How top economic performers lean into their competitive advantage to guide their strategy
How top economic performers lean into their competitive advantage to guide their strategy
https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/how-top-economic-performers-lean-into-their-competitive-advantage-to-guide-their-strategy?
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Top economic performers understand their competitive advantage at more granular levels than their peers and use it to derisk and help accelerate growth.
Our recent McKinsey Global Survey of more than 1,250 executives and managers—including 1,002 senior executives—across industries and geographies shows that the majority of their organizations are not actively validating or managing their competitive advantage. Companies that are top economic performers, however, are much more likely to try to understand, validate, and use their competitive advantage in their decision-making. In this article, we examine what they do and why it matters.
Signs that current competitive advantages are eroding
Eight in ten respondents are at least somewhat confident that their organizations understand their competitive advantage across the markets in which they operate. However, many question how stable it is. The majority also report that their organizations do not truly understand how and why they achieve competitive advantage, nor do they validate it with external data at the market level.
Despite their confidence in their companies’ current understanding of competitive advantage, one-third of respondents believe the nature of their competitive advantage will significantly or completely change over the next five years, including the areas of competitive advantage and the bar required for actual differentiation
An organization’s economic viability is, at its core, dependent on its competitive advantage, and many respondents believe their organizations will need to rethink their core business models in the near future to stay competitive: Seventy-nine percent of respondents expect their organization will need to moderately or significantly change its business model in the next three years to remain economically viable. This implies that the nature of competitive advantage is shifting in those industries.
One-third of respondents believe the nature of their competitive advantage will significantly or completely change over the next five years.
Respondents see trends from outside their industry, rather than just increased competitive pressures from “the usual suspects,” as the greatest threat to their current competitive advantage. More than 40 percent of respondents cite trends from outside their industry or risks posed by new market entrants, such as tech players, as the biggest threats. By comparison, only about one-quarter of respondents believe the main risk is from existing peers outperforming them on their current areas of competitive advantage—implying that competitive advantages are undergoing changes more profound than a simple acceleration of business as usual.
According to the findings, increased uncertainty is also putting organizations’ current competitive advantages at risk; this uncertainty is limiting their ability to define scenarios that would help them set strategies that defend or extend those advantages. More than half of respondents say their organizations would be unable to address the current degree of uncertainty by using only one or a few distinct scenarios. In fact, 11 percent even say that the context is so uncertain that they could not identify even a broad set of scenarios that would encompass their business context, consistent with other research we have done showing the rise in uncertainty.
Seventy-nine percent of respondents expect their organization will need to moderately or significantly change its business model in the next three years to remain economically viable.
Competitive advantage affects profitability (through the ability to command a price premium or reduce costs) as well as share gain, and overlooking that advantage can put both at risk. Nearly two-thirds of respondents say their organizations sometimes or often miss growth opportunities—such as launching a new product or entering a new market—because their competitors move first, even though respondents’ companies were the natural owners of those opportunities and better positioned to win.
Additionally, only about a third of respondents say they are confident that their companies can find new growth where they already have a competitive advantage. Expanding into an area where a company already has a competitive advantage often requires lower investment and can deliver greater gains in market share.
Top economic performers—that is, respondents from companies in approximately the top quintile for annual growth rate and EBIT in the past three years—are significantly more confident than all other respondents in their companies’ ability to create growth, both within and outside of their core business. They are more than three times as likely as other respondents to say their growth expectations have increased significantly for both their primary industry and the businesses their company has developed in other industries over the past year.
We explored how they link growth and competitive advantage and found that they connect the two much more closely than their peers.
Top economic performers validate their competitive advantage
Although top economic performers represent a broad cohort across industries, geographies, and sizes, they are more likely than others to focus on competitive advantage, as well as take a rigorous approach to validating it. Top economic performers are more than 2.5 times as likely as others to say their organizations have a fully aligned understanding of their competitive advantage across all areas of their organization. When every part of a company is driving in the same direction, the company experiences less friction and avoids fragmentation of both resources and focus that can increase costs and lower returns.
