Competitive Advantage in Consulting and in Life

One of the concepts taught in business schools around the world is the concept of competitive advantage. While the term is well known, I find very few people actually grasp the implications of this extremely important concept.

It applies not only to how you serve clients as a consultant but also how you manage your own career.

My thoughts on this topic are widely applicable to CIBs (Case Interview Beginners), F1Ys (Future first years), and CIFMs (Consulting Isn’t for Me).

The concept of competitive advantage is quite simple. It is something you, your company, or your client possess that provides you with some kind of edge over your competition. Sometimes, the advantage is a physical asset (we have factories in 30 countries), other times it is a skill (Apple), or a culture.

As it applies to you and your career, it is a particular skill that you possess that is unusually strong (relative to others) and uncommon.

Now, this common-sense definition seems pretty straightforward and even obvious. Yet, the vast majority of working professionals ignore their own personal competitive advantage…. and many CEOs ignore their company’s competitive advantages in making strategic decisions.

A strategic decision is a decision of what to focus on…. which game to play.

A tactical decision is a decision on how to win the game.

For example, growing up as a kid, I watched Michael Jordan play basketball. He was by far the best in the world, and by an extremely wide margin.

But I’m willing to bet you that I could beat Michael Jordan in a one-on-one match up.

It’s true.

Even in his prime, I’m sure I could beat him in one-on-one competition.

TIME OUT….

Now be honest, in reading those last few sentences, did you assume that I meant I’d beat him in playing basketball?

If you read carefully, nowhere did I say I could beat him in a one-on-one match of basketball. You may have assumed that (because that’s the natural inclination of most people), but I never said that.

No, I’m pretty sure I could beat him in a case interview competition!

Strategy is about harnessing your competitive advantage to exploit a competitor’s weakness. It would be very foolish of me to try to beat Michael Jordan in a one-on-one game of basketball. By attempting to do so, I would provide him the opportunity to use his advantage to exploit my weakness (5’8″ – or 174 cm – height and I can’t jump, shoot or run!)

But, I’m half-decent at this case interview thing… and in playing that “game,” I have the advantage.

So, how does this apply to your clients and your career?

There is enormous temptation to take the path that is most popular, most visible, and often most prestigious.  (It is far more prestigious to be an NBA champion than say a case interview champion.)

You see, CEOs do this all the time. They favor the seemingly “safe” choice (safe defined as the choice that everyone else is pursuing). It takes a very strategic CEO to take the path that competitors won’t take — but quite often, that is the better choice in the long run.

Amongst aspiring management consultants, I see many, many people who attempt to pursue this career path that really shouldn’t.

If math is difficult for you, if you don’t naturally “see” the insights that factually exist but aren’t obvious, if you’re a creative lateral thinker (but not a step-by-step linear thinker), these are competitive disadvantages in consulting. (But one industry’s disadvantage is another’s advantage).

Now, it is hard to know which category you fall into early in the process, but at some point in the process, you need to take a hard, critical, unemotional, unbiased, objective assessment of yourself to see how you stack up.

Your career will be much more productive and successful if you can find a “game” (a profession) that plays to your strengths and competitive advantages, instead of one that constantly exposes your weaknesses.

A big part of being strategic about your career is to know yourself.  This is a hard thing to do, and it has taken me well over a decade to understand myself.  It didn’t even occur to me to try to do this early in my career, but it would have been much more efficient if I had been more thoughtful about this.

Let me explain why being strategic is useful.

Life is easier.

Promotions come easier when you’re able to harness your competitive advantage. Income growth is easier too (both for your clients and for yourself). Stress levels go down when your daily work requires you to do things that are nearly effortless.

I recognize that I’ve become a role model of sorts to many readers of my blog and emails. To the extent this is true, it is my hope that people emulate the guiding principles behind the decisions I’ve made in my career and not copy the decisions I made in my career, given my specific talents, strengths and competitive advantages.

As I approach 40 years of age (geez… that is such a scary number for me), I have seen the difference between people who focused on what they were exceptionally good at doing, versus those who followed what conventional wisdom suggested was the more prestigious choice (even if they had no competitive advantage in that profession).

