Goliath's Revenge

Chapter 3 Winner Takes Most

Yesterday’s home runs don’t win today’s games.

—Babe Ruth, baseball player

We’ve now moved on to what you might consider the “bad news” part of “I’ve got good news and bad news for you.” We did not even ask you which one you would prefer first. With your inventory of crown jewels that confer your incumbent’s advantage in hand, we feel that you are ready for the tough medicine. The hard reality is that we are heading into an era in which the spoils of innovation are not being distributed evenly, democratically, or (what some might consider) fairly.

The competitive moats that have protected companies, large and small, for decades are being drained month by month, quarter by quarter, and year by year. In parallel, some companies aspiring to Goliath’s Revenge are stealing a page from the digital attackers to put in place even stronger and more durable sources of competitive differentiation.

The End of Average

Back in high school we were taught that the most important concept in statistics was the normal distribution. It was a comfortable idea: that the random observations for a given variable tend to be tightly clustered around the average observation, with relatively few outliers below and above that average. As individuals, if we were of average intelligence then we were about as smart as the vast majority of the people we knew. We were “normal” and part of the group. While we might very well have aspired for more, ending up as average was not ...