Rethinking Competitive

Advantage
New Rules for the Digital Age
Ram Charan and Geri Willingan

Book Summary - Rethinking Competitive Advantage

The new rules of competition
1. A personalized consumer experience is key to exponential growth
2. Algorithms and data are essential weapons
3. A company does not compete, its eco system does
4. Money making is geared for huge cash generation, not earnings per
share and the new law of increasing returns. Founders understand the
difference.
5. People, culture and work design for a ‘social engine’ that drives
innovation and execution personalized for each customer
6. Leaders continuously learn, imagine, and break through obstacles to
create the change that other companies must contend with
Book Summary - Rethinking Competitive Advantage
Creating competitive advantage is different
in the digital age. The ultimate prize in a
digital world is winning consumer
preference. It comes from what a company
does vs what a company has.

Book Summary - Rethinking Competitive Advantage

Imagining new market spaces and revenue
pools that can scale up at unprecedented
speed is just one way that digital
companies are born from the start.

Book Summary - Rethinking Competitive Advantage

The old adage of stick to your knitting or
build on your core competence narrows a
company’s imagination in a digital world.

Book Summary - Rethinking Competitive Advantage

When one dissects the digital companies , we find that :

1.They imagine a 100 x market space.

2.They have a digital platform at the core.
3.They have an eco system that accelerates growth
4.Their money making is tied to cash and exponential
growth
5.Decision making is designed for Innovation and speed
6.Their leaders drive learning, reinvention and execution

Book Summary - Rethinking Competitive Advantage

A traditional company’s downward curve
starts with price declines, margin pressure
and flight of investors.

Book Summary - Rethinking Competitive Advantage

Some conventional advantages still persist,
such as brand, reputation, patents, and
scale matters in steel and auto.

Book Summary - Rethinking Competitive Advantage

The biggest difference to create
competitive advantage vs the past is the
speed of competitive action and response.

Book Summary - Rethinking Competitive Advantage

Many leaders have an overreliance on
outdated theories.

Book Summary - Rethinking Competitive Advantage

Core competencies have a shelf life, they
become obsolete, and new ones have to be
built.

Book Summary - Rethinking Competitive Advantage

Thinking Mistakes from past consulting models
1. A dominant psychology of incrementalism and short term thinking.
2. A blind spot when it comes to customers
3. Acceptance of existing boundaries
4. Belief in mass markets and segmentation

Book Summary - Rethinking Competitive Advantage

A market of one is the ultimate in
personalization. M = 1

Starbucks caters to 170,000 possible

beverages options at its stores according to
its website.

Book Summary - Rethinking Competitive Advantage

Mapping the customer journey is emerging
as a distinct expertise.

Book Summary - Rethinking Competitive Advantage

Leaders who have ‘observational acumen’,
the ability to notice what others miss are
often the ones who land on a better
consumer experience.

Book Summary - Rethinking Competitive Advantage

A digital platform on its own is not a
competitive advantage, but not having one
is a competitive disadvantage.

Book Summary - Rethinking Competitive Advantage

Combining and refining algorithms over
time build competitive advantage.

Book Summary - Rethinking Competitive Advantage

The real impact of digital technology
comes from combining knowledge of what
technology can do and business judgement
about how to use it.

Book Summary - Rethinking Competitive Advantage

Consumers get great value from company
use of data and algorithms, however, that
can quickly disappear if privacy or
security is compromised.

Book Summary - Rethinking Competitive Advantage

Digital giants and their eco systems are not
linear, i.e. not only aligned with their own
supply chain, they are exponential and
multidimensional. They have a vast range
of partners.

Book Summary - Rethinking Competitive Advantage

A digital company’s capex is opex.
Expenses are lower at digital giants
because they have fewer layers than a
traditional company.

Book Summary - Rethinking Competitive Advantage

Digital companies create recurring
revenues from consumers.
Digital companies see growth as a series of
S curves

Book Summary - Rethinking Competitive Advantage

Breaking work into bite size missions and
giving stand alone teams the autonomy to
figure out ‘how’ leads to faster, better
decision making.

Book Summary - Rethinking Competitive Advantage

Digital platforms make real time
information transparent to people in other
parts of the organization, people feel
liberated and send more time doing what
they inherently need to do.

Book Summary - Rethinking Competitive Advantage

The founders of todays tech companies put
a lot of effort in recruiting right.

Book Summary - Rethinking Competitive Advantage

The difference between physical leaders
and digital leaders is their cognition, skills
and psychological orientation.

Book Summary - Rethinking Competitive Advantage

Digital leaders blend data with intuition.
They have the mental capacity to think big
10x or 100 x.They are focused on the
customer.

Book Summary - Rethinking Competitive Advantage

There is a fluidity to their thinking, they
welcome change and even seek it. They are
hungry for what’s next and are willing to
create and destroy.

Book Summary - Rethinking Competitive Advantage

They rely on metrics and transparent data
to drive execution.

Book Summary - Rethinking Competitive Advantage

When leaders fail, it is because their
business skills do not fit the challenges of
the job.

Book Summary - Rethinking Competitive Advantage

Leadership obsolescence is a reality.
Reviews in legacy companies are largely
focused on the rearview mirror.

Book Summary - Rethinking Competitive Advantage

Are you ready to build competitive advantage in a digital
age?
1. Are you driven to improve end to end customer experience?
2. What is your vision of a customer experience that can deliver a 10 x
growth?
3. What is the digital platform you need and how will it connect to the
ecosystem?
4. How will moneymaking work?
5. Who are your funders?
6. What kinds of people and leaders do you need to make it happen?
7. What is the feedback loop that allows you to continuously experiment,
learn and improve the existing end to end customer experience?
Book Summary - Rethinking Competitive Advantage