Most companies still only track the drivers of their economic performance and competitive advantage at aggregate levels. By contrast, top economic performers are nearly twice as likely as peers to monitor performance measures that are more detailed than just the business unit or geography level—they look at important intersections within the business. In this way, they can better understand granular shifts in trends and stay ahead of any erosion of their competitive advantage overall. This also improves their ability to invest in the things that actually matter in a given part of their business, rather than taking a “peanut buttering” approach of spreading resources thinly across too many things. As we know from previous research, disaggregating company performance helps leaders make the right decisions about where and how to compete.
As companies face changes from outside their industry and industry barriers continue to erode, it will become increasingly risky to validate assumptions about competitive advantage based on legacy trends and norms and competitive sets. Top economic performers understand this and validate their views on competitive advantage with external data within each market. In fact, they are much more likely than other respondents to do so in most or all of their markets
Unlike many of their peers, top economic performers are much more likely to use AI to scan for shifting patterns in investment flows, acquisitions, patents, and the number or type of start-ups or new product launches. Monitoring these patterns can identify trends that could indicate both new opportunities and emerging threats to their current competitive advantage.
Top economic performers put their competitive advantage to work on growth
The final area where we see a difference between top economic performers and others is the degree to which the top performers use their enhanced understanding of competitive advantage to inform their investment decisions and other critical strategic choices. Most respondents—including top performers—report underleveraged insights on competitive advantage. But top economic performers are more likely than others to use these insights while making strategic decisions across almost every category of new growth.
Top economic performers are much more likely to use their understanding of competitive advantage to inform decisions about where to focus R&D, which geographies to enter, or whether to build a new business area or customer segment. In our experience, major investments that have been grounded in a verified, granular understanding of competitive advantage tend to yield better results. When an investment must first address gaps in competitive advantage, it typically requires greater spending to deliver the same share gains or cost savings.
Overall, responses show that top economic performers are much more confident in their ability to use their competitive advantage to expand into new growth areas.
The degree to which this plays out can be seen by the relative level of resource reallocation used by top economic performers compared with that used by all others. Top economic performers shift significantly more of their budget year over year to different business units, geographies, or other major projects than do their peers.
Top performers distinguish themselves by better understanding, validating, and deploying their competitive advantage—and these differences offer three practical lessons other companies can apply to help create growth.
- Understand the drivers of your economic performance at a granular level, not at the aggregated enterprise or business unit level. Early signals of an eroding advantage can be averaged away, increasing the odds that a company might be late to respond, which can both drive up costs and increase the chance of losing to better-informed peers.
- Validate your assumptions about your company’s competitive advantage through external data, including data from outside your current competitor set. As the rate of change and uncertainty continues to accelerate and industry barriers erode, assumptions that served you well in the past might be breaking down. Technologies such as AI can make validation a more feasible task than in the past, allowing more markets to be scanned and analyzed with greater frequency. This can prevent an organization from wasting resources on trends in decline and provide data to highlight potential biases and assumptions that might be holding you back.
- Inform your investment decisions with a market-back view of what drives your performance, checking with customers about what they value and are willing to pay more for as the landscape changes at a market level. Understand the difference between a general strength and one that actually wins you business, and use this to inform your resource reallocation to break away from the “last year plus or minus 5 percent” rut that many organizations are stuck in, which erodes competitive advantage and reduces the return on your investments.
IHG has opened its largest hotel in the Americas here
https://hotelsmag.com/news/voco-opens-its-largest-americas-hotel-in-times-square/?
IHG Hotels & Resorts has opened voco Times Square – Broadway, its largest property in the Americas and one of the final new-build hotels approved in New York’s Times Square neighborhood.
