Competitive Advantage is Necessary to Compete
Adapt or perish, now as ever, is nature’s inexorable imperative.
—H.G. Wells, Mind at the End of its Tether
Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men.
—Adam Smith, An Inquiry into the Nature and
Causes of the Wealth of Nations
The ideal of competitive advantage is exalted, overprotected, worn out, and contextually misused like no other strategic management concept. Given that the base concept is so wildly misunderstood, you can bet that the inflated management maxim that claims Competitive advantage is necessary to compete is overripe for criticism.
My premise on competitive advantage is contrarian yet very simple: Precious few organizations have one! Now, it’s not that I don’t believe in the concept of competitive advantage or its phenomenal power when exploited in the marketplace. On the contrary, a true competitive advantage should be the envy of all who compete—not necessarily the goal, but certainly the envy. However, when the ideal of competitive advantage is rolled into the management maxim Competitive advantage is necessary to compete, we encounter serious issues with the truth and real-world pragmatism.
Before proceeding with this entrenched and ubiquitous maxim, I must first set some ground rules as to what constitutes a competitive advantage. Much of the misunderstanding about competitive advantage lies with the vagueness of the term’s explicit and tacit meanings. Referencing numerous texts that have leaned on the strategy parlance of Harvard Business School’s Michael Porter, a competitive advantage is “what sets the organization apart from others and provides it with a distinct edge for meeting customer or client needs in the marketplace. The essence of formulating strategy is choosing how the organization will be different.”1 Consequently, this phantom distinctiveness misleads many into thinking they have a competitive advantage.
Strategy scholar Jay Barney defined competitive advantage more formally, citing that a firm achieves it “when it is able to create more economic value than rival firms.” This economic value is the customer’s perception of value, which is the difference between the perceived benefits and the costs incurred by the customer.2 In other words, a firm possessing a competitive advantage is offering a distinctively higher value (real or perceived) to customers than these customers can get from competitors.
Most strategic management experts stress the attribute of inimitability with regard to competitive advantage, meaning the distinctive edge that a firm possesses cannot be readily copied. This in turn yields a continued competitive advantage. Thus, if a firm is able to protect its distinct ability to offer the lowest prices (by being the lowest cost producer), provide the best customer service, operate the most effective distribution system, or possess patent-protected and superior product designs, then this firm will be more suited to achieve superior economic results over time.
However, most organizations do not have an inimitable edge yet they are still successful competitors. These firms routinely win customers and eke out revenue, profits, and market share—albeit not overwhelmingly—but they survive nonetheless. Scores of firms compete at the microevent level, one transaction and customer at a time.
For example, in lodging, Marriott and Hilton each offer a range of lodging choices, but neither has a compelling, distinctive attribute that makes them superior. For automobiles, Ford, Nissan, and Honda all offer good quality cars, but it’s not difficult to find comparable models across each firm’s product lines. Casual dining is jammed with similar options across categories, depending on how long you want to wait for your food and how much you are willing to pay. Department stores such as Target, Kohl’s, JC Penney, and Macy’s all offer quality merchandise, and it is often on sale. All of the above companies do lots of little things well, but you would be hard pressed to name an inimitable advantage possessed by any of them.
Where does a sustainable competitive advantage stand in this discussion? When escalating the maxim to include the sustainable kind, the number of competitively advantageous firms quickly drops to the endangered species category. A truly sustainable competitive advantage is the pinnacle of strategic and general management. It is often represented by a strong first mover advantage, protected product differentiation, extreme brand loyalty, or some interdivisional alchemy that borders on corporate sorcery. This alchemy may be better described as a unique combination of activities within the company, which we’ll discuss a bit later. Nevertheless, most true competitive advantages are temporary. Successful market performers tend to attract attention that stirs competitors to match the frontrunners in some way.
For thought leaders in this domain, the classic rock star of the strategy set would have to be Michael Porter. His early, landmark books included Competitive Strategy (1980) and Competitive Advantage (1985). Porter introduced us to the enduring Competitive Forces Model, which includes these five industry forces: rivalry of firms, threat of substitutes, threat of new entrants, power of suppliers, and power of buyers. Porter also delineated his three generic strategies of cost leadership, focus, and differentiation. A third hallmark contribution, described initially in 1985s Competitive Advantage, was the widely adopted Value Chain Analysis. Using the Value Chain Analysis, a thorough understanding of a firm’s critical activities and support functions could reveal both shortcomings and sources of actionable value.
