YouTube video lesson by Dr. Allen Nazeri (MBA series) explaining competitive advantage for dental practices. Introduces the VRIO framework (Value, Rarity, Imitability, Organization) as a tool to assess whether strengths from a SWOT analysis constitute temporary or sustained competitive advantages, and gives dental-focused examples and strategic options (cost leadership, focus, differentiation, service excellence, people development, innovation).
Chapters
This is Dr. Alan Naziri, and welcome to my MBA series and today's video lesson. We're going to discuss about your competitive advantage and see if you really are practicing with a competitive advantage. Now, in the previous lesson, we looked at SWOT analysis and we made a list of our strengths, and we wanted to see if those strengths are really a competitive advantage in the marketplace. So let me define for you what a competitive advantage is. Well, competitive advantage means anytime you have something, a feature, a benefit, a price, something that is superior to your competitor, that will allow you to charge maybe higher fees and having a larger profit. So in the last session, we talked about the SWOT analysis framework, and we looked at the list of strengths, and those are the list of items that I typically ask my clients and their team to fill out. And they usually put a long list of different things that they think is a strength until we put them through the competitive analysis, competitive strength analysis framework, which is what we're talking about today. So I want to introduce you to Dr. J.B. barney, who is a professor at, I believe in Ohio State University. I'm not sure, but basically 1991, he wrote an article, he wrote a paper, and he challenged the idea of competitive advantage. And he said, well, the competitive advantage, you have to look at it much deeper. And he said, in order for a company to have a competitive advantage, there must be a four question to be answered. Because once you answer these four questions, you realize that your company may actually be operating in a competitive disadvantage in the marketplace or just a competitive parity, meaning you're just equal to other players in the market. Or you may actually have a temporary competitive advantage which you can leverage for the time being to grow your business. Or you may realize you have unused competitive advantage that you have never explore. And or you may have a sustained competitive advantage. So how did we determine this? Well, we do determine this through a VRIO framework. Let me explain to you what that is. VRIO framework, There are four questions that we ask for any type of a project that we try to do. V stands for is it valuable or is it rare? I is it imitable? That means can it be copied? And O means has your organization really exploited?
So he talks about, a competitive advantage is valuable when and only if it increases revenue, reduce cost. If it doesn't do either one of those, then you really.
Are at a competitive disadvantage. And you need to figure out whether you can have a competitive advantage or try to get out of that business. But if the answer is yes, then you have a competitive Parity means at least you're equal to other business or practices in your neighborhood. Now, is it rare? So if you answered yes to the valuable, the next question is, is the item that you're considering as a strength, is it valuable but rare to find? Because if it is rare to find, then guess what, you have a temporary competitive advantage. Now, it may not last very long time, but, but at least you have a temporary competitive advantage. Now if you answered yes to valuable and yes to Dr. Being rare, the next question to ask is, is it imitable? Is it valuable, rare to find and hard to copy? Do you have a special talent that no one else has?
Is something that you have cannot be copied by others? If that is the case, then again you have a temporary competitive advantage now. And finally, has your organization really exploited to the maximum? Because if you say no, then you have basically.
On recognized competitive advantage, unutilized competitive advantage. But if you say yes, that means you have a sustainable competitive advantage. Okay, so let's take a look at the example from last time. Okay, and I'm just going to go through this really quick here. We had the list of things that we did for the list of our strengths in our SWOT analysis. So let's take a look at a few of those list. Now, I am the only dentist in a 10 mile radius. Is it valuable? Absolutely it is.
But is it rare? Well, yes, you are the only dentist. Is it imitable? Well, you have a temporary competitiveness in the market until a new dentist comes to town and opens up a practice.
Has the organization exploited? Has your practice exploited? That means have you maximized.
What you can do to generate revenue through this.
Competitive strength that is unique to you that you have? Have you added enough dental chairs to service that city, that town? Are you open enough hours to service people? Do you have enough dentists or hygienists working for you that you can service it? If the answer is yes, then you certainly have a good temporary, I would say probably sustainable competitive advantage. Now let's look at another example. All on 4. There are many clinics that they are providing all on four. Now when this was introduced back in the 90s.
It was really a competitive advantage for many clinics. But then over time this started fading away as more dentists they became trained in all on four and providing it. Now if you're doing zygomatic implant surgeries, that's still a very good competitive advantage. I wouldn't say sustainable, but I would say it's a temporary competitive advantage. So as you see these Questions will all lead to, to a yes or no answer and more yeses you have. That means you do have a sustainable competitive advantage. So companies that have a long term sustainable competitive advantage have the ability to thrive in the marketplace and leave their competition in dust. So what do you do if your practice has no sustainable competitive advantage? Well, one way is to get out of the practice, go to another industry or try to find a way you can have some sort of a competitive advantage. There are a few ways we can do that and I'm going to do this very quickly for you here. One is to become a low cost leader. The other one is to focus your attention on a narrow service or market or product or somehow differentiate yourselves. Now if you want to be a low cost leader, obviously your output cost has to be low as well. That means you have to have low salaried staff, low salaried employees, maybe use volunteers in your dental practice and so forth. Use low cost dental laboratories, buy your supplies low and so forth so you can deliver at low cost. This is where sometimes best to maybe join a larger dental group or some sort of a buying club or affiliate with other dental practices in your neighborhood, in your community so you can bring the cost down. Okay, the next would be to focus. You can focus on a specific service. For example, you can say, you know what, all I'm going to do is dental implant and crowns. That's it, Nothing else. What? Or you can focus on a segment of population, on the people. You can say, I'm just going to work on children, I'm going to work only on seniors or geriatrics or a specific market. You may say, you know what, I'm going to work in New York City on business people and only provide, let's say surgery. So that is a fairly focused. Now neither being a low cost nor, nor being focused is really, really a good idea for a long term sustainability and having a competitive advantage. So my recommendation is to find a way to differentiate your practice. Well, how do you differentiate your practice? Well, you can differentiate your practice through the service excellence. You can provide exceptional level of service. And those guys who've been following me, you know how passionate I am about the subject of our service and giving exceptional level of service to patients so they don't look elsewhere because they fall in love with you. The next is to develop your people. And I keep talking about it. Dentists need to develop their people. Dentists need to develop themselves because they think they have an outgoing personality and they know how to, you know.
Tell good jokes and so forth. They are mastering communications. It's absolutely incorrect. Your you and your people need to master communication skills in a dental office. This is why you have to invest time and money into your people. You can differentiate your product, your service. For example, you can become the only dentist that can do pinhole gum treatments in, you know, 20 mile radius to take care of all the gingival resection, to do specific job like zygomatic implants or so forth. Or you can find a way to innovate, differentiate yourself. You can find a way, maybe your website can be linked to, let's say Uber or Grab Taxi and the patient gets on online and makes an appointment and automatically Uber gets notified and shows up at their home to pick him up to bring him to the office. These are all examples of differentiation. I hope you have found this lesson valuable enough that you're willing to share it with others. If there's anything I can help you to develop, scale and exit from your businesses successfully, please contact me. Thank you very much. We'll see you in the next video lesson coming up soon.
