Think of innovation as a bundle of vectors. If a company commits deeply enough to any one vector, it will eventually create a “turning-back” point for everyone else in its competitive set. For example, Microsoft’s relentless commitment to incremental product innovation drove others out of innumerable software categories—even where the competitors themselves had initiated them. Dell’s commitment to process innovation in the PC category—invented by IBM and dominated by Compaq—eventually forced those rivals to flee the space. Nike’s marketing innovations have yielded sustainable advantage in sporting goods, as Porsche’s design innovations have in sports cars, SAP’s integration innovation in business software, General Electric’s management innovation in diversified businesses, and Oracle’s platform innovation in systems software.
All these companies have an innovation strategy in which they spend extra dollars toward a single, defining vector. Skewing every process toward their innovation of choice, they hire specialists, re-engineer the innovation to enhance it, and make it their biggest bet. Over time, they develop enough critical mass to force the other players to withdraw and pursue alternative vectors.
The problem is, most companies don’t adopt a true innovation strategy, but commit to a host of vectors in a futile attempt to become the best at everything simultaneously. Lacking differentiation, they’re forced to compete more on price than they can afford to.
Choose A Vector, Any Vector