Porter’s strategic thinking proclivity coincided with a boom in the strategy consulting industry, most notably served by the big three firms: McKinsey, Bain, and Boston Consulting Group.3 This was a perfect storm of sorts where economists and strategy theorists sought to explain phenomena, consultants sought lucrative contracts, and large corporations sought help in coping with more competitive and globalized markets.
Competition-centric practitioners such as management icon Jack Welch, the former General Electric (GE) CEO, embraced the competitive advantage mantra head on. Welch once growled that “If you don’t have a competitive advantage, don’t compete.”4 This proclamation is indicative of how this faux maxim achieved such enduring and lofty status in management circles. Heck, if Jack Welch espouses it, it must be true! Normally I would say that is the case. However, in reality, there would be so few firms in existence if they stopped competing due to the absence of a competitive advantage. Perhaps Welch’s legendary strategic conviction that every GE business be either the #1 or #2 market share player (or shed the business) has skewed his outlook with regard to competition. In reality, if most CEOs thought this way, we would have a world filled with monopolies. There would be no third, fourth, and certainly no tenth competitor in many industries. Thankfully for customers, both consumer and industrial, this is not the case.
An outlier mindset regarding competitive philosophy is held by PayPal cofounder and venture capitalist Peter Thiel. Along with Blake Masters, Thiel wrote the recent best seller Zero to One that laid out their vision for market leadership from a tech start-up perspective. In a contrarian stance, the authors claimed that new enterprises should not be disruptive. Upstart firms should instead focus on a small market and seek to dominate it with a superior offering. Avoiding crowded, established markets is one of their central tenets for success.
However, for most entrepreneurs this is essentially fairytale land. It reminds me of a bit done by the actor/comedian Steve Martin. As a young standup comic, Martin posed a tantalizing proposition during a Saturday Night Live episode: “You can be a millionaire, and never pay taxes!” You say, “Steve, how can I be a millionaire, and never pay taxes?” Martin’s cheeky reply was, “First, get a million dollars.”5 Similarly, in Zero to One, Thiel and Masters seem to be goading would-be entrepreneurs to simply go out and start the next Google, Facebook, PayPal, or Tesla. Sure thing, sounds easy enough. What are you waiting for?
Survey Findings
In 2005, I surveyed the leaders of 127 organizations that included small manufacturers (such as machine shops and light industrial manufacturing), health care providers (community hospitals and nursing care facilities), and public school systems. Not surprisingly, 79 percent of manufacturing CEOs felt they had a competitive advantage, 86 percent of health care leaders claimed to have a competitive advantage, and 53 percent of school system honchos believed they possessed a competitive advantage.6
When asked what specifically was the organization’s competitive advantage, those in the small manufacturing group mentioned the following: unique technology; skilled employees; low cost production; innovation; engineering; partnerships; marketing channels; reliability; brand name; and customer service. A sampling of reasons for a competitive advantage in the health care group contained reputation; great clinicians and staff; niche programs; diverse programs; only game in town; location; small, caring and focused; culture; customer satisfaction; and best clinical practices. The education group, with the lowest incidence of self-reporting a competitive advantage, elicited the following responses: student-focused; dedicated employees; exclusive niche; sole provider; worthy mission; continuous improvement; excellent teachers; and small classes.
While all of the above responses are admirable strengths to use when competing, only the geographic exclusivity of the public schools and a few of the health care facilities represent an enduring (yet not unthreatened) competitive advantage. I contend that the manufacturing firms and the majority of health care providers are successful, at least in the near term, because of their capabilities to adapt and compete on a daily basis. For example, they must continually nurture and replace employees. They must reorient their technology, manufacturing techniques, partnerships, and pathways to market in order to stay competitive. These organizations are unlikely to possess an inimitable advantage. They compete separately and continually for each customer, patient, deal, or contract on a situational, case-by-case basis. Impressively, they do this day after day.
