Warren Buffet always remarks that all he is looking for in an investment is a long-term competitive advantage.

If you’ve ever read any books on starting a company, or asked an investor for cash, you’ve no doubt been reminded that your business should have a competitive advantage.

But what exactly is a competitive advantage?  Are there different kinds?  Are some better than others?  Do you really need one to have a successful business and make a good living, or only if your looking to shoot your company to the moon in the next three years?

Hiking in Boulder got me thinking about these things!

Since we moved to Colorado about seven months ago, I try to hike the trails at Chautauqua Park about twice per week.  For me, it’s the best form of exercise in the world and does more to make me feel stress-free than just about anything possibly could.  I didn’t expect it to provide business lessons as well!

This Saturday I hiked the Royal Arch Trail, which is a pretty tough hike that has some steep inclines that tend to be pretty icy and slick.  I learned a while ago that if you want to make it up during the winter months, it’s a good idea to have YakTrax on your shoes for extra traction.

This weekend was a perfect example of why.  With my Yaktrax on, I easily made it up the mountain while watching just about everyone else on the mountain stumble and slip along, and in almost all cases, stop and turn around before they reached the top of the mountain.

I had the competitive advantage, and beautiful views were the profits I enjoyed!

Now when I hike for exercise like I did this weekend (versus out with company to enjoy a more leisurely hike), I try to make a point of not getting passed by anyone when going up the mountain.  Since I had the competitive advantage this weekend, you’d think that wouldn’t have been a problem.

That’s when I started to understand that there are degrees of competitive advantage.

On this particular hike, a man that was a good ten years older than me and who didn’t have Yaktrax on, passed me towards the top of the trail.  I couldn’t believe it!  This guy was wearing regular tennis shoes and was slipping on almost every step, but he was in such good shape that he eventually went right by me. 

His competitive advantage was better than mine.  At least for the time being.

If you’ve ever done any winter hiking, you know that going uphill on the snow and ice is much easier than going downhill.  Well, on the way down, I passed this guy like he was standing still, and watched him fall three times over a fifty-yard stretch. 

My competitive advantage proved to be more sustainable over the long term!

To any normal person, this would have just been another hike.  But I LOVE business, so this is the way my brain works.  Strange, I know.  But look at what I learned:

  1. It’s great to have a competitive advantage.  You can still be successful and reach some nice profits without one, but it’s much more of a struggle and has much more risk of falling down before hitting your goals.
  2. There are degrees of competitive advantage - some are better than others.
  3. Sometimes competitive threats aren’t what they seem.  Business is more of a marathon than a sprint.

Not bad for a hike in the woods!

MRC