Early warnings of a fading competitive advantage
As the world begins to open up and I’m back on the speaking circuit, a question I get asked again and again is how one can tell when a once-robust competitive advantage is starting to show its age. Here’s how you can diagnose it.
The traditional strategy prescription
Find a competitive advantage, throw up entry barriers like crazy and defend that advantage with full throated energy. That’s been the strategy prescription for years, and sometimes it can provide a useful perspective on how to compete (for one of my favorite perspectives on this kind of competition, see George Stalk’s book Hardball and our Friday Fireside chat).
But a dramatic fall from grace isn’t the norm. More often, what happens is a slower, barely noticeable fading away of what was once a formidable franchise. It can take years before the alarm bells announcing impending doom start to ring.
Take Revlon, the glamourous company that Ronald Perelman bought in 1985. It ushered in an era on Wall Street of junk bonds, hostile takeovers and a sea change in how deals are done. Over the years, the company gradually seemed to lose its relevance (despite kudos for its CEO, Debbie Perelman). The firm went bankrupt in 2022, losing out to a whole host of factors — less interest in buying cosmetics in…
