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Economic Moat

    Economic Moat

    Strategy should create an economic moat.

    “What we’re trying to do is we’re trying to find a business with a wide and long-lasting moat around it, protecting a terrific economic castle with an honest lord in charge of the castle.”
    – Warren Buffett

    Every business should have a unique and distinctive mission, culture, and vision.

    Just as every company should have an economic moat.

    And that moat is developed through strategy.

    What elements define a moat?

    Growth

    1. Better Network Effects than Competitors
    2. Higher Switching Costs than Competitors
    3. Better Branding & Higher Customer Loyalty

    Profitability

    1. Better Economies of Scale than Competitors
    2. Higher Prices than Competitors
    3. Cost Advantage over Competitors

    You may have one from each bucket. You may have several. You may have them all.

    But to compete in today’s market, your strategy should be helping create an economic moat.

    Recap:

    1. Strategy is the means to fulfill your vision through growth and profitability.
    2. Strategy should create a long-term economic moat.

    Your turn.

    Now go spark that revolution.