Competitive analysis is dead. I have believed this to be true for quite a while, but my very last doubts disappeared when I listened to Zhang Ruimin, chairman and CEO of Haier, give a talk at IMD business school. In his presentation, Zhang stressed that the failure of a company typically comes not from its competitors but from itself. He went on to outline the organizational culture that Haier has put in place to resist such failure by challenging itself—all the time.

It is no coincidence that many of today’s leading companies, including Haier, share two characteristics. First, they have built value propositions that customers love, combined with business models that offer superior returns. Second, they have demonstrated the ability ...

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