The Kauffman Firm Survey, a national probability survey of new businesses in the United States, inquired about competitive advantage thinking of firm founders. The survey’s principle investigator, entrepreneurship scholar Scott A. Shane, writes that “only 63 percent of the founders of new businesses reported that their new business had a competitive advantage.”7 Given the expected positive bias from founders’ optimism, this is a remarkable finding. Perhaps the realities of the competitive marketplace have accurately informed the outlook of these entrepreneurs.
A Grocer’s Tale
Some companies are commonly identified with the wrong competitive advantage. You may recall the feel-good story of the Market Basket grocery chain located throughout New England. In the summer of 2014, a bitter boardroom battle erupted over control and management of this private firm. The company has a long history of family disputes. Boardroom and shareholder power was shifting to settle old scores. Widely respected CEO Arthur T. DeMoulas (not to be confused with his boardroom rival and first cousin Arthur S. DeMoulas) was ousted and replaced with two co-CEOs.8 Employees and customers (me included) turned out in droves to support Arthur T. and his quest to preserve the Market Basket Way. For decades, the firm had been known for low prices and excellent employee relations among its full-timers.
Employee solidarity, walk-outs, and a customer boycott eventually crippled store revenue. Several public rallies were held to demand that Arthur T. be reinstated as CEO so that business could return to normal. Arthur T. eventually succeeded with a buyout. Stores reopened and customers happily flocked back (again, me included). This story is often told with customer and employee loyalty heralded as the competitive advantages, with Arthur T.’s management style and trustworthiness being the impetus for that employee loyalty. And yes, there is tremendous employee loyalty at this company, demonstrably shown when Arthur T. was fired and then reappointed. Scores of employees refused to go back to work unless Arthur T. was back in charge.
However, the underlying competitive advantage for Market Basket is not loyalty nor is it trusted management, admirable and effective as these attributes may be. Market Basket’s real competitive advantage is low prices. No full-line grocer in the region comes close (or desires to come close) to matching Market Basket’s prices. Customers boycotted the chain and showed up at rallies because they wanted their low price grocery chain to stay as is, myself included. Market Basket does have a competitive advantage with their low prices. They can maintain this posture because management has the discipline to resist growth beyond their friendly, regional confines. As Michael Porter pointed out long ago, “The growth imperative is hazardous to strategy.”9 Market Basket, under Arthur T. DeMoulas, has thus far shown the discipline to make trade-offs to choose which markets to focus on.
Everything is Temporary
Michael Porter saw the difficulty with the sustainability aspect of competitive advantage, warning in Competitive Advantage, “Since barriers to imitation are never insurmountable, however, it is usually necessary for a firm to offer a moving target to its competitors by investing in order to improve its position.”10
More recently, Columbia University’s Rita Gunther McGrath has taken up the mantra of transient competitive advantage as a logical extension of Harvard’s Clayton Christiansen and his timeless provocations from his book The Innovator’s Dilemma. Both authors emphasize how an organization can be trapped in a currently successful competitive advantage, resisting the signal to migrate from one product platform to another, for example.
Christiansen pointed out the perils of Digital Equipment’s strict adherence to its then lucrative minicomputer business in the 1980s, which resulted in the firm missing out on the burgeoning PC industry. Digital Equipment did not want to proactively destroy their margins in the near term. McGrath continues the case study tradition in this domain but also points to traditional strategic frameworks as the apparent dinosaurs. Akin to blasphemy in traditional competitive strategy circles, McGrath claims companies should embrace the transient competitive advantage approach and abandon historical positioning stalwarts such as Porter’s Five Forces, Boston Consulting Group’s Growth-Share Matrix, and SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. Heresy and shock value aside, McGrath’s emphasis is on organizational speed and a discovery orientation. Refreshingly, McGrath advises companies to be more experimental, flexible, and faster at decision making. Expecting mistakes and near misses due to haste and inherent uncertainty, this discovery-minded approach preaches quick reactions and adjustments.11
Also reflecting the market’s insistence on speed and responsiveness, the once venerable Hewlett-Packard (H-P) decided in 2015 to split into two companies. Seeing H-P lose ground to swifter aggressors like Amazon and Apple, CEO Meg Whitman remarked, “We need to be smaller, more nimble, we need to be more focused.” She also noted how the marketplace was “changing at lightning speed.”12
Similarly, Google decided in August 2015 to essentially split in two by forming Alphabet as a way to focus on noncore, moon shot initiatives. The Google case is particularly interesting, given the restructuring was done much sooner than conventional wisdom would have predicted. Time will tell if the new Google and H-P entities will produce more competitive positions and sustained growth.
