Strategy is stuck. If you dropped into a boardroom discussion or an executive team meeting, chances are you’d hear a lot of strategic thinking based on ideas and frameworks designed in, and for, a different era. The biggies — such as Michael Porter’s five forces analysis, BCG’s growth-share matrix for analyzing corporate portfolios, and Hamel and Prahalad’s core competence of the firm — are all tremendously important ideas. Many strategies today are still informed by them. But virtually all strategy frameworks and tools in use today are based on a single dominant idea: that the purpose of strategy is to achieve a sustainable competitive advantage. This idea is strategy’s most fundamental concept. It’s every company’s holy grail. And it’s no longer relevant for more and more companies.

     Rita Gunther McGrath, The End of Competitive Advantage

Consider the following case study of Fuji Photo Film Company and its inauspicious beginning in the 1930s when it was divested from Japan’s first cinematic film manufacturer because it was a chronic under-performer. Over the years, it improved its reputation and eventually began to take on giants such as Eastman Kodak in film and film processing. However, as the market for chemical-based photography changed little during the past hundred years, Fuji struggled to break into markets where Kodak was entrenched.

In the 1970s, Nelson Bunker Hunt and William Herbert Hunt made a play to corner the silver market as a hedge against inflation. They started to make investments in 1973, when silver was only $2 an ounce. By early 1979, the price had risen to $5 an ounce. By the time their plans were announced in 1979, they had amassed roughly half of the world’s supply. Their announcement caused the price of silver jumped to $50 per ounce! When the price collapsed in March of 1980, the Dow Jones Industrial average saw one of the sharpest declines in history.

The experience deeply troubled Minoru Ohnishi, the CEO of Fuji Photo Film, as silver was a key ingredient in film processing and another similar action could seriously damage any film processing business. Furthermore, he sensed a fundamental change might be coming. Four years later, Sony introduced the Mavica, one of the the first consumer digital cameras, and Mr. Ohnishi knew that film-less technology was possible. He immediately moved on the insight and invested heavily in building up expertise in digital technologies to prepare for the next round of competition in the photography business. By the end of 1999, the company had invested over 2 Billion in R&D and by 2003, it had nearly five thousand digital processing labs in chain stores in the US whereas Kodak had less than 100.

In addition, the company branched out and started to supply magnetic tape optics, hybrid electronic systems, and videotape (as the first non-US company to do so). Later still, the company branched into office automation and even biotechnology. Thirty years later, Kodak went bankrupt and Fujifilm, which obtains 45% of its revenue from document solutions and office printers, has significant electronics and healthcare operations.

The lesson is that simply managing well, developing quality products, and building up well-recognized brands is insufficient to remain on top in increasingly heated global competition. The stakes for Fujifilm, which risked undermining its existing advantages while betting on a highly uncertain future, were huge. But it was this approach, investing in new advantages and pulling resources from declining ones, that was more robust in the face of change. When competitive advantages don’t last, or last for a much shorter time, the strategy playbook needs to change.

And that’s what this book is really about, adapting to a changing competitive landscape in our modern, globally connected, world. In some industries, like logistics, products and services change slowly and competitive advantages can last for a long time. But in other industries, such as fashion and consumer electronics, products change quickly and competitive advantages last only until your competitor releases a new model with a feature your last product didn’t have. In these industries, where advantages are transient, a firm needs new rules and new models to determine where to compete, how to compete, and how to win. The old models don’t work, or at least don’t work on their own. In Part II, we’ll begin to discuss how an agile organization deals with the transient landscape.

And a consideration of market leading companies should put this into perspective. the doctor was reminded of this while reading a recent piece over on the HBR Blogs on “Apple Versus the Strategy Professors” where the author noted that the how of Apple’s fall (or continued rise) will hinge on strategy — because strategy has driven its success.

In the article, the author referenced Michael Porter, famous for his five force analysis, W. Chan Kim and Renee Mauborgne, and their blue oceans, Clayton Christensen, and his disruption model, Michael Raynor, and his successful growth strategies (co-devised with Clayton Christensen), Carl Shapiro and Hal Varian, and their information economy, and Amar Bhide, and his hustle. He then illustrated how Apple has drawn on the teachings of all of these professors (of the Harvard Business School, INSEAD, UC Berkeley, and Tufts) to achieve their transformation and market leadership of the last decade.

It does a great job of demonstrating how strategy is key to success, and, more importantly, how strategy has to be taken beyond the classroom to be effective. Apple didn’t subscribe to any one philosophy or methodology, it borrowed from the teachings of all of the greatest management and strategy thinkers of our time and incorporated those that made sense. But it didn’t do so randomly.

What Apple really did, and what you need to do if you want to ensure consumer success, is figure out what your customers need and give it to them before they have figured out what they need. It took note of what it could do, and then searched for products that would fulfill what people wanted in blue oceans. For example, going back to the iPod, it realized that consumers wanted a portable music device that was easy to use AND easy to manage.

At the time, the mp3 players available were few, used different, proprietary operating systems, and were difficult to use. Furthermore, even if you weren’t a computer geek, getting music on and off was a pain in the backside, and the whole experience — compared to popping a cassette into a Sony Walkman — was unpleasant. Apple realized that people needed an end-to-end solution — a great device, a great software tool for managing the device, and, equally important, an easy way to acquire legally licensed music in the appropriate format. Hence, it developed, and released, in order, iTunes for easy mp3 (and device) management, the iPod, and, finally, the iTunes Store that negated the need to get music from third parties. It was an end-to-end solution that even the most novice of computer users could master — and it was cool. Market dominance was just a matter of time.

While your customer might not be able to tell you what they want when you ask, they know it when the see it and, if you listen, can give you lots of hints. For example, Apple’s future customers were saying things like: “I want my music on the go.”, “This portable music player is cr@p., and How do I manage a library when all I can see is 1 song at a time.” “I can’t figure out how to get the music files I buy from Mperia onto my mp3 player.” All they had to do was listen closely, come up with an entirely new solution that met all the most common wants, and find a way to make it desirable (cool, sexy, fun, etc.). Yes, that’s a tall order — but not that tall when you think about it.

And when you figure out not only what your customers want, but what you are going to give them to make them want your product over the competition, that’s when your supply chain can really give you an edge by getting involved early in the NPD (new product design) effort and finding creative and innovative ways to keep costs down, quality up, and value-add at the right level for maximum reward.