Published on: July 18, 2026 at 8:00 am
A competitive advantage is not simply something companies do well. It’s something they do better than competitors that matters to customers and other stakeholders. That distinction is critical, according to Academy of Management Scholar Thomas Hutzschenreuter of the Technical University of Munich, author of Sharper! Charting Your Course with Seven Strategy Principles.
“Companies frequently mistake technical superiority for competitive advantage,” Hutzschenreuter said. “If customers do not value the difference, the advantage is largely irrelevant.
“Leaders should therefore ask two questions: Where are we genuinely superior? And where does that superiority influence customer decisions?” he said. “Once identified, advantages must be protected and renewed—every advantage has a lifespan.
“Competitors imitate, technologies evolve, and customer preferences change,” he said. “The most successful organizations treat competitive advantage not as an asset to preserve but as a capability to continuously recreate.
“Competitive advantage is not what you do better—it is what you do better thatcustomers actually value.”
Kaizen: Japanese for “change for the better” or “continuous improvement”
The Japanese philosophy kaizen reflects the idea that excellence is achieved through accumulation rather than breakthrough alone. Hutzschenreuter said that Toyota institutionalized continuous improvement by making it part of all personnel’s everyday work.
“Improvement was not limited to executives or consultants—it became everyone’s responsibility,” Hutzschenreuter said. “Over time, countless small improvements created extraordinary organizational capabilities.
“The strategic lesson is powerful: Competitive advantage rarely emerges from one dramatic innovation,” he said. “More often, it is built through thousands of small refinements that compound over time.
“Leaders should therefore view processes not as fixed routines but as evolving systems.”
Continuous improvement is not merely an operational philosophy—it is a strategic capability.
“Competitive advantage is often the result of thousands of small improvements rather than one big breakthrough.”
Overlooked strategy components and internal fit
The most overlooked aspect of strategy is coherence, Hutzschenreuter said.
“Many organizations evaluate strategic initiatives individually but fail to examine how they interact as a system,” he said.
“As a result, they create contradictions: pursuing cost leadership while investing heavily in customization, seeking innovation while rewarding risk avoidance, or promoting collaboration while incentivizing internal competition. These inconsistencies undermine performance.”
The strongest strategies exhibit internal fit.
“Goals, scope, competitive advantages, organizational structures, incentives, and daily behaviors reinforce one another,” Hutzschenreuter said.
“When that alignment exists, strategy gains leverage. When it does not, organizations expend enormous effort while achieving surprisingly little. Ultimately, strategy is less about finding one brilliant idea and more about ensuring that all the pieces work together,” he said.
“A strategy becomes powerful when all its components reinforce one another.”