Phil Rosenzweig, in his bracing classic The Halo Effect, recounts what he calls the delusion of lasting success. This delusion (there were eight others in the book), falls squarely on the elusiveness of a sustainable competitive advantage. Rosenzweig points to the poor track record of the firms celebrated in Peters and Waterman’s In Search of Excellence, given that two-thirds of the companies profiled had marked performance drops just a few years out from their much-publicized stardom.13 Again, this is further testament to the tenuousness of staying power with regard to competitive advantage.
Both Rosenzweig and business journalist Walter Keichel, author of the informative Lords of Strategy, point to the research of McKinsey’s Richard Foster. Foster reported only 74 of the original Standard & Poor’s (S&P) 500 blue chip firms were still in the index from 1957 to 1998. More glumly, only 12 of those remaining 74 firms outperformed the S&P index over the same period.14 Keichel viewed the public’s shock at these figures as evidence of a common malady of business book readers, which was believing in the aura of corporate persistence. In their book Creative Destruction, Richard Foster and Sarah Kaplan cite the tumult of market discontinuities as reason for much of the churn of blue chip firms. They refer to the perpetually overachieving company as a myth.15
Indeed, many assume that excellent blue chip companies will stay blue indefinitely due to their pedigree, well-executed strategies, and yes you guessed it—competitive advantages. In reality, consistency of excellence and competitive advantage are extraordinarily hard to achieve over time. Further evidence of the precariousness of corporate performance over the long haul is reflected in the work of Jim Collins. In his best seller Good to Great, Collins reported only 9 percent (126 firms) of 1,435 companies were able to substantially outperform market averages over 10-year periods.16
Mere survivability as a company is becoming more of a feat given today’s competitiveness. The Boston Consulting Group’s Martin Reeves and Lisanne Pueschel produced some compelling data in 2015 on corporate mortality, writing:
Today, almost one-tenth of all public companies fail each year, a fourfold increase since 1965. The five-year exit risk for public companies traded in the U.S. now stands at 32 percent, compared with the 5 percent risk they would have faced 50 years ago.17
The popular 2005 book Blue Ocean Strategy, by INSEAD strategy professors W. Chan Kim and Renee Mauborgne, explains the importance of exploiting unknown (new) market spaces as blue ocean strategy. In contrast, more established markets crowded with competitors are referred to as red oceans. Citing them as representative of most industries, Kim and Mauborgne studied the automobile, computer, and movie theater industries. They concluded that there is “no permanently excellent industry” and there are “no permanently excellent companies.” Kim and Mauborgne attributed shifts in competitive advantage to the ongoing delivery of “innovative value” to customers.18
Intel’s Andy Grove, in his tech strategy chronicle Only the Paranoid Survive, reflected on the ups and downs of strategic inflection points. He both marveled at and lamented the shifts in competitive advantages, particularly in the semiconductor and memory chip segments, caused by industry inflection points. Grove saw the fleeting, dynamic nature of competitive advantage first hand. He recollected that “Having been both affected by strategic inflection points and having caused them, I can safely say that the former is tougher.”19
Pretty Good at a Lot of Things
The reality of most organizations that slug it out day by day is that they are essentially not great at any one activity. They lack a distinctive, special talent or secret sauce. They are not superior to foes with regard to quality, speed to market, low-cost production, or best customer service. They are unlikely to be fortunate in possessing a proprietary design or algorithm. By definition, they do not have a competitive advantage. But alas, these firms have been in business for several years and are pretty good at a lot of different things.
