CHAPTER 7

BEATING THE COMMODITIZATION CYCLE

Sharpening Differentiation with Less Risk

Rise-and-fall is a repeated pattern; the fleeting nature of competitive advantage stems from a tendency of all products to commoditize over time. Competitors are forever encroaching, replicating advances, and muting differentiation. As soon as customers are presented with acceptable alternatives, they tend to fixate on price and challenge profitability. The problem is aggravated as technology makes copying product features easier, faster, and cheaper. The only way to restore advantage is to evolve, but even innovation seems impotent when it subsidizes competitors’ R&D.

While there is no sustainable way to prevent this commoditization cycle, edge strategy is ...

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