The 32-story, 419-room hotel joins voco Times Square South New York and voco The Franklin New York, bringing the brand’s total to seven properties in New York.
voco Times Square – Broadway combines the scale of a large hotel with a more informal and individualized environment. Its design references Prohibition-era speakeasies, with sleek lines, rich textures and furnishings. The lobby features seating and lighting, while guest rooms and suites include vintage-inspired details with contemporary elements and a muted color palette.
The property includes Times Square’s only hotel rooftop with unobstructed panoramic views of the New York skyline. The 2,400-square-foot indoor-outdoor rooftop offers space for group events and private gatherings. The Velvet Fox bar and lounge serve cocktails, small plates and live music.
Located at Seventh Avenue and West 48th Street, the hotel is near Radio City Music Hall, the Museum of Modern Art and the Empire State Building.
Ginger Taggart, vice president, brand management – global brands at IHG Hotels & Resorts, said the opening follows the brand’s milestone of One Hundred voco hotels globally and expansion across multiple regions. She said voco aims to reach Two Hundred open hotels within its first Ten years.
As of Dec. 31, 2025, voco has 124 hotels open worldwide with 108 more in the development pipeline. Recent U.S. openings include properties in Flagstaff, Laguna Hills, Moab, Myrtle Beach and Port St. Lucie.
I Thought I Knew Ski Trips—Then I Skied 300 Kilometers Through the Dolomites
©Harald Wisthaler - Dolomiti Superski
https://www.fodors.com/world/europe/italy/the-dolomites/experiences/news/a-seven-day-guided-adventure-through-the-italian-dolomites
Somewhere between shared lift rides and mid-mountain espresso, skiing stopped being just about skiing and became a sort of reflection.
Some trips are about checking boxes; however, my seven-day ski adventure through Dolomiti Superski completely erased everything I thought I knew about what an epic ski trip could actually be. With over 1,200 kilometers of slopes, 450 lifts, and a journey curated by Inspired Italy, my trip felt less like a tour and more like being shown a secret world by a local friend.
From private airport transfers to family-run hotels, helicopters lifting us straight from our lodge, and moving daily between reservation-only mountain refugios with nothing but a backpack, this was luxury built on adventure. We carved legendary runs like the Gardenissima, floated over Passo San Pellegrino, skied the quiet vastness of Civetta, slept at Rifugio Lagazuoi high above the world, and dropped at sunrise into the Hidden Valley, part ski run, part time machine, before laughing our way down Marmolada’s 12-kilometer queen of a descent.
Somewhere between exhaustion and wonder, bruised shins and soul-deep joy, shared lift rides and mid-mountain espresso, skiing stopped being just skiing and became a sort of reflection, connection, and presence. By the time we returned to Val Gardena at sunset on our last day, we had skied a total of 300 kilometers (186.4 miles).
It was then that I realized this journey was never about the destination or the box it ticked, but about living fully between that first lift and the last après-ski coffee, proving that the most epic moments rarely care how much you packed or how many days you wore the same kit.
Stop Haggling on Vacation — It’s Unethical and Tacky
Courtesy of Fodor's Travel
https://www.fodors.com/news/travel-tips/stop-haggling-on-vacation-its-unethical-and-tacky
Guidebooks advise us to haggle down prices while abroad, but is that ethical?
Hot Takes is a new monthly series inviting experts to share their hottest takes about travel, hospitality, and more. Have a hot take you’d like to share with us? Send your takes to editors@fodors.com for a chance to have your take featured in a future story.
Awoman gloats: “I got this for $5,” while waving an ornate jewelry box in my face. “That guy asked for $20, and I beat him down!” Our air-conditioned bus moves on as we wheel away from the stall owner, hunched in the dirt. “I think I’m getting the hang of haggling!” she says, stuffing her ill-gotten treasure into her $250 leather backpack.