Michael Porter, while emphasizing the importance of fit for individual activities within a company, stressed the need for management to embody a seemingly holistic and systemic approach to creating competitive advantage. In his Harvard Business Review (HBR) article What is Strategy?, Porter states that “Competitive advantage grows out of the entire system of activities,” and further expounded that “Strategy is the creation of a unique and valuable position, involving a different set of activities.”20
Now we can see the evolution of competitive advantage becoming less reliant on narrow one-hit-wonders such as a design patent or lowest cost via economies of scale, with the latter often resulting in a disastrous race to the bottom. Competing on price alone can be a ruinous undertaking. Porter viewed market competitiveness based solely on operational efficiencies as “mutually destructive” and no longer a viable basis for competitive advantage.21
Further signaling the need to create competitive magic from the mundane across multiple business units, the noted duo of C.K. Prahalad and Gary Hamel wrote, “The real sources of advantage are to be found in management’s ability to consolidate corporate wide technologies and production skills into competencies that empower individual businesses to adapt quickly to changing opportunities.”22 Note the emphasis on the more intangible attributes of management prowess, time (i.e., speed to market), and change. Compare this to earlier, more unidimensional measures of competitive advantage such as lowest production cost. The metrics for ascertaining competitive advantage have indeed gotten a lot fuzzier.
For a single business unit example (not part of a conglomerate) employing a systemic competitive strategy, Southwest Airlines provides an excellent case study. Many often point to Southwest’s fun, quirky flight attendants as a possible competitive advantage. However, while they may sing and joke more than flight attendants from other airlines, you are more likely to book your flight with Southwest due to cost, cities served, and scheduling. There appears to be no real difference among domestic carriers regarding inflight experiences, most attendants are kind and helpful, and most coach seats are uncomfortable. Customers would rather not pay an extra $200 or add 2 hours to their trip for a more entertaining set of announcements.
Southwest is particularly competitive via a combination of activities that includes high degree of sameness of aircraft, high equipment utilization, short point-to-point routing (fewer connections and baggage handling), limited perks, and reasonable prices. This coordination of activities helps Southwest keep its cost structure under control. While not being all things to all people, Southwest has executed very well while being pretty good at several things—in a tough industry.
Walmart is another superb example of a combinative competitive advantage. Assuming they have one, what would you say is Walmart’s competitive advantage? The most common answer to this question is low prices. The legendary Sam Walton himself supported this view by saying, “Control your expenses better than your competition. This is where you can always find the competitive advantage.”23 Indeed, solid old school advice. But contemporary market leadership needs to go beyond today’s givens of operational efficiencies.
So how does Walmart manage this low-cost leadership position? Essentially, Walmart is a relentless executor of a strategy focused on information technology (IT) coupled with state-of-the-art supply chain management (SCM) techniques, of which Walmart was an early adopter. Combine the IT and SCM expertise with their obvious economies of scale power and you have the ability to offer the lowest prices. Again, Walmart senior management has been able to coordinate a complex set of activities in an effective, disciplined manner. Even as the massive, full-line death star of discount merchandising, Walmart does not try to be all things to all people.
For a personal account of the fleeting nature of competitive advantage, I recall my days as a product manager in the sports medicine and arthroscopic surgery market. Working for Smith & Nephew in the late 1980s and 1990s, I was fascinated at the strength of our market position. We were the market share leader in motorized arthroscopic resection and bone debridement, enjoying the fruits of our first mover advantage in a growing market trending to less invasive surgery. Success in this market began attracting good competitors eager for a share of the spoils in this space.
Smith & Nephew’s competitive advantage was its large installed base and a cadre of new surgeons being trained on our equipment. We made good, reliable products and also had an excellent commission-based distributor network full of motivated sales reps. Eventually, pricing pressure ensued, competitors gained traction, and new technologies clamored for customer attention—all in the wake of tumultuous health care reform and customer (hospital) consolidation. This market certainly had its share of discontinuities. After nearly 20 dominant years, this division of Smith & Nephew was still successful and extremely capable in many aspects, but so too were other brands. Competitors such as Stryker, ConMed’s Linvatec, and Arthrocare (purchased by Smith & Nephew in 2014) eroded Smith & Nephew’s robust yet unsustainable market fiat.
Competitive Advantage as a Medieval Moat
Like American football, our business lexicon is chock full of military terminology. Examples of these common terms and phrases include product launch, guerilla marketing, territory acquisition, industrial espionage, flanking maneuver, retaliatory pricing, sales force on the front lines, and hostile takeover. A term used with particular resonance in competitive advantage analysis is that of a moat. Primarily thought of as medieval defensive trenches, moats were often filled with water and surrounded the ramparts and parapets of castles.
