Chapter 1 - Competitive Advantage and Organisational Viscosity

Introduction

Organisations operate in environments where they are constantly compared with others that are trying to achieve similar outcomes. Commercial organisations compete for customers and profit, public sector organisations compete for funding and trust, and professional service firms compete for reputation and access to work. In each case, performance is judged not only by internal effort, but by how well the organisation performs compared to others.

Competitive advantage describes this relative performance. It exists when an organisation delivers outcomes that are better than those of comparable organisations in ways that matter to stakeholders. Being busy, efficient, or well organised does not by itself create advantage. Advantage depends on delivering results that are recognised and valued externally. An organisation may appear successful internally while still falling behind others in its market or sector.

Defining Competitive Advantage

Competitive advantage exists when an organisation delivers greater value than its competitors in a way that is difficult to copy. Value may take different forms, including lower cost, higher quality, faster delivery, stronger reliability, or a better overall experience. What matters is that the value is meaningful to those making decisions and that it influences their choices.

It is important to understand what competitive advantage is not. Large scale on its own does not create advantage. Efficiency does not create advantage if competitors achieve the same results. Strong performance in a single period does not necessarily reflect advantage, as it may be influenced by timing or favourable conditions. Competitive advantage reflects the ability to perform well in a way that continues over time.

Maintained Competitive Advantage

Maintained competitive advantage describes the ability to continue delivering superior value as conditions change. Markets evolve, customer expectations shift, technology develops, and competitors respond to successful ideas. Advantage therefore needs to be renewed rather than simply preserved.

Maintaining advantage requires the organisation to adapt while continuing to deliver value. It depends on the ability to respond to change without losing direction or coherence. Organisations that perform well over time are able to adjust their capabilities, processes, and structures in a way that supports ongoing performance rather than short-term success.

The Modern Competitive Environment

Modern organisations operate in conditions where change happens quickly and knowledge spreads rapidly. Information moves easily between organisations, new technologies become widely available, and skilled people move between employers. Practices that once provided an advantage often become common across the industry.

At the same time, organisations are becoming more complex. They operate across multiple markets, use interconnected digital systems, and manage increasing regulatory requirements. These factors make it harder to coordinate work and respond quickly to change. As a result, there is often a gap between what leaders intend to achieve and what is delivered in practice.

Introducing Organisational Viscosity

Organisational Viscosity describes the level of internal resistance that slows the movement of work, decisions, and information through an organisation. The term is drawn from physics, where viscosity refers to resistance to flow. In an organisational context, it helps explain why some organisations move quickly and others struggle to act, even when they face similar conditions.

Low viscosity organisations allow work to move smoothly. Decisions are made in a timely way, responsibilities are clear, and priorities are aligned. High viscosity organisations experience delays, confusion, and competing priorities. Work takes longer than expected, and effort is spent navigating internal structures rather than delivering value.

Viscosity is an internal property of the organisation. External conditions such as competition or regulation may highlight it, but they do not create it. Two organisations facing the same situation may perform very differently depending on how their internal structures support or hinder movement.

Sources of Organisational Viscosity

Viscosity develops from a combination of organisational design choices. Governance structures with unclear or overlapping authority can slow decision making. When it is not clear who has the right to decide, work pauses while responsibility is clarified. Funding models that allocate resources rigidly can make it difficult to respond when priorities change.

Organisational structures can also contribute to viscosity. Functional divisions may optimise their own performance while weakening coordination across the whole organisation. Separation between different areas, such as business and technology, can slow delivery and reduce accountability for outcomes. Centralised control can create bottlenecks, while a lack of coordination can lead to fragmented effort.

These factors often build up gradually. Each decision may be reasonable when considered on its own, but together they create a system that is difficult to move and slow to respond.

High and Low Viscosity Organisations

High viscosity organisations display common patterns. Work takes longer than planned, even when teams are capable, initiatives overlap or conflict with one another, rework is frequent because priorities change during delivery, and employees spend significant time managing approvals and navigating processes instead of focusing on outcomes.

Low viscosity organisations show different characteristics. Ownership is clear, and decision making happens at the appropriate level, work progresses with fewer delays, and priorities provide clear direction while still allowing adjustment when needed, and feedback is used to improve performance without requiring constant restructuring.

Low viscosity does not mean a lack of discipline. It reflects alignment between strategy, structure, and execution.
High viscosity does not mean poor intent. It reflects a mismatch between how the organisation is designed and the conditions in which it operates.

Viscosity and Strategy Execution

Strategy depends on coordinated action across the organisation. Even well-designed strategies require decisions, resources, and work to move efficiently. When viscosity is high, this coordination becomes difficult. Strategic intent becomes fragmented as it passes through different layers of the organisation.

The result is often partial delivery. Some initiatives progress while others slow down or stop, activity increases, but outcomes do not improve at the same rate. Leaders may respond by adding more controls, which can further increase viscosity and slow progress.

This explains why strategy alone is not enough. The organisation must also be able to act on that strategy in a consistent and timely way.

Viscosity in Day-to-Day Operations

Viscosity is visible in daily operations as well as in major initiatives. Teams wait for approvals that should be routine, work is delayed by dependencies between functions, changes require multiple handoffs between teams, and information is repeated across systems rather than flowing smoothly.

These small delays build up over time. They increase cost, slow delivery, and reduce the organisation’s ability to respond to change. When small adjustments are difficult, larger changes become harder to achieve.

Organisational Design and Viscosity

Organisational design shapes how work flows and how decisions are made. It determines where authority sits, how responsibilities are defined, and how different parts of the organisation interact. Design choices reflect assumptions about stability, risk, and control. When these assumptions do not match the environment, viscosity increases.

Clear accountability, aligned incentives, and appropriate decision rights reduce friction. Misalignment increases it. Understanding this relationship shows that viscosity is not simply a cultural issue. It is a result of how the organisation is structured.

Reducing viscosity supports movement, but it must be combined with clear strategic direction. Strategy provides focus, and low viscosity enables action. Together, they allow organisations to deliver value consistently and adapt as conditions change.