YOUR People are NOT YOUR Competitive Advantage

"My people are my competitive advantage, and I can prove it." This statement is the response I often receive when I challenge an executive to describe their main competitive advantage. It is undoubtedly the most politically correct statement that one can make. Unfortunately, your employees are not smarter, more capable, better looking, or nicer than your competitors'.

Tightly holding to this view blinds executives in the search for real competitive advantages in an organization. You have the same (or relatively the same) collection of exceptional employees, good employees, capable employees, and poor employees. All the HR processes in the world today have not changed that dynamic in companies. The employees you have working in your organization are a combination of LUCK (the biggest factor), HR practices, networking, and LUCK! The following is an example of a conversation with clients who believe people are their competitive advantage.

"My People are my Competitive Advantage" (Always said with Pride)

"Of course they are; none of your competitors have people!"

"Well, our people are better" (Now somewhat defensively)

"Sure they are! Did you ever lose any? Did you ever hire any from a competitor?"

So, here I go. Your People are NOT your competitive advantage - they are how you deliver your competitive advantages – the strategy promise of the organization. I'm not trying to be divisive (but I am trying to make a point); employees are critical to the operation of any organization. Unfortunately (or fortunately sometimes), most of your customers do not care (or if they care at all, it is slight) who takes care of their business needs as long as the needs are taken care of.

This does not apply to every employee in an organization, just most.

At every organization I have ever worked with or for, there is a contingent of "franchise employees." If they left the organization, those employees would impact the success of that organization quite substantially. We all know who these folks are, and if executives are smart, they take care of these employees to ensure that they stay with the organization. These "franchise" employees are not just customer-facing employees; they reside throughout an organization.

From a strategy perspective, virtually every other employee is relatively interchangeable and therefore not a competitive advantage. This is because strategy is about differentiating the business in the mind of the customer. The customer is buying from your organization for a reason (or hopefully several), and in most instances, the employee is simply a conduit for that reason.

• If you walk into the bank to make a deposit and your favorite teller is not there, you don't walk out in a huff – you make the deposit.

• If you walk into a fast-food restaurant to get a meal, you are indifferent to who makes or delivers the meal to you.

• If your power goes out, you don't care who the technician is that turns it back on; you just want the power back on.

• You call a cruise line to book a trip; you don't care who is on the other end as long as they are competent (friendly is a bonus).

• You order a new part from a manufacturer; you don't care which employee makes it; you just want the part.

• Do you have any idea who the pilot was on your last flight? No, because it doesn't matter to you as the customer (unless your pilot was Captain Sully Sullenberger, in which case you would have a franchise employee – unfortunately for us, he is retired now). You expect the pilot to be trained, competent, and sober (personally, I find a little prayer goes a long way before a flight, but that is a different issue).

This logic can be applied to most employees at most companies in most industries. I've seen it in practice with law firms (where the client may follow the departing attorney or may not), in consulting practices (where the organization has a long-term relationship with a firm and is sorry to see that particular consultant, manager, partner go), at universities (where so-called star professors come and go without any impact on the rankings) in auto dealerships, insurance, manufacturing, banking, retail stores – you get the picture.

I talked with a bank executive who insisted that their competitive advantage was their people. I asked him where they got their people. Of course, they got them from other banks, university recruiting, posts, and luck (much like all of their competitors). He insisted that they only hired good employees, to which I resisted the desire to ask him if he had ever managed employees that he thought should be fired.

I asked him what he thought the CEO of Bank Y (one of his competitors) would say about their employees.

Might it be something like?

"Well, we wish we could say that our employees were our competitive advantage – unfortunately, all the good ones are at X, so all we are left with over here is crap. We just try to do our best with crap employees."

OF COURSE NOT! That Executive thinks his bank has the best employees.

This is simply a black hole in strategy. If you are convinced that you have better employees than your competitors, you distort your business practices to try and take advantage of that aspect.

Customers do not buy from Wal*Mart because they employ Suzie. Despite all the great press about how COSTCO treats their employees (which may constitute a competitive advantage), customers are indifferent about who checks them out of the store. Customers do not buy a car wash from a particular organization because they employ Bill, and they do not deposit their money with a bank because they employ Ralph. Customers expect employees to be competent, relatively accommodating, and accountable, and friendly as a bonus. We need our employees to do their job and do that job well, but that is TABLE STAKES in industry, and the customer expects it out of every competitor. Beyond that, customers are choosing to do business with your organization for other reasons. Those reasons will enable you to charge more and lead to being an organization of choice for customers. This is why we have to develop REAL strategy.

Employees are NOT your Competitive Advantage