Morningstar, the investment rating service, uses the metaphor of a moat to signify the presence, strength, and potential sustainability of a competitive advantage.24 Although Morningstar relies heavily on historical financial performance, it also evaluates a firm’s competitiveness by reviewing the industry’s competitive structure. Morningstar uses the following five characteristics (a moat rubric of sorts) to determine the strength of competitive advantage:
Network Effect. Competitive advantage is enhanced as more users get involved, such as with Facebook and EBay.
Intangible Assets. Intellectual property, such as patents and trademarks, brand equity, and licenses bring value to the firm’s competitive standing. Starbucks and Apple are two examples that exhibit considerable strength with this metric.
Cost Advantage. A lower cost basis than competitors offers the opportunity for enhanced margins and profitability. Walmart shines in this regard.
Switching Costs. Prohibitive costs may be faced by customers if they choose to switch brands. These costs include training, spare parts, and system integration requirements. Firms such as Paychex and Autodesk involve high switching costs for customers, whereby Starbucks would entail none.
Efficient Scale. A small number of firms may be adequately serving a niche market, thereby precluding additional competitors from encroaching.25 An example of this type of market would be package delivery, dominated by United Parcel Service and Federal Express.
While the framework for assigning competitive advantage status to a firm may seem adequate, it is worth a look to see what moat ratings specific companies have received. Moat types include NONE: signifying the firm has no competitive advantage; NARROW: denoting a firm with a limited competitive advantage, perhaps lasting up to 10 years; and WIDE: connoting a robust, defensible, and often sustainable competitive advantage, with superior returns foreseeable for up to 20 years.26 A sample of firms and their respective moat ratings is provided in Table 5.1.
Table 5.1 offers a glimpse into Morningstar’s stock analysis rating system. It appears Morningstar can rationalize a moat rating in any direction based on their interpretation of the moat rubric. One cannot help but wonder how Starbucks secures a wide moat while Boeing and Apple are rated with narrow moats. Granted, Morningstar rightfully assigns both Boeing and Apple wide quantitative (secondary) moat ratings, but to think a coffee shop is better defended than a leading aerospace giant is surprising. Also, given Apple’s $200 billion in cash on its balance sheet, one would think that all that money could buy Apple a wider moat!
Table 5.1 A sample of firms and moat ratings. Source note: Moat ratings, market capitalizations, and EPS (earnings per share) growth percentages are from Morningstar Equity Analyst Reports for each company, dated from June 1 to June 15, 2015
Netflix presents another perplexing case when using moats for determining competitive advantage. Morningstar’s Equity Analyst Report states that Netflix is leveraging its massive data set “across its multiple offerings in multiple ways to derive sustainable competitive advantages.”27 Apparently, Morningstar analysts feel this sustainment will last only 10 years, not 20. Speaking of which, a 20-year projection of outsized returns is an aggressive call considering market uncertainties and discontinuities. Fortunately for Morningstar, it can change its moat ratings whenever it chooses. Nevertheless, it is hard to fathom how some firms (i.e., their senior management) get the faith of Morningstar to sustain their advantages much further out than other capable firms and managers.
While Morningstar is keen on ascertaining company performance (and by default management’s performance), the moat framework does not include a distinct evaluator of how well management coordinates any internal set of activities. Additionally, moat analysis does not attempt to codify intangible measurements of speed and adaptation, which are increasingly cited by practitioners and scholars as being integral to competitive advantage. Perhaps the moat analysis framework is too traditional. A revised model that better incorporates a firm’s human capital, nimbleness, and ability to compete at the microlevel may be more suitable in dynamic markets.
In closing the discussion on competitive advantage, note that very few firms strike gold with a one-trick pony competitive advantage. Successful companies in the future will be smart, fast, and change-oriented. If you are fortunate enough to have a real competitive advantage, be mindful that in its current form, it is temporary.
Contra Maxims for Competitive Advantage
Competitive advantages are rare, endangered, and temporary. Organizations must experiment, learn, and adapt quickly to stay competitive. Manage everything well!
