Four Metrics for Competitive Advantage refers to a method for aligning decisions and strategies toward competitive advantage. The root question is—what ideal outcomes characterize an optimal business investment? There are four: (1) 100% share of a target market, (2) no constraints to meeting demand, (3) no significant business risks, and (4) above average returns. The Four Metrics for Competitive Advantage are an application of that logic—competitive advantage means having the attributes of an optimal business investment. They include:
- Market Potential—team members prioritize choices that optimize demand for the company in its target market. The ideal is 100% share. It is to be “the alternative of choice” for all key stake- holders, including:
- Provider of choice
- Employer of choice
- Channel partner of choice
- Investment of choice
- Community member of choice
- Operational Scalability—team members prioritize choices that eliminate constraints to the company meeting demand in a target market. The ideal is no constraints.
- Business Model Sustainability—team members prioritize choices that minimize risks to the company’s performance and to its key capabilities. The ideal is no significant business risks.
- Financial Returns—team members prioritize choices that best mitigate financial risks and optimize financial returns. The ideal is above average returns.
Between strategic trade-offs or between competing investment opportunities, the optimal choice will be the one expected to most contribute toward these four metrics in the order of the cascade. This robust logic cuts through inherent biases, enabling all members in a team and all teams in a company to fly in formation toward overall competitive advantage. See Decision Analysis and Cascades of Key Conditions.
