Why do some companies become successful and others are forgotten after a couple of years?

Why doesn’t everyone become Apple, Amazon, Tesla?

There are a lot of studies and publications devoted to these questions. Many people talk about it, discuss it, and argue about it…

But WHY?

• – Why do people buy from some people and not from others?
• – Why come to our neighbors and not us?
• – Why are some on the crest of success, and others dissolve into the masses?

Is it because they have some special qualities?

Do they have some special knowledge or skills?

Or their staff is specially trained, or they talk to customers differently, or their product is unique?

I have been in the certification business for 20 years. And during that time I have seen thousands of companies, among which there were both recognized market or industry leaders and unknown beginners. What made the recognized LEADERS different, what made them more interesting than their competitors and surroundings, that the CUSTOMER preferred them?

Here is my conclusion – if we want to be better, if we want people to come, to buy, to stay with us – we must have a COMPETITIVE ADVANTAGES. In other words, our main goal and task should be to CREATE, SUPPORT, and DEVELOP COMPETITIVE

ADVANTAGES.

What’s new here? Thousands of books are written about it. Among the authors of this direction are such management gurus as Mike Porter, Kaplan and Norton, Jack

Trout….

Absolutely, they are. But I want to introduce you our concept of CONCURRENT ADVANTAGES Advantages, which is the result of surveys, studies, observations and interviews with a lot of companies. This framework also combines, as I said, with the well-known works of Mike Porter, Norton and Kaplan, Trout, Latansky, but with some features specific to today, to today’s opportunities and challenges.

7 factors of competitive advantage

• 1. Flexibility and adaptability
• 2. Operational excellence
• 3. Internal innovations
• 4. Effective sales
• 5. Marketing and competitive intelligence
• 6. Personnel management (incl. Corporate culture)
• 7. Brand perception

Meeting with many companies in Ukraine and abroad, I was convinced again and again that without these 7 factors it is very difficult to be in the market, let alone to develop and prosper. And the failure in any one of them instantly affects the position of the company.

And vice versa, unknown newcomers became leaders in their fields if they took into account these 7 key factors of competitive advantages in their activity. And it’s not enough to create this same advantage once and then get your dividends for it. It’s an ongoing process. How to achieve it, how to constantly maintain your competitive advantage, how to be always ahead of everyone or, how to be different…?

So there you go

You will not succeed without a clearly structured strategy aimed at creating a competitive advantage for your company or for yourself personally.

But a strategy is not only well-formulated goals and objectives, it is not only the distribution of authority and responsibility, it is not only slogans and declarations. It is something more.

One of the conditions for successful implementation of the strategy is to turn it into

EVERYTHING you do, i.e. STANDARDIZATION. In other words, we must:

• 1 – occupy a place in the mind of the buyer (client)
• 2 – create STANDARDS and rules to maintain and develop that image.

And we must fully comply with this image, created in the head and the view of our

CUSTOMERS. And where to start, we can tell you and advise you.

One more important aspect of competitive advantages. Competitive advantages give us SECURITY.

Risk Management and Business Continuity Management should be at the core of creating this security. But risk management should not be in the form of risk registers, risk matrices and other artifacts, as Alex Sidorenko calls them. Risk management should help us to achieve our goals. Risk management should answer the question – what is the probability of reaching a goal, is it achievable, in principle? Don’t you want to understand that?

Now let’s get to the bottom of the question, “What is the basis of SECURITY?”

The answer is simple – UNDERSTANDING what is going on. If we have a DEFINITION

(FUTURE) described, if we use standards (whether it is a standard for the production of a physical product, or a standard for the production of a service, or a management system standard), then the result is Predictable and EXPECTABLE. And if we have an expected result with clear and agreed characteristics, then there are no risks and dangers, or if there are, then we expect them and we’ll be sure to “make a straw”.

In other words, the task of any business is to create understandable, expected and controllable conditions for the expected, safe and agreed results.

