experimentation.

In other words, the only way to sustain a competitive advantage is to make sure everyone in your business has the tools, motivation and support to learn better and faster than the competition.

In his new book Learn or Die (Columbia University Press, 2014), which is packed with research and case studies, Hess lays out four things businesses need to create competitive advantage in today’s world:

More coaching; less managing: Leading a business today is less about “command and control” and more about creating an environment in which people can innovate and adapt to conditions of uncertainty, ambiguity and rapid change. When business leaders put themselves in a position of “knowing and telling” they create dependencies that limit progress.  

Instead, work with employees more as a coach, and look for situations where you can let them experiment on their own. You don’t need to be the final “thumbs up or thumbs down” on every decision.

A positive work environment is a must: As Hess notes, “Positive emotional work environments are no longer negotiable. They’re a requirement.” A positive environment is essential to fostering new ideas, better problem solving, less rigid thinking, resilience, creativity and collaboration.

“If you think that building a positive workplace environment is too ‘soft’ a concept for your company’s limited time and energy, consider that none other than the U.S. Army has adopted this approach,” says Hess. “It’s directed toward producing soldiers and leaders who can adapt to new and challenging situations and uncertainty.”

High employee engagement: It stands to reason that if employees don’t have an emotional investment in your company and their own there, they won’t be motivated to learn and help the business grow. By giving employees some degree of autonomy, they can feel they are being more effective and that what they are doing directly relates to the success of the business.

Employees must be able to try things, and sometimes fail. Workers who are fearful generally are not willing to learn. They need to feel safe enough to try new things. But building that type of environment requires many businesses to adopt different attitudes about “mistakes” and about what “being smart” really means.

Mistakes will happen and employees must be given conditional permission to fail within certain financial boundaries, knowing that they won’t be punished for their mistakes so long as they learn.

“Transforming an existing business into a  learning organization requires change that starts at the top,” says Hess. “If you want to change your business, change yourself first. Good intentions aren’t enough. Behaviors are what counts.”

 

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