Notes
1. Richard Daft, Management, 10th ed. (Mason, OH: South-Western, Cengage Learning, 2012); John Pearce and Richard Robinson, Strategic Management: Formulation, Implementation and Control, 8th ed. (New York, NY: McGraw-Hill Education, 2003).
2. Jay Barney, Gaining and Sustaining Competitive Advantage, 4th ed. (Upper Saddle River, NJ: Prentice Hall, 2011), 15.
3. Walter Kiechel, The Lords of Strategy: The Secret Intellectual History of the New Corporate World (Boston, MA: Harvard Business Press, 2010).
4. Stratford Sherman and Cynthia Hutton, “Inside the Mind of Jack Welch,” Fortune, 27 Mar 1989, http://archive.fortune.com/magazines/fortune/fortune_archive/1989/03/27/71783/index.htm?iid=sr-link1 (accessed 31, 2016).
5. “SNL Transcripts, Season 3, Episode 9,” 21 Jan 1978. http://snltranscripts.jt.org/77/77imono.phtml (accessed June 18, 2015).
6. Kevin Wayne, “Leader Perception of Competitive Advantage: A Regional Survey of Manufacturing, Healthcare and Education.” American Society of Business and Behavioral Sciences Annual Meeting, February 21, 2009.
7. Scott Shane, The Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By (New Haven, CT: Yale University Press, 2008), 67.
8. Hilary Sargent, Adam Vaccaro and Roberto Scalese, “Two Arthurs, One Basket: The Market Basket Saga of 2014,” Boston.com, 22 July 2014, http://www.boston.com/images/twoarthurs2.pdf (accessed June 18, 2015).
9. Michael Porter, “What is Strategy?” Harvard Business Review 74, no. 6 (Nov–Dec 1996): 61–78.
10. Michael Porter, Competitive Advantage: Creating and Sustaining Superior Performance (New York, NY: The Free Press, 1985), 20.
11. Rita Gunther McGrath, The End of Competitive Advantage (Boston, MA: Harvard Business Review Press, 2014).
12. Robert McMillan, “H-P Makes Its Breakup Plan Official.” Wall Street Journal, 2 Jul 2015, B3.
13. Phil Rosenzweig, The Halo Effect and Eight Other Business Delusions that Deceive Managers (New York, NY: Free Press, 2014).
14. Kiechel, Lords of Strategy.
15. Richard Foster and Sarah Kaplan, Creative Destruction: Why Companies that are Built to Last Underperform the Market—and How to Successfully Transform Them (New York, NY: Crown Publishing, 2001).
16. Jim Collins, Good to Great (New York, NY: Harper Business, 2001), 220–222. Note: ten-year periods of substantially above average performance was preceded by a period of average or below average performance.
17. Martin Reeves and Lisanne Pueschel, “Die Another Day: What Leaders Can Do About the Shrinking Life Expectancy of Corporations,” BCG Perspectives, 2 Jul 2015, https://www.bcgperspectives.com/content/articles/strategic-planning-growth-die-another-day/ (accessed May 4, 2016).
18. W. Chan Kim and Renee Mauborgne, Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant (Boston, MA: Harvard Business School Press, 2005), 191–192.
19. Andy Grove, Only the Paranoid Survive: How to Exploit the Crisis Points that Challenge Every Company (New York, NY: Currency, 1999), 4.
20. Porter, “What is Strategy?” 68.
21. Ibid., 64.
22. C.K. Prahalad and Gary Hamel, “The Core Competence of the Corporation,” Harvard Business Review 68, no. 3 (1990): 79–91, 81.
23. Patricia Sellers, “A Visit to Wal-mart’s Home,” Fortune, 14 Oct 2009, http://fortune.com/2009/10/14/a-visit-to-wal-marts-home/ (accessed Jun 15, 2015).
24. Morningstar, “Moats and Competitive Advantage.” Investing Glossary, http://www.morningstar.com/invglossary/economic_moat.aspx (accessed Jun 19, 2015).
25. Ibid.
26. Ibid.
27. Morningstar, “Morningstar Equity Analysis Report: Netflix,” 1 Jun 2015, 2, www.schwab.com (accessed July 10, 2015).