Optimisation provides a competitive advantage because it almost always finds the best solution - faster and more accurately than traditional methods and processes can.
Optimisation as a Competitive Advantage
Why do some companies become global industry leaders, while others never rise to the top? For example:
McDonald's versus Roy Rogers
Walmart versus Kmart
Marriott versus Howard Johnson's
Google versus Yahoo!
UPS versus Airborne Express
Amazon versus Borders
What has McDonald's discovered about cooking burgers and fries that has eluded Roy Rogers? Why, in the U.S are Walmart's isles bustling with customers, while at Kmart even Blue Light Specials can't fill the stores? Why, after more than 50 years as close competitors did JoJo become history and Marriott a megachain? Why does Google appear on the verge of putting Yahoo! into the dustbin of history? Why, in the U.S, when you must get a package delivered on time, you dial UPS or Fedex, instead of Airborne Express? And why has Amazon managed to leave a host of venerable, already established booksellers at the starting gate?
Theories abound about the drivers about the drivers of industry dominance: strategy, leadership, sticking to the knitting, customer centricity - the list goes on and on. While these theories may go far in explaining why some companies rise to the top, they just do not go far enough.
Take MocDonald's. Underlying the Big Macs, Egg McMuffins, French Fries and now first rate coffee, there is a hidden advantage: McDonald's remarkable consistency and efficiency. Visit just about any McDonald's restaurant: from burgers to bathrooms, from coffee to counter service, you know what to expect and you get it.Or look at Walmart in the U.S. Not too long ago, the pundits were predicting the demise of the general merchandise stores that had become part of the post World War II busniess landscape. Indeed, Montgomery, Sear, J.C Penney, Kmart and others have either fallen off the charts or only appear in small markets such as Australia (Kmart). Walmart on the other hand, weathered the most recent global economic downturn quite handily, remaining profitable while so many others in its industry were gasping for air.
In yet another industry, consider Google. It certainly did not invent the internet search engine. In fact, Google was a relatively late bloomer that suddenly burst on the scene in 1998, two or three years after a host of other search engines - Lycos, Alta Vista, Info Seek and Yahoo! - were already up and running. And then there is Amazon. It has left every other online mall in its wake, with revenues more than double that of its closest rival.
How do you account for the difference between these stars and the also-rans? Is there a common denominator that differentiates then from other companies? There are undoubtedly a number of reasons for their stellar performance, but one that has largely gone unnoticed is this: These companies possess and uncanny ability to make complex decisions faster, more accurately, and more consistently than their competition. They've introduced Optimisation strategies, systems, processes, tools and software into their operating model.
In today's fiercely competitive world, the notions of long-term strategy and enduring competitive advantage seem like quaint anachronisms, part of the detritus of the 1980's and 1990's. Now, "strategy on the run" and tactical advantage rule the day. McDonald's, Walmart, Marriott, Google, UPS, Amazon, and many others have demonstrated that competitive advantage comes from a tight focus and riveting attention on making optimal decisions that squeeze every ounce of value from the assets under management.
Optimisation strategies, systems, processes, tools and software give them that edge. It's a sustainable competitive advantage that differentiates them from the others.