Penny Pennington, managing partner of the investment firm Edward Jones, pondered the view from her corner office overlooking downtown St. Louis. Despite another year of exceptional performance – industry-leading profitability, the largest advisor network in North America, and nearly $1.5 trillion in assets under management – she knew substantial changes were needed to stay competitive.
Fintech disruptors like Robinhood were using technology to offer new business models. Demographic and regulatory shifts diminished the perceived value of Edward Jones’ traditional services. Passive investing through index funds increasingly commoditised portfolio management. Pennington realised that continuous adaptation and innovation were crucial, even amid success.
This challenge of sustaining growth by aligning strategy with a rapidly changing business landscape confronts both established companies and younger startups. Once dominant corporations can suddenly struggle against nimble competitors introducing new offerings. Meanwhile, rising startups fail to convert buzz into enduring profits. The nature of capitalism fuels a perpetual cycle of creative destruction.
Now more than ever, leading a thriving company requires chief executives to adopt a comprehensive approach towards strategy, one that encompasses how they create value, harness it through competitive positioning, and build capabilities to sustain an edge. However, this entails balancing diverse considerations.
The Value Creation Dilemma
“We focus so much on beating competitors that we lose sight of the bigger picture – how to develop radically better solutions for customers,” Pennington remarked to her strategy chief. “Our obsession with surpassing rivals through marginal improvements often hinders real innovation.”
Many established companies have aligned their activities and culture so tightly to current market positions that they struggle to explore new spaces. Yet the most valuable firms like Amazon, born from identifying previously unrecognized customer needs, rarely disrupted competitors directly. In fact, when they launched, these now-giants had few existing rivals.
On the other hand, fast-growing startups chasing the latest trends often spread themselves too thin without building robust capabilities. For both new and mature companies, the central challenge lies in creating and delivering substantial value through business models aligned with market realities.
Consider the video-on-demand industry. The core need – personalised entertainment delivery – remained stable, but technology and preferences evolved. Netflix’s initial DVD-by-mail model was superseded by convenience-focused streaming platforms with extensive catalogues and spontaneous access.
Leaders require a methodical approach to determining which new business models can generate significant value. This involves analysing the unique consumer needs fulfilled, how technology and resources will be configured to optimise production and delivery, the importance of market entry timing, and how revenues will be generated from the value created.
The Value Capture Dilemma
“Our value proposition and competitive positioning seem strong for now. But how do we ensure future profitability as industries and consumer behaviour transform rapidly?” Pennington asked her strategy team.
“New technologies definitely create openings,” her innovation head responded. “However, attractive opportunities also draw more competition. We need to consider industry dynamics and our competitive edge to sustain returns on investment.”
Take electric vehicles (EVs). Tesla’s meteoric rise fueled massive investment. However, the EV market with lowered barriers to entry increasingly resembles the traditional auto industry. Luxury carmakers like BMW and Mercedes are launching electric models that undermine Tesla’s brand edge. Meanwhile, Tesla lags behind giants like Toyota and Volkswagen in cumulative production experience and scale.
For enduring success, firms must establish defendable positions within conducive industry structures. Leaders need to deliberately assess market attractiveness and clarify sources of competitive advantage difficult for rivals to replicate, targeting specific customer needs.
Capabilities Dilemma
“We’ve discussed enhancing value creation through new business models and maintaining competitive positioning,” Pennington addressed her team. “However, effectively implementing strategic changes to ingrain sustainability remains a major obstacle.”
Many companies fail here by rigidly adhering to formal top-down strategy planning, which rarely transforms embedded behaviours and systems. Conversely, reckless experimentation completely disconnected from core strengths risks diluting the organisation.
The solution lies in promoting disciplined entrepreneurial initiatives aligned to strategic boundaries. This fosters incremental innovations across functions to achieve fluid adaptation. Disney’s huge success under CEO Bob Iger arose from focused investments to leverage quality brands through technology and global expansion.
At Edward Jones, client needs and sources of differentiation were clear – personalised financial advice and widespread community presence. Rather than reactively altering these, Pennington defined broader themes for proactive growth. These involved rejuvenating the advisor workforce, leveraging technology to augment services, and customising solutions based on long-term client goals rather than transactions.
By concentrating resources around these stable initiatives for adapting operations without overhauling competitive positioning, Edward Jones smooths incremental innovation across a decentralised organisation.
While maintaining focus, companies also need strategic peripheral vision to sense paradigm shifts. With disruptive forces accelerating, adapting business models and capabilities for delivering superior future value becomes imperative.
By getting the full strategic picture, leaders position their organisations not just to beat competitors but to reshape entire industries.
