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Understanding Competitive Advantage

The potential gains lie not in radio frequency identification itself, but in how you use the technology.
Posted By Mark Roberti, 02.16.2011
My 16-year-old son has been taking pitching lessons for the past few months. His coach has completely revamped his pitching motion, and now my son throws harder, and with less stress on his arm. On the way home from a recent lesson, I suggested he recommend his new coach to his teammates who pitch. "No," my son said. "I don't want to do that, because then they'll pitch better and I'll lose my advantage."

It's the same argument I hear from end users of radio frequency identification who prefer not to discuss their use of the technology—they don't want to tip off their competitors. That's certainly understandable, but here's what I told my son: If everyone gets better, then the team gets better as a whole; and it's not what his coach is teaching him that matters, but rather how he uses it. Baseball pitchers don't compete based on how good their mechanics are. They do so based on their ability to throw hard, make a ball move or deceive a hitter. If all of my son's teammates were to improve their pitching mechanics with lessons, it wouldn't mean they would automatically all become better pitchers.

I think the same is true for businesses. If companies refuse to talk about what they are doing with RFID, then few people will hear about the benefits and want to use the technology in their own operations. That means an entire industry can't move forward, because suppliers won't source-tag for just one or two retailers. But apparel companies don't compete based on how well they replenish, or on how efficiently they manage store inventory. For the most part, they do so based on having styles people want, at prices they are willing to pay. Similarly, automotive firms don't compete based on how well they manage reusable containers or parts bins—they do so based on the quality and look of their cars.

Now, I know it's true that RFID can affect an item's price. If companies are more efficient, they can lower their price in an effort to undercut the competition while maintaining their margins. But it's unlikely any company can hold on to a competitive advantage like that for very long, because that company doesn't operate in a vacuum. The press and financial analysts will report on why that firm is able to cut costs, and companies will move quickly to adopt new technologies when they see that they are delivering benefits to the competition.

Returning to my baseball analogy: If my son goes out and pitches no-hitters during his first three games, you can bet his teammates will ask who taught him his mechanics so they can sign up for lessons as well.

In my mind, competitive advantage comes from constantly striving to improve. Companies need to improve their products, marketing and execution. RFID can certainly help with execution, but some businesses will analyze data and see new ways to use that information to boost sales, while others will be content with the improvement it provides in inventory accuracy.

So my advice for my son is not to worry if his teammates go to the same pitching coach, and to instead focus on weight training, diet and pitching strategies—all of which will enable him to continue improving. And my advice to companies is this: Don't worry about discussing the benefits you've achieved from RFID. Compete based on the quality of your products and price, and focus on how to take advantage of the technology in order to keep achieving additional benefits.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.

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