Haggling is often romanticized as a form of cultural immersion. It’s a lot more palatable to think about it as engaging in authentic local customs, rather than exploiting another country’s artisans. I’ve heard many a seasoned traveler brag about their haggling “skills,” and I’m always in awe at the total lack of self-awareness that seems to accompany it.
I’m not disputing that haggling is indeed a common practice in many countries. I’m saying that, for a wealthy traveler from a first-world country with disproportionate exchange rates in your favor, the cultural mainstay of haggling is not intended for you. I doubt there’s a shopkeeper out there who will find it “disrespectful” that you didn’t haggle when you are a tourist in their country. Haggling may be customary in the country you’re touring, but that doesn’t mean it’s a custom for you. You’re not a local. And, as a tourist, you shouldn’t be paying local rates.
No one wants to be ripped off. But when you can afford international flights, a plush hotel, car rental, and a tour guide, the ethical considerations of haggling with a merchant over the price of a curio should take priority. You are on vacation, whereas the stall you’re browsing is their livelihood.
I hail from South Africa, where 23.2 million people live below R1300 ($80 USD) per month. The minimum wage in my country will increase to R30.23 per hour on March 1, 2026. That’s less than $2 USD per hour. I am immensely privileged to have the opportunity to travel, and I try, where I can, to use that privilege for good. For me, that means paying the asking price, no matter where in the world I am—every single time.
So, when I found myself in Morocco, ambling through the souks that glittered with golden lamps and rich bolts of fabric, I paid the first figure requested without question. If I couldn’t afford the item, I politely declined and walked away, just as I would back home. I don’t haggle over my electricity bill or over the price of a restaurant check. The price is the price, and if I can’t afford it, then I don’t buy it.
I enjoyed watching the playful back-and-forth banter between Moroccans as they haggled, but I never once thought their practice was one I should try to emulate. There’s no shortage of travel advice out there saying the first asking price is always deliberately too high and you’re being taken for a ride. It may well be true, but if the first price is within your budget for the item you’re eyeing, I think you should pay what they’re asking for.
Back home, in South Africa, I hear tourists trying to beat down the cost of beaded jewelry or carved bowls at roadside markets every single day. It’s only natural to feel petulant about paying $10 for a beaded bookmark when you think you could have scored it for $2, but your purchase is optional. For vendors, it’s rent, food, and school fees. The few dollars you might “win” in the haggle would be better spent uplifting the community you’re visiting. If you win the haggle, someone else is losing.
Sustainability and travel are a hot topic. It’s not a novel concept that we should be mindful of where we go and how we behave when we visit. Fodor’s No List is one such example where a little more consideration can go a long way to prevent overtourism or environmental damage. We talk about the importance of ethical tourism and of supporting local communities, ensuring our money goes into the pockets of the people who call these places home. And I’d argue there isn’t much of a point in congratulating yourself for opting for a family-owned boutique hotel instead of a big chain if you’re going to deliberately try to shortchange every artisan you interact with, all because “haggling is a local custom.”
Yes, you may be overcharged. And maybe they’re doing a little dance as soon as you round the corner. But if you’re still happy with your purchase and the shop-owner is delighted with the sale, where is the harm?
In Fez, I saw a beautiful gold lantern that I immediately craved for my dining room table. The etched side panels were set with stained glass, and the interior was the perfect size for a tea light candle. I wanted something that would remind me of my trip. The lantern wasn’t cheap (I mostly earn in South African rands, and they don’t stretch very far), but in all honesty, I don’t remember what I was charged for it.
Instead, I remember the care with which the shop owner packaged it, securing it in bubble wrap so it would survive luggage handlers in the airport, and his smile as he waved me off. I remember the honeyed, sticky pastry that I ate shortly after, squeezing through the narrow alleys of the medina back to our riad, getting lost twice, and meeting three cats along the way.
I wonder what that woman who bought the jewelry box at the side of the road remembers when she rummages around her earring selection, choosing her adornments for the day. I wonder if she remembers anything about it at all.
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