Disentangling Competitive Advantage and Superior Performance and Their Roles in Enterprise Transformation

Enterprise transformation is often triggered by financial performance deficiencies, i.e., anticipated or experienced transitions from superior performance to inferior performance. These deficiencies are due to a lack, or a loss, of competitive advantage. Transitioning back to superior performance usually requires that enterprises invest in regaining competitive advantage in one form or another. Unfortunately, the literature conflates advantage and performance, indicating that superior performance inherently implies competitive advantage, suggesting, for instance, that winning is due to the ability to win. This is akin to the ancient Greeks’ assertion that objects fall to earth because they have tendencies to fall. To gain true strategic insight, we need to disentangle competitive advantage and superior performance. This article explores the way in which an enterprise accomplishes transitions in the financial performance space by investing in particular competitive strategies, such as refined market segmentation, diversification of offerings, and increased operational efficiency. The article proposes that the analysis of transitions in firm performance can validate insights into the underlying competitive advantage. We can therefore infer the kind of competitive advantage that would enable enterprise transformation in a given context.