What is the Key Driver for Competitive Advantage?

In their quest to maximize profitability over the past several decades, senior managers in organizations have usually put emphasis on improving processes and technology.

This emphasis on technology and work processes has brought results. Technological improvements through automation and major hardware and software implementations have dramatically reduced costs and increased organizational efficiency. Organizational process improvements through initiatives such as six sigma and lean management have also had the same effect.

Clearly, over these past decades, technological and organizational process improvements have been the primary drivers for organizational success. Over time, organizational managers have put a greater importance on how work is done in the organization than on who is doing the work.

The tide is starting to shift however!

Many business forecasters stress that managers at all levels of the organization cannot continue to focus their efforts mostly on technological and organizational process improvements. Instead, managers must pay greater attention to their human capital — their people in the organization. Failure to do so will cause these managers to lose their competitive advantage.

Forecasters point to the fact that successful technological and organizational process improvements have narrowed the productivity gap. This gap has narrowed not only among industry competitors but also among different countries. Successful outsourcing to other countries is an example of the narrowing productivity gap.

In this new millennium, business forecasters explain that an organization’s human capital (its people) will be the key driver for success. An organization’s competitive advantage will come from the quality of its human capital and the ability of its managers and leaders to leverage this talent successfully. An organization’s human capital can no longer be ignored as leadership attention is focused on other organizational areas.

As we move forward toward a changing and uncertain future, putting a greater importance on who is doing the work in your organization will help you to distinguish yourself as an effective manager.

If you truly want to stand above the crowd, pay attention to your people. Support and develop them. When they excel, you excel!