The Great Repeatable Business Model
The sharper a company's differentiation, the greater its competitive advantage. The sharper your differentiation, the greater your advantage. Tetra Pak a company that in 2010 sold more than 150 billion packages in 170 markets around the world. Tetra Pak’s carton packages extend the shelf life of products and eliminate the need for refrigeration. The shapes they take—squares and pyramids. These three features set Tetra Pak well apart from its competitors and allow it to produce a package that more than compensates for its cost. In studying companies that sustained a high level of performance over many years, the authors, both partners at Bain, have found that more than 80% of them had a well-defined and easily understood differentiation at the center of strategy. But differentiation can wear with age: The growth it generates creates complexity, and complex companies tend to forget what they're good at. Often they respond by trying to reimaging their entire business models quickly and dramatically. That's rarely the answer, the authors write. Really successful companies relentlessly build on their fundamental differentiation, going from strength to strength. They learn to deliver it to the front line, creating an organization that lives and breathes its strategic advantages day in and day out. They learn to sustain it through constant adaptation to changes in the market. And they learn to resist the siren song of today's hot market better than their less-focused competitors do. The result is a simple, repeatable business model that a company can apply to new products and markets over and over again to generate sustained growth.