Article: Building competitive advantage through people - A leader’s role


Building competitive advantage through people - A leader’s role

We look at the role of the business leader in enabling their employees to become the business differentiator.
Building competitive advantage through people - A leader’s role

Michael Porter in his famous book “The Competitive Advantage: Creating and Sustaining Superior Performance” talked about two types of competitive advantage: one coming from a favorable cost position and the other coming from an ability to differentiate. Although he made this statement long ago, it is pertinent and true even in today’s hyper-competitive business environment. 

Superior products, services, cost, and technological differentiation undoubtedly play a vital role in building a competitive advantage for the organization. However, many times, even the best of products, services and technologies find no takers due to poor articulation of the value proposition to the prospective customers. Hence, when it comes to building competitive advantage, maintaining a balance between the organizational offerings and how one positions these offerings in front of the customers is of paramount importance. 

It is a known fact that the majority of the customers buy the idea before they buy the product, service or technology. Hence, people in front of the customer provide the winning edge over the competition and the fact remains that organizations being contrived systems need smart people to sell the products, services or finest of technologies. The question here is ‘does a leader play a role in helping his or her people build competitive advantage?’ Evidence over time repeatedly suggests that they can. Some of the companies such as Southwest Airlines, Apple or Disneyland, etc., are live examples where leaders have helped their teams build sustained competitive advantage in the market. So, some of the obvious questions that cross our minds are:

  • What does a leader do to inspire members to articulate the value proposition in front of the customers as well as serve the customers in the best possible manner to win their hearts?
  • How does a leader proactively help build solution orientation in the minds of people for the issues customers may face, so that they respect us as trusted advisors and not vendors?
  • What should a leader do to make members feel valued, passionately engaged and thus profitably productive for the organization?

Studies conducted on successful leaders across the world advocate that being genuine in thoughts and actions coupled with common sense galvanize positivity in team members. Some of the other simple things leaders practice on a day-to-day basis to help people own the organization and thus build competitive advantage are:  

Listen with the intent for action: When people start feeling that the leader is listening for understanding to help them, meaningful and engaging conversations take place. Moreover, this cannot happen unless leaders consciously put in the effort to listen to not only what others are saying verbally but also try to understand what is unsaid, feelings unexpressed and non-verbal cues. The most important thing here is the action taken by the leader after listening to the team members. Any action taken needs to convey a strong message that ‘the team members are important to the leader’. Once team members start believing that they are important in the eyes of the leader, they share their thoughts unhesitatingly, which they would not have done otherwise. Trust enables people to willingly go the extra mile not only to make the organization successful but also in enabling the organization to stay ahead of the competition. 

The moment employees start believing that the leader respects their expertise and that they are open to learn from them, they become partners in business

Focus on psychological contract: According to John Purcell, Faculty of Management, the University of Bath when employees feel that the manager has broken or breached their expectations about work and career opportunities, they feel less committed. On the contrary, when leaders help members build a psychological contract with the organization, employees behave as good citizens, support fellow members in organizational cohesion and deep bonding. The psychological contract enables discretionary behaviors – to do more for the organization than laid down in the written contract. Employees engage in meaningful actions and put in the best effort to add value readily. When the feeling of psychological contract is dented, because of perceived poor management, discretionary behavior is withdrawn leading to dissatisfaction, despair and a dip in productivity. Research shows that when leaders build emotional connect with their employees and treat them as a strategic advantage, employees often outmaneuver and outperform.

Humility to learn: It requires tremendous inner strength and humility on the part of the leader to accept that he or she has learned something new from their followers or youngsters who are way below in the hierarchy. This shows that the leader is courteously respectful to superior knowledge & skill possessed by members and not the position one holds. The moment employees start believing that the leader respects their expertise and that they are open to learn from them, they become partners in business. 

Reach out: What happens when leaders reach out to their team members and give them a feeling that they are there to help the employee succeed? What happens when leaders genuinely believe that people are the real asset and it is their responsibility to help employees make a meaningful and lasting contribution? Experience shows that whenever leaders reach out to employees and inquire about their wellbeing and professional development, the employees’ morale and engagement go up. Similarly, when leaders restrain themselves from creating an artificial barrier of position power around, people open up and share their hearts out. 

Obviously, the message spreads around that the leader is open, and values ideas, suggestions, and feedback given by team members. Mere feeling that the leader has approached them and paid attention to their ideas excites members with a sense of ownership to protect the cause of the organization and they do better in the future. 

Help people innovate: Leaders are responsible to bring the members together as a team and lead them to optimal performance outcomes. However, this requires the leader to recognize the importance of embracing differences in people and be skillful to integrate differing points of view to get the best from them. Obviously, this will be possible only when the leader thinks more about the organization and people and less of himself/herself. Moreover, this certainly requires a tremendous inner strength of conviction. The good news is that if done well, it promotes a culture of partnership. This also encourages team members to embrace an entrepreneurial mindset where they feel reasonably confident to share and build on ideas fostering innovation, growth, and sustainability. Members know that the leader is always there to back them in case they fail in experimentation and that helps them flourish cognitively. In addition, the sense of freedom helps members build a competitive advantage for the organization.

Once team members start believing that they are important in the eyes of leader, they share their thoughts unhesitatingly, which they would not have done otherwise

Let us not forget the fact that Machine Learning, Artificial Intelligence and all other sophisticated creations that are revolutionizing the business and our life, are inventions of the human mind. If leaders look after and nurture people well, they, in turn, will take care of the organization as well. According to Bersin by Deloitte’s “Building Competitive Advantage with Talent”, published in April 2015, “Organizations with a talent strategy are 4.2 times more likely to be in the top quartile of business outcomes.”


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Topics: Leadership

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