Tilt: Shifting Your Strategy from Products to Customers

The situation can also change for firms that rely on innovation. At these firms, the share of revenue accounted for by products launched in the preceding three to five years is often worn as a badge of honor.

But since no advantage lasts forever, firms invest in innovation, which is a way to find or make new forms of customer value that ideally lead to sustainable competitive advantage.

To achieve its goals, a firm adopts a strategy that spells out how the firm will create value for customers and outdo competitors to achieve its goals.

My follow-up question aims to uncover what managers see as their particular competitive advantage, not just how they see their business—and it does one other thing: it reveals a puzzling gap between their product obsession and their customers’ behavior. So why do they think their customers buy from them rather than from their competitors? The responses consist of reasons such as “They trust us,” “Our reliability of supply and delivery,” “Our service,” “We are knowledgeable about their business,” “Our experience with other such customers,” “We make it seamless,” “They see us as unique,” “We’re prominent in their consideration set,” “Our reputation,” and “Our brand.” Rarely is a better product mentioned, and seldom is a lower price seen as the reason customers buy from the company

Companies have product divisions and product managers, and profitability is generally measured by product (not by customer).