Sustainable competitive advantage—What it is, what it isn't

Three important conditions must be met for a sustainable competitive advantage (SCA) to be meaningful in strategy: 1. Customers see a consistent difference in some product/delivery attribute that is a key buying criterion for the market so that the product commands the attention and loyalty of a sizable customer base. 2. That difference is the direct result of a capability gap between the producer and competitors in such areas as business systems, market position, regulatory/legal restrictions, and organization or managerial quality. 3. The difference in attributes and the capability gap both are durable. Competitors may refrain from closing the capability gap because of inadequate potential, a corresponding disadvantage, fear of reprisal, or management inertia. However, producers that own an SCA can fail if the market sector is not viable, if the producer has severe operational problems, or if competitors inflict tactical damage.