If a customer says that I WANT a product to that standard, or I want a service to that standard, it means that he expects a product or service with the characteristics specified there. And, in addition to that, the standard specifies how to get those characteristics. And if we agree with that, where will the disputes and misunderstandings come from? In this case, I recall the statements of one manager of a large company. He was telling me about the stages of implementing a MANAGEMENT SYSTEM in his company.

And he said:

“Mikhail, I understood that I have a functioning QMS when at meetings during disputes and discussions instead of statements – You, my son, be quiet, I have been working here for 20, 30 or 40 years. And what does the standard say about it?”.

This is the main indicator that MANAGEMENT is not based on emotions and desires, but on rules and standards.

The central and one of the most important competitive advantages is FLEXIBLE and

ADAPTIVE, which in my opinion is the foundation of today’s business. And right away I want to object to the critics that these concepts are so definitely not compatible with standards and standardization.

Answer one question: do you think Chess is a creative game, is it a flexible and adaptive game?

Many would say, CONVENIENTLY, YES.

Well, chess is the only game in which all possible combinations and steps are known.

Another issue is that we may not know them all. And, it turns out, our task in playing chess is to choose the right continuation.

If we find it – then there is no DANGER and RISK, if the move is wrong, then here is DANGER knocking on your door. So, our task is to write and manage all possible combinations and scenarios in as much detail as possible (after identifying the CRITICAL RESOURCES, the interruption of access to which could DESTROY or STOP our business). The more complete the portfolio of possible scenarios and combinations we know, the more FLEXIBLE and ADAPTIVE we will be, the more SAFE we will be.

You will say – it is not possible to know all possible scenarios. It’s not possible to make yourself such a list overnight. Does everyone remember that one of the requirements of the same ISO 9001 standard is the company’s knowledge BASE and management. Does everyone comply with this requirement?

Let’s move on

Many people today have already encountered the terminology of SUSTAINABLE

DEVELOPMENT. It has been adopted at the level of the United Nations. Many companies have included in their strategy some goals from this. So recently they did a study on what standards these goals meet.

The results are amazing.

For example:

GOAL 9: INDUSTRIALIZATION, INNOVATION, and INFRASTRUCTURE. It includes 1,2502 standards,

GOAL 3: GOOD HEALTH and PROSPERITY – 2,780 standards,

GOAL 12: RESPONSIBLE CONSUMPTION and PRODUCTION – 2,543,

then – the full list, the first number is the number of the goal, the second number is the

number of standards

1 – POVERTY ERADICATION 341

2 – ELIMINATION OF HUNGER 530

3 – GOOD HEALTH and PROSPERITY 2780

4 – QUALITY EDUCATION 477

5 – GENDER EQUALITY 176

6 – CLEAN WATER and SANITATION 543

7 – AFFORDABLE and CLEAN ENERGY 819

6 – DECENT JOB and ECONOMIC GROWTH 543

9 – INDUSTRIALIZATION, INNOVATIONS and INFRASTRUCTURE 12502

10 – REDUCED INEQUALITY 502

11 – SUSTAINABLE CITIES and TOWNS 2322

12 – RESPONSIBLE CONSUMPTION and PRODUCTION 2543

13 – COMBATING CLIMATE CHANGE 1071

14 – PRESERVING AQUATIC ECOSYSTEMS 274

15 – CONSERVATION OF TERRESTRIAL ECOSYSTEMS 1036

16 – PEACE, JUSTICE and EFFECTIVE INSTITUTIONS 154

17 – PARTNERSHIP FOR SUSTAINABLE DEVELOPMENT

For me personally, this is a very important indicator.

Why? We all agree that the foundation of development, prosperity and coexistence – is SUSTAINABLE DEVELOPMENT, based on the balance of the systems mentioned therein. And the standards describe and show us how to achieve the goals in each group, how to create these SUSTAINABLE SYSTEMS.

INTERNAL INNOVATIONS.

Today, only a lazy person does not talk about ENERGY EFFICIENCY. But why are we not achieving outstanding success, why is our industry one of the most energy-intensive? Sometime in 2011 I was lucky, and I met a man who at that time

worked in the company, which is engaged in energy conservation and energy efficiency in the construction for over 30 years.

