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I and my colleagues will endeavour to answer some of these questions – in our typically practical and pithy style – in the following pages.
What is Edge?
By edge we mean that differentiating factor that sets a company apart from its competitors. Marketers refer to a company’s USP [Unique Selling Proposition]. The concept of edge is a little wider and might also include a technology lead, a cost advantage or a superior culture – anything which might confer a lasting advantage to a company over its rivals.
An edge need not be the most important quality or feature a company has; instead it means having a clear lead in one area, exploited mercilessly.
An edge means having a clear lead in one area, exploited mercilessly.
Why is it valuable?
Competition is what a free market is all about. But head-on competition is what all business people strive to avoid. Ordinarily we view our efforts to avoid head-on competition as a search for market niches, in fact the search should start within our own businesses. If we build an edge, we avoid head-on competition, we create our own niche, and so earn returns that aren’t easily competed away.
How to build an edge?
There’s a body of literature on this subject. The best article in our opinion is Kim and Mauborgne, HBR 1998.
In working with clients on real world cases, we have found that the key is to identify that one quality where you have a lead [price, customer service, a special feature] and think through trade-offs: can other qualities be de-emphasised and the savings re-invested in expanding the edge. This requires a disciplined and rigorous approach. A value curve, as in the box below, helps describe this.
Who has it?
Think of Ryan Air (a constantly re-inforced cost advantage), Bloomberg (a user-friendliness which Reuters struggles to match) and the Co-op Bank (an ethical twist to an amoral subject). These aren’t market leaders, but they are successful, disruptive, distinctive market players. They each have an edge.
In the following pages, my colleagues pick one company from each of their practice areas – business services, financial services, telco and rail – to illustrate this concept. I trust you find it interesting reading.
Stephen Brandon is the Chairman of Credo.
Copyright © 1999-2009 Credo Group Ltd.