Competitive-Advantage

The Abductive Advantage ← Series Home Key Takeaways Empathy-driven strategy beats data-driven: Netflix won by focusing on customer pain points that Blockbuster ignored. Late fees were the key: Blockbuster’s revenue model punished customers, while Netflix eliminated the pain. Design thinking for strategy: Abductive reasoning helps innovate beyond historical data. Customer-centricity: Understanding jobs-to-be-done leads to competitive advantage. Iterative approach: Rapid prototyping turns assumptions into market-ready strategy. The Strategy of Empathy: Why Netflix’s Obsession with Late Fees Wrote Blockbuster’s Obituary Once upon a time, the video rental market belonged indisputably to one giant: Blockbuster. In the 1990s, they understood the core mechanics of their business: customers rented movies, largely impulsively, through a vast network of stores, generating revenue primarily through rental fees. Their business model, developed using a traditional, deductive, and backward-looking analytical approach, seemed sound and viable for years. ...

The Abductive Advantage ← Series Home The first principles of Design Thinking for Strategy (DTS) established the primacy of customer empathy and iterative validation (Posts 01 and 02). We learned that traditional, deductive strategy often falters because it analyzes backward-looking data and fails to anticipate disruptive customer pain points, as illustrated by the spectacular demise of Blockbuster. The question then shifts from understanding the problem to structuring the solution. How does a firm translate deep customer insights and validated assumptions into a coherent, executable blueprint that touches every aspect of the organization—from its delivery channels to its financial streams? ...

The Abductive Advantage ← Series Home The Design Thinking for Strategy (DTS) methodology is structured around three layers: first, setting the Foundation Layer by defining the strategic focus (e.g., Customers, Offerings, Capabilities, or Financials); second, iteratively developing the Business Model Layer by designing and validating a Detailed Business Model (DBM) that is Desirable, Feasible, and Viable (Posts 01-04); and finally, deploying the Competition Layer. If the first two layers focus on answering the “what” and “how” of value creation from an absolute, firm-centric perspective, the Competition Layer forces a shift to a relative perspective. It asks a fundamental, existential question: How do we position our meticulously designed DBM in the competitive environment to ensure our advantage is not just temporary, but sustainable? ...