The goal posts have changed

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The new Age of Innovation – how competitive advantage is changing

Lets start at the end –


“Tomorrow’s competitive advantage of companies will not be based on innovative products and processes but on innovative business models”

Many success stories go back to an innovative business model rather than a fantastic individual product:

  • Amazon has become the biggest bookseller in the world even though it does not own a single bricks and mortar shop.
  • Apple is the largest music retailer in the world that does not sell CD’s
  • Pixar won 11 Academy Awards without there being a single human actor in its films
  • Netflix reinvented video rental despite not owning a single physical shop

Innovation has always been an instrumental factor in driving growth and competitiveness in business.  In the past, an outstanding technical solution or the introduction of an exceptional product was enough for success.  Today, though, it is no longer sufficient to focus on product or process innovation, as increasing competition, on going gloablisation and the upsurge of competitors in the east, to name just a few of the present driving forces.  New technologies, blurred industry boundaries, changing markets, new competitive players and changing regulations all combine to make products and processes obsolete.  Whether we like it or not the rules of the game are changing.


Research has shown that business model innovation carries a greater potential for success than mere product or process innovation.  A recent study showed that business model innovators are 6% more profitable than their contemporaries who were innovating products and processes.  Similarly 14 of the 25 most innovative companies in the world are business model innovators.

Of course quality products and processes remain as ever of great importance, but they will not decide a company’s success or failure in the future.  We have now firmly arrived in the era of business model innovation, where a company’s fate increasingly depends on its ability to apply the appropriate innovative business model that differentiates it from its competitors.


“The consequence for companies in the innovation race are drastic.  The Boston Consulting Groups’s old adage of milking your cash cows has become less and less relevant today.  Even if they are currently successful, it is important for businesses to regularly test their business model.  We live in an era of temporary competitive advantage: success can only be maintained if its roots are continually re-examined and nurtured.”

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