The Decisive Advantage

In any kind of high stakes competition, whether for your clients or for your own career, it's VITAL to have a decisive advantage over the competition. Warren Buffet calls in the Durable Competitive Advantage. Michael Porter calls it Competitive Advantage. Regardless of the phrasing, the concept is the same:

NEVER compete in a competition where you don't have a major advantage over the competition.

(I suggest re-reading that last sentence 3 times.... most people, including most CEOs I know, do not grasp that point)

Having taught this point to thousands of CEOs across the United States and to tens of thousands of aspiring management consultants, the most common question I get asked is, "How do I figure out what's my decisive advantage?"

This is THE critical question.

Before I answer this, let me review WHY determining your decisive advantage is so important. It determines two factors in any effort: 1) the amount of effort required, 2) the likelihood of a positive outcome.

When you have a decisive advantage, the amount of work required drops substantially and the likelihood of success goes up considerably.

Yet despite this common sense rule of thumb, few people actually consider whether or not they possess a decisive advantage in deciding whether or not to compete or deciding how to compete.

One reason for this is many people are simply unaware of their own decisive advantage.

So let me address HOW you can figure out what your advantage is over everyone else.

To start, it's actually very hard for you to notice your own unique talent, gift or ability that's the underlying basis for your distinctive advantage. A part of the problem is most people take for granted their gifts... because often you've never known life without it!

For example, if someone told you that you're a gifted listener. If you're like most people, you won't think of this is as a gift or an advantage over other people because you've never known what it was like to NOT be such a good listener. You're just too accustomed to your own gifts.

The key to discovering your own gift is to realize you need to see yourself through the eyes of the people around you.

For managing your own career, this means asking friends, families and colleagues what makes you special or different from others? It means asking your boss, why did you hire me vs everyone else?

It means asking your parents, what were the 1 or 2 things you did as a child that was unique or better than other kids of the same age?

I often encourage my corporate clients to under a similar self assessment -- to determine what they're company's decisive advantage in the marketplace. I have them call up their top 10 clients and ask them a simple, but revealing question.

WHY do you continue to do business with us?

If all 10 clients give the same reason, THAT is the company's decisive advantage in that market.

You would think that most companies would naturally know the answer to this question. But in many cases they don't. That's because a decisive advantage is a RELATIVE comparison.

Even if you know your own abilities at an absolute level, you don't always have a clear sense of the abilities of your competition. Without the benchmark, it's hard to figure out your relative advantage or disadvantage.

What I find interesting about one's decisive advantage is that it's fairly persistent through time. For example, about 4 years ago I worked with a friend and colleague of mine Rob Berkley, an executive coach, to figure out my own gifts and talents. www.visionday.com

He had me ask my friends, families and co-workers many of the questions I've outlined above. In total, I asked 10 people to describe what they thought my #1 talents or gifts were.

The two themes that came up over and over again were:

  1. Clarity of Thought
  2. Good at explaining / teaching things

I had a few reactions:

  1. It was surprising to me that other people thought my thinking was particularly clear. I mean my thinking is just my thinking. My thinking has been clear to me, but I just assumed everyone else's thinking was just as clear. But, it turns out all of my family, friends and former co-workers disagree. While I don't think my own thinking is that clear, apparently on a relative basis it is.
  2. I never saw myself as a teacher. Yet, everyone else did. In high school, I was always the guy helping everyone else pass their college entrance. (They all did well!). In college, I was teaching financial planning and retirement planning to my friends studying sciences. I even help them setup their retirement accounts at the age of 19 years old. It didn't seem like that big a deal to me at the time, but apparently to others this was not the norm.
  3. Finally, 100% of the replies were more or less IDENTICAL. In short, everybody I asked thought "clarity" and "teaching" were my gifts... EXCEPT ME!

So here I was truly shocked by the answer, and all of my friends are shocked that I'm shocked.

I get a lot of emails from my readers about Case Interviews that are very consistent with the feedback from my friends. So even though at some level I don't quite believe, the qualitative data strongly suggests that I'm a clear thinker that can teach.

It's a hypothesis I try to, but can't seem to, disprove, and thus I reluctantly accept it as true even though it contradicts my historical self image.

So the way to identify YOUR gifts and talents... which in turn is the source of your decisive advantage... is to ask OTHER PEOPLE what they think is your gift or talent.

The next step in the process is to have the COURAGE to avoid competitions where you have no advantage, and to pursue competitions where you DO have a DECISIVE ADVANTAGE.

For example, as a small business owner and a consultant that works with other small businesses, I come across a LOT of opportunities for investment, markets to get into, etc. It seems with every speech or article I write, someone suggests a business opportunity tied to that.

I have created a rule for myself. It is the same rule I apply to my corporate clients when advising them on company strategy.

Here's the general rule of thumb, followed by how I apply it to my own career.

NEVER ENTER A MARKET WHERE
YOU DON'T HAVE A DECISIVE ADVANTAGE.

The Corollary is:

Get OUT of any market that you're ALREADY in,
where you have no decisive advantage

(Note: This is very hard to do emotionally)

As it applies to myself, I turn down ALL business, investment, product-extension, and customer segment opportunities where my ability to have clear thinking and be a good teacher is not relevant and doesn't provide an edge in serving customers.

For example, I would never operate a McDonalds franchise because my talents in clear thinking and teaching provide very little competitive advantage. It's unlikely that a McDonalds restaurant in my control would be dramatically more successful than one run by someone else.

Another example, I realize one of my competitive disadvantages is that I'm not particularly creative or inventive. I'm a much better improver than I am an inventor. So I stay away from opportunities where inventiveness is the key to success.

