The End of Competitive Advantage

onic problem of new businesses being managed like more certain ones. Brambles also set up a measurement system to see how it is doing on implementation. As Ron says, “They track everything.” The company has what it calls an “innovation dashboard,” which tracks the following:
Ideas submitted per month
Sessions (workshops) held and on which topics
Employees trained
Ideas by category
Status of the innovation fund in terms of total revenue opportunity
Revenue opportunity by category
Funds spent and returned to the innovation fund
Opportunities received, opportunities funded, and opportunities launched

So the company shifted from simply saying there was a fund to being more explicit about what the company was looking to do. It articulated three broad areas that would define what was in scope to be funded by the innovation fund. The first would include projects that were potential revenue generators. Then there were value generators, which were defined as projects that increase margins, help to maintain premiums, reduce costs, or just create greater marketplace differentiation. A final category was insight generators, the front-end piece that helps the company understand new and emerging customer needs

The third category of investments is in options. Options are generally small investments you make today that buy you the right, but not the obligation, to make a more substantive investment in the future. Pilots, prototypes, early-stage experiments, living lab designs, and so on are all options

Investments in new platforms, which generally have somewhat more uncertainty to them but are not bold leaps off into the wildly unknown, can be thought of as your next core business

FIGURE 5-1
An opportunity portfolio

Core enhancements are projects and initiatives that help today’s business better serve today’s customers

So, if you want to get it right, innovation needs to be continuous, ongoing, and systematic

In a typical firm, resources are controlled by powerful existing businesses, and the powerful people are those who dominated the last-generation competitive advantage. That means that new opportunities are often force-fit into an existing structure, if they survive at all.

Increasing Commoditization
A second clear warning sign is when you start to hear customers saying that new alternatives are increasingly acceptable to them. Or worse, that cheaper alternatives are just as good as what you have to offer and that there is little differentiation between them

Evidence that a business or business model is going into decline is usually quite clear long before it creates a corporate crisis