Your online strategy can be a source of competitive advantage.

Despite the internet being over 10 years old and its phenomenal impact it has had on business, many companies today still fail to leverage it to its full potential. This is primarily due to the lack of consideration given to the strategic and tactical options the internet provides in corporate strategy and planning. This oversight is attributable to management’s perception that the internet:

• is like an application no different to existing electronic systems such as POS terminals, ATMs or word processor and spreadsheets, and
• that the internet is a part of marketing or IT

The Internet is not a tool for marketing or IT only.

The internet is more than an application system or part of marketing. It is a technology that enables a new set of strategies and tactics for achieving corporate goals and objectives. Micheal Porter, in his paper “Strategy and the Internet”, concludes that the internet introduces a new set of tools that should be used to compliment existing corporate strategy to enhance a company’s strategic position and profitability.

Porter also concludes that traditional companies, rather than the new, dot com companies, are best suited to take advantage of this new tool set.

When we talk about the internet’s new “set of of strategies and tactics” we mean those sources of competitive advantage that arise from the internet’s unique characteristics , and not those potential sources of IT competitive advantage that are already well understood. I.E. we distinguish between “web technologies” which can be deployed internal to an organisation and replace traditional client/server IT infrastructure and the external internet.

Sources of competitive advantage come and go

For many years IT systems were a source of competitive advantage, but as IT became better understood, and best practise became common-knowledge, IT became commoditised. This eroded its effectiveness as a source of competitive advantage. Now that most companies implement SAP or Peoplesoft best practice for business processes are rolled out across entire industries with any competitive business processes that might exists in a company being forced to change to suit the implemented system.

The Internet is the new source of competitive advantage

The internet, although standards based, has not yet undergone this transformation and will not do so for some time. It is evolving too quickly for any one company to “codify” the best practise into a industry dominant package.

Conclusion

As organizations, society and technology evolve and develop, sources of competitive advantage become commodities and successful companies need to constantly innovate and incorporate new strategies to maintain their competitive advantage. The internet is the new source of competitive advantage.

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