Penny Pennington, managing partner at the investment firm Edward Jones, gazed thoughtfully through her corner office windows overlooking the St. Louis skyline. Despite another year of outstanding performance – maintaining industry-topping profitability margins, the largest financial advisor network across North America, and approaching $1.5 trillion in total client assets under management – she sensed profound changes were needed to stay competitive in a landscape marked by technological disruptions and shifting preferences.
New fintech players like Robinhood were leveraging digital capabilities to introduce creative business models and chip away at the margins of traditional finance. Demographic shifts and evolving regulations threatened the perception of value regarding Edward Jones’ conventional in-person consultative services. The accelerating rise of passive investing through indexed and algorithm-driven funds had started to commoditise the portfolio management craft.
Pennington realised that for continued prosperity, even amid current successes, the firm needed to embed innovation, experimentation and continuous adaptation into its organisational DNA. The age-old maxim rang truer than ever – in business and nature alike, either evolve or risk extinction.
This universal challenge of sustaining strategic momentum and growth underscores how leaders across established corporations and younger startups need to rethink traditional models in light of contemporary realities. Once dominant companies across sectors can suddenly find themselves struggling to keep pace as more agile competitors and upstarts introduce disruptive new offerings that redefine consumer expectations.
Meanwhile, the most buzzed-about rising startups chronically struggle to convert initial attention into enduring brand recognition and profits. Icarus-like beginnings filled with lofty promises often crash down spectacularly. The fundamental nature of free market capitalism seems to mandate this endless cycle of creative destruction across industries.
Now more than ever, captaining a prosperous enterprise that fulfils human needs through sustainable value creation requires chief executives to adopt a simultaneously broad and detailed approach towards crafting strategy. Specifically, leaders need to develop an integrated perspective that seamlessly connects how their organisations invent or discover underlying human demands, configure appropriate resources to fulfil those needs in distinctly better ways, leverage useful technologies, and orchestrate ongoing adaptations to changing external realities – thereby perpetually aligning internal capabilities with evolving customer expectations.
However, putting such a comprehensive strategic approach into consistent practice entails maintaining harmony across several domains rife with dilemmas.
The Value Creation Dilemma – Conflicts in Business Model Innovation
“In chasing short-term wins against familiar opponents, most leaders lose sight of the bigger picture,” Pennington remarked pensively to her strategy advisory chief one morning. “Our obsession with surpassing rivals through incremental improvements often hinders more transformational innovation.”
She continued, “We need to clarify why customers truly hire us by re-examining how we create significance and meaning in their lives. And we should explore fresh perspectives from other industries about how to elevate our value delivery.”
Legacy companies across sectors often find their activities and culture tightly intertwined with current market positions and traditional approaches, severely constraining exploration of uncharted waters that could reveal radically better ways to serve customers. Annual strategy planning cycles that focus excessively on outperforming close competitors reinforce this restricted worldview. Consequently, most internal dialogue inadvertently devolves into variations of “How can we do the same thing better or cheaper next year?” rather than “How might we profoundly amplify value for our most important customers?”
In contrast, many celebrated contemporary enterprises built substantial value by initially spotting underlying human motivations hiding in plain sight that other industry incumbents had overlooked or considered inconsequential. Rather than disrupting existing players directly, these now giant corporations invented entirely fresh contexts focused on fulfilling previously unrecognised customer needs. When Amazon initiated online bookselling, no predigital era bookstores had meaningful e-commerce operations. When Apple launched the iPhone, the key competition was not mobile phones but rather user indifference to limited handsets. When Airbnb started, legacy hospitality businesses dismissed communal short-term housing rentals as an insignificant niche.
Established taxi fleets ignored the looming rise of Uber and Lyft.
The central challenge for both market-defining corporate titans who have lost touch with transformational thinking and promising startups chasing temporary trends lies in conceiving and implementing novel solutions optimised to create and deliver substantial new value through reinvented business models suited for evolving modern realities.
Consider the emblematic rise of video-on-demand (VOD) services like Netflix and the parallel declines of once equally prominent DVD rental chains like Blockbuster as well as, more recently, Hollywood film studios resisting digital distribution channels. The underlying core human need that this entire ecosystem synergistically fulfils – convenient access to personalised entertainment experiences – has remained fundamentally stable for decades. However, rapid advancements in online streaming technologies coupled with shifts in mainstream consumer preferences have elegantly disrupted both monetary and non-monetary costs as well as fulfilment speeds across traditional formats of theatrical releases, broadcast television, physical video rentals, and cable channels.