Again, my strengths in clarity and teaching don't provide any edge. It took my several years and huge financial losses to learn this lesson the hard way. That being said, I often work with clients that are great inventors and innovators -- forcing them to have clarity in which market segment to focus on or teaching them how to build a business around a core invention or innovation.

I do consider accepting invitations to join the boards of directors -- because my strong suit in clarity is useful here. But there are many roles in charities that I decline because I'm not very well suited for -- namely anything involving lots of details, extensive coordination, complex scheduling, etc.

It is for the same reason that most of the people I do hire are very good at details--precisely because I'm not, and I know I'm not.

As you can see, seeing your own career and the world around you through the lens of distinctive advantage leads you to make different strategic decisions -- about your life, your career (and the businesses of your clients).

It's a useful perspective to keep in mind and one that I encourage you to adopt.

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23 comments… add one
  • Victor Cheng Jun 19, 2012, 1:03 pm

    Yify,

    When it comes to details, there are two aspects of this skill that are useful in consulting:

    1) Recognizing what is important (and what can safely be ignored without major consequence)

    2) Thorough thinking + never making a math mistake

    The first is a learned judgment where frequent use of the 80/20 rule and making quick estimates helps you figure out if the details you are considering will “change the answer” regarding the case’s conclusion or recommendation.

    The second is a function of caring + time. If you want to be thorough, put in the time and energy and be thorough. If you don’t really care if you’re thorough, no additional time will matter much.

    -Victor

  • Yify Jun 18, 2012, 8:23 pm

    Hi Victor,

    Just some questions here regarding the importance of attention to detail in strategy consulting.

    If you begun your career at Mckinsey as a business analyst, I imagine that you had to have done work where attention to detail either made or broke your reputation. Although a “decisive advantage” in this is probably unnecessary, I would still think that attention to detail becomes critical in any entry-level position where analyzing large amounts of data becomes a daily task.

    This brings me to my 2 questions:
    1. How important is attention to detail in MBB consulting?
    2. If the magnitude of importance is above 50% comparative to other business careers, how and what did you do to improve your attention to details while at Mckinsey?

    My reason for asking these question is to prepare for hopefully a career in strategy consulting. Since I too have been told that my “decisive advantage” is in clarity of thought and effectiveness in explaining these thoughts (although still much less than your abilities in these areas), I have recently switched from a banking/finance track to strategy consulting. As my goal lies in working at MBB, I was just interested to know if and how much I should work on my lack of attention to details.

    Thank you so much for your time,
    Yify

    P.S. Your LOMS stuff is extremely helpful and I have already improved tremendously thanks to it. Do you know how and where I can access your “case practice group” to practice cases with others on your site? Do you provide feedback to these case practices?

  • Tony Lew Jun 11, 2012, 11:51 pm

    I think that depends on what your goal is. If your goal is to be an all-round person you may want to try to improve on stuff you suck at. I think completely ignoring it makes you suck at it even more than you already do.

  • Victor Cheng Jun 9, 2012, 11:51 am

    Irene,

    Your famil described personality traits. Did they have anything to say about skills, gifts or talents?

    For example, do you draw, sing, run, do physics unusually well – that kind of thing?

    Also if you had unlimited money, what would you do with your time?

    For others reading this thread, this process also applies to you.

    Victor

  • Irene Jun 9, 2012, 11:30 am

    Hi Victor,

    My family and friends thought I am “obedient, kindhearted, honest, persistent, courageous and considerate”. Well, there is something in common between the answers I get and my strengths finder profile. But I sill got stuck with career choices……I guess what really made me worried about is whether I would make a “right” choice instead of the specific choice.

    I took a lot of personality tests such as Myers-Briggs Type Indicator (MBTI) assessment to try to know myself better and the I can make the “right” choice in terms of career choice. It seems I will not know whether it is gonna be right unless I actually take the first step. What do you think of it? Thank you so much for replying my post!

    Best,

    Irene

  • Victor Cheng Jun 9, 2012, 9:49 am

    Irene,

    It’s hard to tell just by your strengths finder profile. What do your friends and family say about what your long-time gifts and talents are?

    Victor

  • Irene Jun 8, 2012, 12:06 pm

    Hi Victor,

    I just used Strengths Finders 2.0 and it turns out my five strenghths are intellection, harmony, consistency,context and learner. I read the action plans behind the each strength, but I still got confused that what career I should pursue. I have a bachelor degree in logistics and master degree in hospitality information management. I am good at with dealing with people, loving thinking and got motivated by constantly new challenges. Would you kindly provide some insights? Thank you!

    Best,

    Irene

  • Victor Cheng May 7, 2012, 2:55 pm

    Also a useful book to get is Strengths Finders 2.0. It includes a code in the book for an online personal strengths evaluation which is a useful data point in addition to asking friends, family and colleagues their thoughts on your unique gifts and talents.

  • Victor Cheng May 7, 2012, 2:54 pm

    Teresa – That’s an interesting situation. I’m wondering even though you got 10 different answers, if there are a fewer number of underlying themes that run through the answers.

    Sometimes people give overly specific thoughts whereas for our purposes we want a higher level, generalized idea instead.

    If you’re up to it, feel free to post the 10 answers here and when I get a chance I’ll try to work through it. I think it would be helpful for other to see the process unfold.

    Victor

  • Teresa May 7, 2012, 12:53 pm

    Hi Victor,

    I’ve been a big fan of your work and have thoroughly enjoyed reading your emails for some time now.

    As per your advice, I had gone ahead and resent your email to about 5 of my closest friend/colleagues and family, expecting to be surprised by their unanimous answers. To my surprise, each of them came back with two answers, and each answer has been different! So now I have 10 different answers from 5 people and absolutely zero statistical significance!

    As you can imagine, I’m a bit confused. It would be great if you could kindly provide some insights on this.

    cheers,

    Teresa

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