And this is what he told me:

Mikhail, remember what energy efficiency is and it will be easier for you to work in this market.

Here’s an example.

We decided to build an energy efficient house. We bought the most energy efficient bricks, floor slabs, windows, doors, and made provisions for renewable energy sources. We even installed wiring that does not heat up. But… We decided to save money on ventilation. What do we have in the dry residue? Our energy-efficient home project is a dead end. Because we will be forced to open the windows to ventilate.

 In other words, ENERGY EFFICIENCY is a list, a list of factors that:

• – cost something
• – individually have an effect in reducing consumption
• – sums up to give us our goal.

And we can consciously use and apply these factors one by one, gradually moving towards our goal (if, for example, we do not have enough money to apply all at once).

Imagine how your company would change if:

energy conservation and energy efficiency issues would not only be handled by

ENERGY planning of consumption and distribution of energy resources would be as planned as production planning

Energy efficiency will be considered at the design and purchasing stages.

Will YOUR company be different?

Will it have a COMPETITIVE advantage over the others? Most likely, YES.

OPERATIONAL EXCELLENCE

What are the indicators of this strategy?

These are, first and foremost:

• – Security
• – Quality
• – Cost
• – Time.

Here, I think it’s pretty clear. To create SAFETY, we need standards for both MANAGEMENT SAFETY and PRODUCT SAFETY. One part of SAFETY is QUALITY, which again is based on both management and product creation standards.

EFFECTIVE SALES

Well, what do the standards have to do with it? It all depends on what you understand by sales, what goes into your sales process. There are a huge number of sales courses today, many of them very good. Many of them focus on the organization of the sales department, which, by the way, should be based on the same STANDARDS:

• – on negotiating rules
• – on the rejection of objections
• – on the number of calls per day
• – the number of live negotiations – the rate of conversion of leads into customers

And what is the most interesting – many speakers, lecturers and consultants now already say that any activity, any business and process should be based on PDCA principle which we have been considering within the standards for more than 2 decades and we do not pay attention to it.

You can still give examples, regarding the fact that sales is often also logistics (not all

companies separate these processes). And if logistics, it is the identification of the

processes of delivery, supply, etc. and much more. For logistics there is a separate standard in general ISO 28000 – Supply Chain Security Management System. Or, by the way, a very interesting and highest quality logistics system belongs to a company such as Ford Motor Company. It contains all the requirements within the standard QS–9000.

QS-9000 is an industrial standard, which was developed for adjusting the work of suppliers, troubleshooting problems in the supply chain, deviations in production. Aimed at creating the most perfect system of QUALITY MANAGEMENT in the LOGISTICS SYSTEM.

This is how you can use standards to achieve a competitive advantage in seemingly nonSTANDARD areas such as sales.

BRAND PERCEPTION

It would seem, what do STANDARDS have to do with this direction. Very, very direct.

Firstly, the presence of many STANDARDS at the enterprise, their use on a regular basis today is very often not even a competitive advantage, but, I call it, a hygienic necessity.

After all, none of us today are discussing whether or not we should brush our teeth, for example. And such elements as.

SOCIAL RESPONSOBILITY

ENVIRONMENTAL MANAGEMENT

SUSTAINABLE DEVELOPMENT (which I mentioned earlier).

And many others are an integral part of the image of many companies, a supporting component of their brand, creating an attractive perception of the company in the market.

I recently watched a speech by DTEK CEO Maxim Timchenko, in which he said that one of the components of the Company’s activities is the ESG strategy (Environmental, Social, Corporate Governance). And I really liked the rationale for the importance of this component.

He went on to say:

“This acronym may not be very familiar to many companies in Ukraine at the moment, but very soon it will become a requirement for our investors.”

Already today more than 70% of investment funds are not willing to invest in companies that do not declare their commitment to these values and do not live by the principles of ESG. Here is another example of standardization.