Given these changing market forces and viewing behaviour catalysts, nimble players willing to iterate on nascent models like subscription-based online portals offering instant access to expanding catalogues of on-demand content were best positioned to capitalise on this window of opportunity for value creation. Meanwhile, executives anchored in channel silos and comfortable industry models were left playing catch-up on the wrong side of sliding competitive slopes.
Business leaders striving for transformational growth rather than simply incremental improvements need structured approaches for accurately determining which emerging business models and digitally reinforced value delivery platforms demonstrate serious potential to generate and scale substantial new value in light of target audience needs. This evaluation requires precise identification of the unique combinations of functional, emotional and even aspirational jobs to be done that new offerings credibly fulfil for defined consumer groups. Furthermore, adequately appraising business model attractiveness mandates meticulous analysis of how configurable elements of now ubiquitous enterprise technology stacks including cloud computing, 5G-powered internet networks, data-driven omnichannel personalisation engines, robotic process automation platforms and even cryptocurrency ledgers can optimally synthesise resources to boost production efficiency and accentuate delivery effectiveness in targeted use cases. Finally, meticulously modelling monetisation formats, forecasting viable pricing ranges correlated to perceived value expansion, evaluating go-to-market entry timing options and aggressively stress testing conjectures across wider opportunity spaces anchor business model validation.
The Value Capture Dilemma – Conflicts in Competitive Positioning Strategies
“Our value proposition seems sharply defined and positioning starkly distinguished currently, but the window for a competitive edge is shrinking rapidly,” Pennington observed to her leadership council regarding Edward Jones’ in-person financial advisory services contrasted against emerging fintech rivals. “Industry boundaries are blurring as digital capabilities commoditise key pillars of our portfolio management craft. We need to re-examine the bases for enduring differentiation and deliberately strengthen barriers against imitation.”
She continued, “Rising startups enchant investors with aspirational narratives about revolutionising entire categories. However, the allure of breakthrough innovation also intensifies competition. We should assess contestable markets through lenses like Porter’s Five Forces to inform capital allocation and strategic partnerships.”
Consider electric vehicles (EVs) which represent potential peak oil demand scenario manifestations as battery costs decrease, charging infrastructure expands and governments incentivise reduced emissions mobility. The meteoric rise of Tesla as an aspirational brand anchored in Silicon Valley-styled ingenuity fueled massive private and public investment in both pure-play EV startups and traditional automakers’ electric portfolio ramp-ups.
However, early indications suggest the unfolding EV segment with relatively low barriers to entry will soon resemble current vehicular industry structures rather than escape embedded competitive dynamics that erode profit margins across vehicle manufacturing value chains. Established luxury carmakers like BMW and Mercedes-Benz are directly challenging Tesla’s positional stronghold by launching intelligently crafted electric sedan and SUV models that rival technical specifications at significantly lower price points. Meanwhile, legendary giants like Toyota and Volkswagen leverage decades of cumulative production expertise and immense economies of scale across global supply chains to competitive effect.
For securing leadership seats at the elite modern winners’ table characterised by enduring enterprise prosperity and constant innovation velocity, savvy executives need to clearly establish defendable positions within industry structures marked by conducive competitive dynamics rather than chasing temporary first-mover advantages that advantage-agnostic capital rushes toward in reflexive exuberance.
This requires precisely diagnosing the current state and probable evolution of a targeted sector to pinpoint sources of potential differentiation that could plausibly manifest into sustainable competitive advantage – especially embedded competencies or strategic assets difficult for opportunistic new entrants to reliably replicate at scale over reasonable investment timelines.
Furthermore, attuning enterprise positioning and value proposition communications to the uniquely nuanced needs of clearly defined customer segments opens additional separation. For instance, in financial services, wealth management organisations might differentiate from universal banks by specialising in highly customised offerings like legacy planning philanthropy structuring and business valuation consulting demanded by ultra-high net worth families and small business owners rather than chasing technically savvy millennial day traders obsessed with microtargeted speculative bets.
The Capabilities Dilemma – Conflicts in Change Management Processes
“We have opened exploratory debates on reimagining our core and continuously tweaking the strategic envelope,” Pennington addressed her senior leadership council. “However, effectively implementing changes that ingrain sustainability remains a major organisational challenge given legacy inertia. How do we nurture modernisation while retaining cultural strengths?”
A common failure mode is attempting monumental organisation-wide changes through formal, rigid strategy planning cycles administered by isolated corporate strategy groups. But visionary manifestos crafted by detached teams rarely cascade into grassroots operational metabolisms or transform deeply embedded legacy behaviours and systems. Wholesale revolution from above often breeds resentment below.
