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Don’t just lead your industry – dominate it


Competitive advantage is shifting, say Thomas N. Hubbard, Paul Leinwand and Cesare Mainardi, writing for Strategy+Business. The new industry leaders are leaner and more focused than their predecessors. They are the “supercompetitors”.

These companies have the power to change entire industries. They excel at delivering a small number of relevant, scalable capabilities. They have developed “mutually reinforcing systems”, which combine the processes, skills and organisation necessary to deliver their outcomes consistently and to an ever larger customer base.

Amazon is one such supercompetitor. The company formulated its distinguishing capabilities – distinctive retail interface, great IT and supply chain capabilities and automated, tailored recommendations – when it began life as an internet bookseller. Amazon has now successfully scaled up its capabilities system across many product categories including homeware, clothing and cloud-based services.

Other supercompetitors include IKEA, with its “globally scalable business model for affordable home goods”, Starbucks, Danaher, Enterprise Rent-A-Car, McDonald’s, Qualcomm and Toyota.


Yesterday’s market leaders were broad conglomerates whose competitive advantage was based around assets, product portfolios and economies of scale.

Today’s winners have a more focused strategy, based on a single value proposition and a steady stream of capabilities. But these capabilities take time to build and are both complex and expensive, warn the authors. This is why most supercompetitors can only afford to focus energy and investment on a few (between three and six) capabilities.

Because supercompetitors have to invest heavily in their distinctive capabilities, they are incentivised to scale up across several categories. Many grow by acquiring or merging with services and products that will prosper with them, choosing companies whose capabilities match their own. These highly focused supercompetitors in turn attract the best employees and the best suppliers.

All of these factors contribute to a “gravitational pull” towards the supercompetitors and eventually the industry itself aligns around them.


The consumer packaged goods (CPG) industry demonstrates this increasing migration from broad conglomerate to more focused capabilities-driven business.

In the early 90s, the CPG industry was carved up between several large companies – Unilever, Procter & Gamble, Kraft, Colgate, Nestlé, and Sara Lee – each with broad and diverse portfolios combining food, drinks and personal care goods.

The sheer size and scale of these companies gave them huge advantages, including bargaining power, lower-cost back-office functions and the funds necessary to make effective use of television advertising.

Over time, these large companies started to lose their advantage, as the internet allowed new companies with more specialised capabilities better access to markets. Some of the big CPG players began rethinking their own strategies. Rather than maintaining broad portfolios requiring too many diverse capabilities, they doubled down on areas in which they were strongest.

Sara Lee underwent capabilities-driven restructuring in the 2000s, divesting its coffee business; Kraft split its business in two; Unilever dropped healthcare and chemicals; and Proctor & Gamble sold off its food and beverage companies.

A study of the top 15 CPG companies between 1997 and 2013 shows a reduction in scope from an average of 4.3 to 3.1 segments per company, and a corresponding increase in revenue per segment from $8.9bn to $11.2bn.

The authors comment: “As these companies focused on capabilities, they grew stronger and more dominant across a smaller number of categories. They have become the supercompetitors of the supermarket shelf.”


For an industry to support the emergence of a supercompetitor, it requires two qualities:

1) Scalability of critical capabilities. The supercompetitor’s capabilities system must be scalable across an expanding number of products, services and customers over which it can spread its extensive fixed costs (such as IT, the supply chain and talent management).

The capabilities of players in the lower-end restaurant industry are highly scalable. Hence this industry lends itself to supercompetitor chains like McDonald’s. The premium restaurant industry, however, will not support the emergence of supercompetitors because its inherent distinctive capabilities – highest quality ingredients, specialised menus, personalised service – are not scalable to this degree.

2) Differentiation relevance. There must be a relevant audience that cares enough about the distinguishing capabilities a company is delivering.

Some industries – including the paper towels and toothpaste categories – have reached a threshold of “good enough value and usefulness”, so that consumers show little, if any, brand loyalty, explain the authors.


Conducting a “meaningful inquiry into the supercompetitor potential of your industry” can allow you to rethink your company’s strategy in a more transformative way.

To do this, the authors suggest considering these four factors:

1) Is your industry supercompetitor-ready? To determine this, ask yourself the following questions:

Are the leaders in your industry different from those of ten years ago? Are new companies beating the old players? Are the conglomerates in your industry breaking up?

Is the success of your industry leaders due to their capabilities, as opposed to assets or product portfolios? Are the distinctive capabilities of these companies scalable? Is there a high level of differentiation relevance?

If you answered “yes” to most of these questions then your industry already supports the emergence of supercompetitors, or soon will.

If you answered mostly “no”, take the opportunity to ask yourself what opportunities everyone in your industry is missing, and how you can best test those opportunities.

2) What will your new supercompetitors look like? Look to the future and ask who your industry supercompetitors might be and what capabilities might they offer.

Here it is useful to think “in terms of kinds of rivals, or archetypes”, advise the authors. For example, if your industry is air travel, supercompetitors might include the low-cost provider, the premium provider and the global aggregator.

List three to five archetypes that best fit your industry. Next, look “under the hood” at each supercompetitor archetype to determine their critical capabilities. Ask what these companies would need to do to excel. Are their capabilities scalable and would they be relevant to enough customers?

3) Where does your company fit in? Determine which supercompetitor archetype best fits your company based on your current and prospective capabilities.

“Set aside the other constraints of current reality,” advise the authors. Start from the image of your company as supercompetitor and work backwards.

Ask yourself what capabilities you would need to develop. Also determine who will be trying to deliver value in the same way as you.

“These are the ones you have to beat,” explain the authors, “because when supercompetitors take ownership of a specific area of value creation within their industry, they make it nearly impossible for others to compete in the same way.”

4) How will you get there? Now, create your road map. Decide which capabilities you need to invest in. Work out how you can scale them up and how you can create a “mutually reinforcing system that no competitor can beat”.

Think about which products or businesses you might acquire or divest and how you could beat any rivals in your chosen area of value creation. This type of enquiry can take a few weeks, advise the authors. But it will show you where best to focus your resources and attention.

Building your strategy around strong capabilities will give your company competitive advantage and help shape the future of your industry. The authors conclude: “The aspiration to become a supercompetitor changes the heart of a company’s identity, both today and in the future.”

Source Article: The New Supercompetitors
Author(s): Thomas N. Hubbard, Paul Leinwand and Cesare Mainardi
Publisher: Strategy+Business