MARKETING and CONCURRENT EXPLANATION

Don’t think that this section encourages you to do any spying. At the heart of this competitive advantage are provisions such as knowledge of the following categories in the marketplace:

– competitors in the industry

– potential competitors

– substitutes

– suppliers

– customers

Of course, this area should be closely linked to EFFECTIVE SALES to make the right

decisions later on. Or maybe with any other direction. Where are the STANDARDS here?

Come to us, we have prepared some recommendations and tips in this direction.

For example PESTLE(ED) analysis, Strategic Analysis of the Client Base, ABC analysis, Competitive analysis, SWOT-analysis (many think they know what it is, but do not use effectively this very useful tool).

Beyond that, marketing, in and of itself, is a whole science. The science of creating knowledge about the CUSTOMER, about the rules of conveying information to him, about creating a relationship of trust with him and turning him into a CUSTOMER. And not just as a CLIENT, but as a PROMOTER of our SERVICES, PRODUCTS and IDEOLOGY.

PERSONNEL MANAGEMENT

It’s not just about the rules of recruiting employees with the necessary qualifications, it’s not just about how to retain them. It’s more about building a TEAM of like-minded PEOPLE who take PRIDE in their COMPANY, their WORK, and their PRODUCTS (services).

It’s about those corporate rules and fundamentals that make your company a place where lines of people want to develop and improve, to achieve and to improve. And I also want to remember one more component which I did not include in the list of COMPETITIVE ADVANTAGE components, but which I think should not be forgotten. And, by the way, some companies have chosen this component as a strategic initiative in their development.

DOMINANCE STRATEGY

Also a matter of great controversy. Generally speaking, the strategy itself is very interesting. Its idea is to create such conditions, in which it would be more profitable for the CLIENT to stay than to leave us for a competitor. It would seem impossible to create such conditions. But remember Gillet, what is the basis of their strategy?

Remember how much a razor costs when we buy it, and how much do replacement blades cost?

And we’re left with a choice – either buy those or go for electric razors, for example.

The choice is yours.

What do standards have to do with it?

With them, we can create a package of services for the client, which can not be repeated by competitors.

I, by the way, personally faced certain problems in relations with customers when my company offered more interesting prices and additional services – training, etc., but did not have the opportunity to offer an important package product (certification of non-destructive testing personnel).

Finally, I want to give you an example that also shows the difference between the STANDARDS based and HOLISTIC MINDSET and the mindset that we often use.

For any economy in any country, reconstructing roads and keeping them in proper condition is a top priority. And rightly so – roads are the arteries of the state.

But when we get down to this task (reconstruction, construction, etc.), we often forget about what the main purpose is pursued by us, carrying out these works? And this purpose is to PROTECT DRIVING SAFETY. And there is an ISO 39001 standard. And how can we ensure it?

Totally all participants in the road, TOTALLY all stakeholders should be involved in this process. The following example of different understanding and approach to this issue is very illustrative.

Several years ago I visited my colleagues in Greece and we were just talking about this standard. And this is what my colleague said to me:

Mikhail, look carefully at this standard.

It applies to most companies and organizations. How so?

– I was surprised. And look, who is involved in the creation of road safety?

– And road planners

– And road builders

– And private drivers

– And trucking companies

– And pedestrians

– And bicyclists.

– And shopkeepers, restaurants, and movie theaters all around

 – And schools, kindergartens, and institutes

 – And supermarkets

– And many, many others…

And in creating a SAFE environment, we must consider the requirements and expectations of all participants. And they must understand their IMPACT on that SAFETY. That is, they must participate in the creation of that SAFETY.

Tell me, have you encountered a situation on the same road when your question was answered as to why the roads are like this?

It’s not us. It’s the road service, or it’s the trucks, or it’s the farmers moving the cows, or, or, or.

Or when you’re driving down the highway and BANG, BANG… and you can’t see the end of it.

And what’s ahead, and how long will it last?

Can you put up a poster?

And you can post information in social networks, that Dear participants of traffic…. At such and such a kilometer, etc. Take note, sorry.

And why does this happen?

Because there are no RULES, no STANDARDS. So let’s CREATE those STANDARDS together, let’s follow them and develop habits that will make us WINNERS and simply SUCCESSFUL and HAPPY people.