Conversely, distributed experimentation completely divorced from the gravitational centre of institutional identity risks strategic dissolution through a thousand disconnected cuts. Empowering isolated teams to each chase separate shiny objects according to ephemeral personal whims can quickly dilute strategic coherence and fragment limited resources.
The solution pathway that sustainably balances forces of change and continuity lies in promoting selected entrepreneurial initiatives aligned to clearly communicated overarching priorities rather than either completely decentralised or wholly top-down approaches. This facilitates measurable learning through phased trials combined with incremental innovations across functions, groups and geographies to nimbly adapt at scale rather than reactively lurch between extremes.
Consider the example of Disney’s sustained market leadership across entertainment sectors under former CEO Bob Iger arising largely from judicious investments to sequentially acquire and responsibly integrate premier content brands like Pixar, Marvel and LucasFilm with proficient leveraging of emerging technologies like computer animation and subscription streaming video along measured global geographic expansion. Carefully timed moves anticipated changing consumer preferences but respected fans’ emotional connections to beloved characters. This approach allowed Disney to fluidly evolve formidable capabilities for repeatedly delighting demanding target audiences worldwide.
At Edward Jones, maintaining durable cultural adherence to core tenets of member partnership equity ownership, entrepreneurial community presence through embedded neighbourhood branch offices and loyal client relationships nurtured by personalised financial advice remains sacrosanct. However, previously unexamined assumptions now merit open-minded reassessment given technological upheaval.
Rather than reactively alter proven differentiators, Pennington defined three broad themes for disciplined exploration to kickstart proactive deliberation and data-driven analysis regarding prudent modernisation. First, rejuvenating the financial advisor workforce composition to gain badly needed diversity across gender, ethnic and generational dimensions while accelerating specialist upskilling. Second, thoughtfully blending digital tools like secure messaging, e-signature workflows and interactive personalised video to augment in-person consultative services. Third, emphasising customised holistic solutions for client lifecycle needs from college savings through retirement cash flow management rather than maximising transaction volumes or portfolio returns as ends themselves.
Concentrated resources allocated toward advancing these thematic areas smoothed incremental innovation across Edward Jones’ deliberately decentralised organisational fabric. Leadership also formulated stage-gated decision protocols for integrating tested prototypes into regional operations without disrupting regional customs.
The key insight for both emerging startups shooting for unicorn valuations and established enterprises seeking to sustain their heavyweight status lies in recognising that realising enduring value beyond temporary hype cycles demands careful integration across all core dimensions of contemporary strategic management.
Lessons to take away
Given incessantly evolving technologies continuously elevating prevailing customer expectations across sectors, sustaining strategic momentum and pushing enterprise frontiers in perpetually faster-moving markets requires leaders to formulate policies and direct actions through integrated frameworks rather than relying on piecemeal departmental plans or fragmented short-term tweaks.
Specifically, resilient companies thoughtfully balance business model innovations that entail reexamining paradigms about value creation for priority customer segments; deliberate competitive positioning strategies clarifying sustainable differentiation; and consistent nurturing of differentiating organisational capabilities secured by reinforcing company cultures. Moreover, enabling environments where controlled experimentation and managed entrepreneurial risk-taking can thrive allows organisations to smoothly sense and respond to external change.
“Too often, harried leaders view crafting strategy as a one-time event rather than appreciating how sustaining market leadership demands embracing strategy as a continuous learning cycle,” Pennington concluded while reviewing performance metrics from the year’s strategic initiatives. “By broadening their perspective, seasoned executives as well as early-stage founders can unlock transformational as well as incremental growth arcs for their enterprises.”
While maintaining focus, successful companies also cultivate what might be called strategic peripheral vision by constantly scanning relevant foregrounds and horizons for early signals of coming macro paradigm shifts within or around their sectors, even if seemingly unlikely at the fringe. Because market-defining disruptive forces and customer adoption trends accelerate faster across maturing digital infrastructures, business models require continual renovation while innovation capabilities warrant nonstop nourishment merely to retain parity, let alone push new frontiers that redefine ecosystems.
With this comprehensively integrated strategic purview that connects future value delivery for target audience groups with competitive differentiation dynamics across configurable technology stacks and within constellations of often symbiotic organisational competencies, prescient leaders position their enterprises not merely to reactively beat competitors at their own diminishing games but rather to proactively reshape entire industries through repeatedly redesigned value constellations aligned with evolving market realities and human needs.
Moe Nawaz
Millionaires Mentor & Strategic Advisor to FTSE 100 Leaders
Moe Nawaz
Duke Brothers Ltd
30th Floor
122 Leadenhall St,
London EC3V 4AB
