When many CEOs think about the comparative advantages of their company they do so along fairly predictable measures like costs and the level of service they provide.
However, successful companies can also carve out a comparative advantage in other areas, especially when it comes to managing strategic risks effectively.
In fact, a 2008 report from McKinsey and Company outlines how companies can turn their business strategies into a point of difference, giving them a long-term advantage over competitors. The study drew on lessons from the banking sector in the midst of the Global Financial Crisis.
The report highlights four key areas companies can use to ensure their risk management is on the right track and achieve the best results.
The first, and perhaps most relevant, is the importance of transparency for strategy. The report suggested that risks to your company strategy will often arise as a result of internal miscommunications. Managers will often make decisions based on a few measurements, coupled with their own assumptions.
By not ensuring that company decisions are rooted in a transparent and open assessment, businesses are losing the potential advantages which come from effective strategy while creating a range of risks for themselves.
Other important areas for companies to consider involve the building robust processes to handle risks strategically along with strong structures which can support these processes throughout your company.
Although this advice was specifically formulated for managing corporate risk strategies, the core advice easily applies to business strategies more generally, as firms look to turn their internal processes into an advantage that can be used in competitive marketplaces.
By taking a few key steps towards better corporate strategy, your company can create a comparative advantage over your competition while also achieving your business goals.