The business world is certainly demanding and, according to several analysts, it resembles a jungle because survival depends on the degree of preparation at the moment of facing competitors. This confrontation is the practical application of the Darwinian concept of survival of the fittest. In the end, it is not about being the biggest, but the one who adapts better.
Establishing the conditions for a company to outperform its competitors by creating competitive advantage is one of the greatest responsibilities of the senior management. Their duty consists in getting an optimum leverage for their available assets and resources. Creativity and knowledgeable collaborators are critical for this purpose. For this reason, if we regard the behavior of a company as an equation, it is of the utmost importance to include, among others, these two variables that, when adequately balanced, will generate innovation. This is, undoubtedly, one of the tools with a greater impact on the performance of a company.
Innovation has been regarded as a high influence factor within economic cycles. These cycles can be defined as the fluctuations that result in the alternation between economic expansions and contractions in the form of successive events. Some authors explain it as the decoupling between both of the spheres that constitute the socioeconomic macrosystem: the techno-economic and the socio-institutional. When both spheres are coupled, prosperity comes along.
Competitiveness is the ability for a company to develop sustainable advantages from their available assets. This allows them to maintain -or even increase- their market share and financial results relative to the average of an specific industry.
Technologies that are a consequence of electronic development (internet, artificial intelligence, robotics, among others) have changed the way in which diverse industries operate and compete. This new configuration has forced the coexistence of two spaces: analog (traditional businesses) and digital (modern businesses). That’s why, nowadays, flexible organization and capacity for innovation comprise the fundamental factors of competitiveness.
Competitiveness is a concept whose formal definition hasn’t been established clearly. However, a set of different authors makes it possible to suggest the following definition. Competitiveness is the ability for a company to develop sustainable advantages from their available assets. This allows them to maintain -or even increase- their market share and financial results relative to the average of an specific industry.
Michael Porter, competitiveness expert, shares some remarkable thoughts on this concept. He states that competitiveness arises from the activities a company carries out to design, manufacture, deliver, and market a product. Competitiveness may result in cost advantage, competitive advantage or differentiation advantage. These advantages are derived from innovating on production processes, organizational structures, business models, and, of course, innovation in the products or services that a company offers in the market.
A company will achieve a dominant position when it accomplishes to develop a powerful duo of innovation and competitiveness.