For example, I have two acquaintances who, in high school, both had an eye for fashion and design. One attended a top 200 U.S. university and studied accounting — corporate audit, in particular. The rationale was that being a CPA was the safer choice — never mind that this person had no real interest, passion, or competitive advantage in the field.

The other (who was not nearly as academically talented) decided to pursue a career in fashion. She attended a community college (a top 20,000 U.S. education institution).

Ten years later, the second person has a thriving career. She works for one of the major fashion labels. She earns more than most engagement managers at McKinsey… because she is just that good at fashion. Her income is in the top 1.5% of all Americans.

Meanwhile, the first person dropped out of the accounting profession (she wasn’t good at it, she hated it, she didn’t put in the effort to excel) and today earns an income that is probably only 20% of what the fashion expert earns today.

When both of these individuals were in high school, their raw talents in creativity and fashion were identical. The difference many years later is a direct result of the strategic choices they made early in their careers.

Making wise (but not always obvious and not always popular) strategic choices early in one’s career has enormous implications many years later.

When you pick a profession where your strengths give you a competitive edge, it has a cumulative effect over the years.

You tend to do well in your early years, get more opportunities for more challenging work, which further enhances your skills, which further improves your competitive advantage (differentiating you from your competition by an even wider margin)… the whole process is a self-reinforcing upward spiral.

If you choose poorly, the cumulative effect can also work against you just as easily.

If you pick a profession that continually exposes your weaknesses, you tend to stumble and fail at a much higher rate early in your career. You get more discouraged, more stressed out… you tend to avoid putting in extra time and effort into a work experience that is unpleasant. You don’t get the opportunities for more challenging work, and the shortfall gap between your skills and your strategically-focused competitors gets wider and wider… and you get left further and further behind.

Perhaps even more than this negative spiral on one’s career is the toll it can take on one’s self-esteem. You can erroneously come to the conclusion that you just aren’t that good at your career (not realizing you might have been exceptional at a different one).

When I compare notes with my friends and colleagues similar in age to me, the one conclusion all of us have reached independently is that it takes about 7-10 years to become exceptionally good at a profession. (If you’re interested in this topic, see the book Outliers by Malcolm Gladwell, which is excellent.)

The problem with picking a profession that isn’t a good fit for you is one of opportunity cost. If you spend 10 years in the wrong profession, many people are unwilling to start all over in a new career — which involves resetting the experience clock and starting the 7-10-year countdown all over again.

If you add in having children, greater financial responsibility, you end up seeing many people “trapped” in a career where their skill level, performance, and income is merely “adequate.” You see a lot of people in this world who fit this description.

If you back-trace the root cause of this unsatisfying outcome, quite often it goes back to choices made early in one’s career. Picking a profession you are not exceptional at, one that is not interesting to you, and one where you have no competitive advantage.

Often these decisions are made due to parental expectations, peer group expectations, or spousal expectations.

CEOs make analogous decisions based on Wall Street expectations, CEO peers’ expectations, etc… The structure of why poor strategic decisions are made is the same, even if the context is different.

My advice is to choose wisely and strategically as early as possible in your career.

If you find yourself in a profession with a poor fit, I can tell you this: If you do decide to make a shift, it is much easier to make a switch early in your career. The “switching costs” only go up with each passing year.

The key to making such a transition, even if it is not conventional, prestigious, accepted, or popular, is to have a very clear understanding of yourself and your strengths.  If you are very early in your career and don’t know your own strengths yet, I suggest building a high self-awareness of this and paying attention to what is easy/hard for you in the first few years of your career.

Once you have some sense of your competitive advantage, you want to take a fresh look at your opportunities and determine which opportunities harness your competitive advantage, as opposed to continually exposing your weaknesses.

Choose strategically and at some point, your career becomes as easy as riding a bicycle downhill. If you choose without this strategic consideration in mind, don’t be surprised if you spend your entire career riding a bicycle uphill — an extraordinary amount of work without much progress.