Do you know the five forces that can erode competitive advantage? Read on to find out how you can avoid these potential pitfalls.

Success can cause failure? How? The beginning point for design is to understand where your success is taking you that you don't want to go but may not notice until it's too late. Five forces can help convert success to failure. Which ones describe what may be happening to your industry or organization?

1. IMITATION

Creating distinctions is the most elemental force of nature. Dr. Deming recognized this when he said, "Everything is one of a kind." Your competitive success depends on making your services and products unique and distinctly useful to your customers. But times are changing:

• New information technologies make it possible for your competitors to imitate your successes by reverse engineering;
• Benchmarking is becoming increasingly popular as a route to rapid improvements without the investment of discovery;
• The West has lacked the process technology the East has had.

Example: Komatsu's lift truck...40% cost advantage over Clark's...Komatsu had 1800 part numbers to Clark's 2800!

General Rules: Reduce the number of elements in your design; any application of technology should reduce overhead.

Scary Thought #1: Your competitor is not hampered by pride of ownership when he imitates you. He is willing to start with a clean sheet...are you that courageous? Can you imitate yourself once in awhile?

Exciting Thought #1: If you're unique and keep redesigning, nobody can catch you!

2. INERTIA

Folk wisdom applies here: "The bigger they are, the harder they fall!" Americans have a fascination with size. They use it as a protection. You hear people claim that they own this or that market. They fail to recognize that size brings with it inertia, or the tendency to keep moving in the same direction regardless of efforts to turn aside from the current path. Inertia means change of direction is harder to accomplish.

Example: Continental Can. . .500 plants making 3 piece metal cans...2 piece can gives 65% production advantage...market share dropped from 49% to 13% in 3 years...company disappeared. They refused to accept the possibility of a better way because they were the biggest.

General rule: The higher the success rate, the lower the probability of change

Scary thought #2: Nothing fails like success.

Exciting thought #2: Flexibility is the key to fighting inertia. Keep units small, autonomous, distinct and integrated. Notice that both differentiation and integration are essential!

3. SUB-OPTIMIZATION

This force is the tendency to rely on one over-developed dimension — to exaggerate a success. Icarus of Greek mythology loved the feel of the sun as he flew on his wax wings away from the island of Crete. Unable to see the danger, he flew so near the sun that his wings melted and he fell to his death in the sea below. A gloomy tale it is, but it is all too common a theme for fallen organizations. Like Popeye and spinach, a single-dimension approach, no matter how strong, will take you down. A single successful strategy creates sameness and the organization loses its power. On the other hand, Jerry Jones paid $35mm for Deion Sanders because he was able to play both offense and defense.

Examples: California's defense industry...The Child Care Group...others.

General rule: We tend to believe that if X is good, more X is better. We keep going until we destroy any distinction that X gave us.

Scary thought #3: Happily ever after is a lie!

Exciting thought #3: People love to be different, and their variety of talents are your very best offense and defense!

4. CHANGE OF GAME

Let's say you've been playing very well. . . winning, in fact. . . then someone tosses you a new ball. This one is octagonal and quite heavy. You look around for your teammates, and they are all wearing heavy padding rather than the shorts and t-shirt you're in. You can't find the goalpost; you can't tell whether to run with the ball, kick it, hit it, or throw it. The game has changed and none of the old rules apply any more. This is an increasingly familiar experience in the 21st century. Nothing seems to make sense, and there is no published rule book for the new game.

Examples: White collar workers in the 1980's. . . the mainframe computer business in the 1970's. . . the communications business today. . . healthcare today. . . George Bush (the first) and the Gulf War. . . Henry Ford and car production (6,000 cars a day vs. competitors at 600 a year). . . dentists and prevention of tooth decay. . . others.

General rule: Successfully playing the game changes the game.

Scary thought #4: You are working your way into a new game without knowing it.

Exciting thought #4: You can redesign yourself to take advantage of being first in the new game. You can be a rule maker, not a rule taker.

5. TWO-WAY SHIFT OF PARADIGM

Must both move away from system archtypes of "machine" and "biological" and to a multi- minded social model AND from a purely analytical approach (the taking apart of things) to sythesis (understanding how parts fit larger and larger systems).

"The functions of a social system are to serve the purposes of the larger systems of which it is a part and the development of its members. Development is the process in which people increase their desire and ability to satisfy their own needs and legitimate desires and those of others." -Jamshid Gharajedaghi

Copyright INTERACT, Inc., and PKR, Inc. by Leddick 10/02.