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Business performance, Leaders, Innovation
In the last issue of the Journal of Business Strategy, our article, "The ultimate competitive advantage of continuing business model innovation", explained the key elements of the high potential strategy we found so effectively used in our study of best practices in top-performing companies during 1989-2003. We likened continuing business model innovation to the sports moves of a fast, ague offensive player with the ball who fakes movement in one direction and quickly shifts actual movement in a different direction. The defender usually either moves towards the faked direction or stands immobile, frozen into inaction by uncertainty about how to react to the quick movements. When the offensive player makes these directional shifts successfully with all the goal defenders, a score will follow.
Knowing that is not much help, though, if your organization only attempts business model innovations that do not work. That is like trying to fake out a defender and falling down instead. The ball will be lost as defenders swarm. Let us focus instead on what has worked best for the most successful continuing business model innovators.
Our research
In 1992, we began look for best practices each year at the 10O companies whose stock prices grew fastest under the same CEO in the prior three years.[1] We soon noticed that repeating companies frequently changed their business models to create new competitive advantages. This was counter-intuitive to us. Our earlier studies of best practices had shown that such successful advantaged model changes by the same company were infrequent.
We read 22 years of the Value Line Investment Survey to locate other possible examples. We supplemented these candidates with others that we had observed directly or read about in literature searches. We contacted all companies which seemed to have repeated business model innovation successes and asked them what they had done. Interviews followed with the CEOs and senior company executives.
We also tracked these business model innovators to see how their subsequent actions have worked out. From these investigations, we began to notice patterns of how organizations were creating the best business model innovations.
The results of this research are reported in more detail in our book, The Ultimate Competitive Advantage: secrets of Continually Developing a More...