76 M C K I N S EY Q UA RT E R LY 2 Tailor Your Competitive Advantage to Each Market Once business leaders have a detailed understanding of their organization’s advan tage, they need to apply that understanding to how they position their offerings in each market. Com petitive advantage occurs at the intersection of offering, geography, and customer—in other words, what you’re selling, where you’re selling, and to whom you’re selling. As sector barriers erode, a company’s biggest competitors may come from outside its industry. Those competitors, in turn, may set the bar that any attribute must meet to constitute a competitive advantage. In our survey, more than 40 percent of respondents cite disrup tive trends and new entrants coming from outside their industries as the greatest threats to their competitive advantage. Such disruptions have a long history, from smartphones subsuming the traditional markets of camera and film manufac turers to software firms transforming the economics of industries as diverse as hospitality, transportation, and music. Large companies that operate across numer ous geographies face additional complications due to high variance in what matters for win ning in a given market. Consider the evolution of quick-service meals. In Canada and the United States, food delivery apps changed the dynamics and shifted value pools in the fast-food and casual- dining industry; premade meals and meal kits have further eroded traditional players’ market share. Yet these innovations haven’t taken off in Latin America, China, and other markets. As the variance in what determines customer choice increases, the attributes that create a competitive advantage also change. Conse quently, business leaders need to be vigilant in ensuring that a competitive advantage their organization may have enjoyed for decades can be sustained as the market evolves. For exam ple, the location of branches and ATMs used to be a significant competitive advantage for retail banks, often determining customers’ choice of institution, but online banking has reduced the value of those physical assets. 3 Don’t Overinvest in What Doesn’t Matter In most scenarios, the ultimate authority on a company’s competitive advantage is its cus tomers (and people who could be its customers but instead buy from competitors). Yet organizations sometimes fall into the trap of believing that their capabilities or offerings are superior to their com petitors’ when customers don’t see—or don’t value—the difference. One home appliance manu facturer, for example, developed a product with sophisticated but complex features, only to discover that what customers valued most was ease of use as long as the product’s features were “good enough.” The lesson: Focus on the few factors that determine customers’ choices (and on which inves tors place value) and don’t overinvest in elements that won’t differentiate offerings in customers’ eyes. A similar concept applies to addressing com petition. Organizations sometimes focus too much Strategy’s Blind Spot - - - - - - - - - - - - -