Every once in a while, a news headline grabs my attention.
Here’s one that did: Ford Says $8 Billion Cost Disadvantage Is Weighing on Profit
Having a “cost disadvantage” is never good, but $8 billion?
According to this article, Ford Motor Co. is less profitable than its traditional competitors because it has a cost disadvantage of $7 billion to $8 billion annually, say its top executives.
What? Ford had a $7 billion cost disadvantage, and it grew to $8 billion? That’s allot of ‘competitive disadvantage’. Leadership should never let this happen.
The lesson for leaders in Ford’s example is this week’s tip.
To compete successfully, you must go beyond being competitive.
That requires being competitive with cost, quality, and service while adding value your customers appreciate.
To be cost competitive, leaders must look for ways to improve processes without increasing costs and find ways to lower costs without sacrificing quality or service. This sounds easy, but admittedly it’s not.
Here are three pieces of advice to get you started in the direction of competing successfully:
- Start with sound short- and long-term thinking and planning. That means being proactive, not reactive. (It drives me crazy when I hear companies declaring they are laying off thousands of workers or closing hundreds of stores to remain profitable. This signals they’re reacting to a bad situation and missing opportunities in previous months when thinking and planning were not taking place.)
- Leaders must build an organization of people who are curious, creative, innovative, productive, engaged, and capable of executing a sound plan.
- In addition to thinking ahead, leaders must listen to others, make timely decisions, and provide the tools and resources for success.
Successfully competing requires much more, but these three points can provide your foundation.
As Jack Welch, former CEO of General Electric, once said about competitive advantage: “There are only two sources of competitive advantage: the ability to learn more about our customers faster than the competition and the ability to turn that learning into action faster than the competition.”