221. Building a superpower: How to turn a capability into a competitive advantage
Oct 11, 2024
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Brad Mendelson, a senior partner at McKinsey in Cleveland, and Tova Katzir, a partner in New York, delve into the concept of corporate superpowers. They argue that organizations should focus on developing distinctive capabilities like customer centricity as strategic assets. The discussion touches on transforming static capabilities into dynamic strengths. They also highlight the role of generative AI as a potential competitive advantage, stressing the importance of aligning it with strategic goals for long-term success.
Focusing on building institutional capabilities as foundational to strategy allows companies to effectively differentiate themselves from competitors.
The Vector Framework provides a structured approach for developing superpowers, emphasizing vision, talent alignment, culture, and ongoing leadership commitment.
Deep dives
The Importance of Capabilities in Strategy
Developing organizational capabilities, or 'superpowers', should be integral to the strategy planning process. Traditionally, companies have focused on defining their market approach before identifying the capabilities needed for execution, but this order is shifting. Emphasizing capabilities as foundational allows organizations to create strategic distance from competitors and excel in their chosen market. By integrating the identification of superpowers with strategic goals, companies can better ensure they are well-equipped to achieve their aspirations.
Identifying and Fostering Superpowers
Organizations need to strategically identify which capabilities can become their superpowers, focusing on those that uniquely differentiate them in the marketplace. Management teams must engage in discussions that align their vision and aspirations, taking into account both existing strengths and areas for new development. Balancing the pursuit of one or two superpowers allows companies to avoid spreading resources too thin while maximizing their competitive edge. Knowing when to shift focus based on market dynamics and competitor capabilities is crucial in honing these distinctive competencies.
Building Capabilities: The Vector Framework
The Vector Framework offers a structured approach for organizations looking to develop their identified superpowers. It emphasizes creating a strong vision, aligning talent systems, fostering an appropriate culture, integrating necessary technology, structuring the organization effectively, and establishing supportive routines. Successful implementation of this framework involves ongoing commitment from leadership to set measurable goals and cultivate employee engagement. Overall, the process is not quick; it requires sustained effort to cultivate a competitive advantage that is truly unique.
Companies have endless initiatives and plans, all with the promise to transform the organization and deliver attractive financial returns. However experience indicates companies should focus on building an institutional capability that has the power to separate them from the rest. To discuss how to build this superpower we’re joined by Brad Mendelson, a senior partner based in our Cleveland Ohio office, and Tova Katzir, a partner in our New York office.