The Future of Competitive Strategy

©2022 MIT. This excerpt is from The Future of Competitive Strategy by Mohan Subramaniam, published by The MIT Press.

Introduction

“ The world’s most valuable resource is no longer oil but data, ” proclaimed the May 6, 2017, lead article of the Economist . 1 The article drew atten- tion to a handful of digital titans that have cornered most of the value from this resource, such as Amazon, Google, Apple, and Facebook. These digital titans, which dominate our economy with their digital platform–driven business models, have indeed displaced such long-­ standing industrial titans as Exxon, General Motors, and Boeing from their erstwhile perch of being among the most valuable companies in the world. This upending of the business value order should make many CEOs of legacy firms—anchored on value chain–driven business mod- els, and with rich histories in the industrial world—ask, Why can’t we benefit from data’s newfound potential? What should we do to unlock the value of data? A vast majority of legacy firms have yet to grasp the full scope of the value that data can unlock for their businesses. A 2019 McKinsey Global Institute report, for instance, highlights that modern digital technologies can help firms add $13 trillion to global GDP by 2030. Yet it also finds that “the gap to the digital frontier remains large across industries.” 2 The institute’s analysis suggests that most firms have yet to establish strategies to benefit from the new opportunities that lie ahead. For decades, firms derived their competitive advantage from how they produced and sold their products 3 within their industries. They now additionally need to draw competitive advantage from data—data their products can generate with the help of modern technologies, data they can harness in the digital ecosystems evolving around them.