Page 31 - HBR's 10 Must Reads 20180 - The Definitive Management Ideas of the Year from Harvard Business Review

LAFLEY AND MARTIN

to consciously decide about routine purchases and offers providers
the lure of effortlessly recurring revenue.
The theory of cumulative advantage makes a lot of sense in what
Martin Reeves and his colleagues at BCG call a classical strategic
setting—one in which industry boundaries are clearly delineated,
the basis of competition is stable, the environment experiences no
major disruptions, and a strong competitive position, once created,
can be sustained. As BCG has shown, the candy company Mars has
enjoyed very long product life cycles: Snickers and M&M’s (intro-
duced in 1930 and 1941, respectively) are among the best-selling
candies in the world today. Procter & Gamble has a similarly strong
track record with Tide, Unilever with Dove, and PepsiCo with Tropi-
cana orange juice.
But for a growing number of companies, those conditions don’t
apply. Their industry boundaries aren’t clearly delineated—in fact,
they’re totally blurry. Just ask anyone in retail, entertainment, or
telecommunications. Their environments aren’t stable—companies
can be disrupted by entrants from below, as Clayton Christensen has
pointed out, but also by competitors using a different business model
or moving over from an adjacent industry. And long-standing com-
petitive strengths can be upended almost overnight by someone who
has digitized your physical business (hello, Encyclopaedia Britannica)
or turned your product into a service (see Zipcar, Airbnb, and Uber).
Apple and Google didn’t necessarily intend to disrupt point-and-shoot
cameras, stand-alone GPS devices, TV advertising, or the Weather
Channel, but they did so nonetheless. (See the sidebar “It Works Until
It Doesn’t: The Changing Nature of Competitive Advantage.”)

Strategic Inflection Points
For some time my argument has been that we need a new way of
thinking about strategy in environments where traditional barri-
ers to entry are eroding, or in which emerging technologies weaken
constraints. Andy Grove’s phrase inflection point captures this situa-
tion nicely. A strategic inflection point, he says, is “a time in the life
of a business when its fundamentals are about to change.” Inflec-

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