Every industry has its front-runners. But what exactly do these companies do to reach their position and hold it? This article takes Google and Walt Disney an examples to find out which principles they follow – and of interest for start-ups.

Key criteria

Keeping competitive advantages on the long run is one of the greatest challenges for top companies. Competitive advantages must meet the following criteria:

• They must be perceived by the customer.
• They must be important to the customer.
• They must be permanent and may not be easy to imitate.

Companies must meet these criteria simultaneously in order to have a sustainable competitive advantage. Special features of a product that cannot be perceived by the customers or that are perceived as unimportant as well as lowering the price, which leads to reduced profits, are no competitive advantages.

Beyond product quality

Top companies often perceive the quality of their product as their greatest competitive advantage. This sounds obvious, if one assumes that all top companies demonstrate high quality standards. However, one should limit the competitive advantages not only to the products, but also include other business-related aspects such sophisticated internal processes, staff qualifications and values of the company.

Walt Disney – core identity and further development

The Walt Disney Company has existed for almost 100 years and is still one of the largest corporations in the world. The company stuck to the simple rule of preserving the core identity and promoting further development. The core contains central values and goals of the company, most of which have been defined in the company’s early days.

It’s not necessarily about certain values, but about having fixed values at all. Development here means permanently changing corporate culture and ways of working as well as adjustments of specific objectives and strategies in face of the ever-changing market environment.

Despite the almost century-long ongoing strategic development of the Disney brand, in the year 2014 the company still holds on to its central values and objectives from its early days: a passion for creative imagination, attention to detail and especially the core objective to entertain people joyfully.

Google X – moving ahead with innovation

The innovation and willingness of Google to invest in new technologies is at once stunning and a sign of urgency for finding new business models and competitive advantages. By way of the so-called Google X projects from their own future workshop Google hopes for further breakthroughs – like they once had with their search engine.

Google X projects such as self-propelled cars make Google less dependent on advertising revenue in the web search context. Other projects push the development of the Internet of Things forward (also called IoT or Web 3.0), in which not only people, but also household items and larger machines communicate with each other.

Innovation work helps to strengthen the core business. Findings from the development and data from the operation of Google Now (a personal digital assistant for Android and iOS) or Google Glass (data glasses for looking into "enhanced reality") help to improve the search engine algorithm.

What start-ups can learn from Walt Disney & Google

Start-ups generally work differently than long-established companies in the market. Their organizational structure is more flexible, they have less hierarchies and allow for more direct ommunication. Its owners are more courageous than shareholders of corporations. But the key resources of capital, experience and time are scarce in start-ups. Despite these differences start-ups can learn from established companies in terms of how to achieve a leading position and keeping it: never keep still.

The examples Walt Disney and Google demonstrate impressively that large corporations must be able to adapt permanently and in shorter time intervals to constantly changing environmental conditions to permanently remain competitive decade after decade.

New markets, new opportunities

Google’s future products and services have the potential of transforming entire markets fundamentally or even giving rise to new ones. These new markets offer new space for other innovative products and services. Innovations often set in motion a chain reaction. Innovative corporations thus create a lot of new ground on which founding ideas of start-ups can thrive.

Never sleep

The examples Kodak and Nokia show that capital is not the ultimate resource. Once innovative and financially sound companies later failed big time. Kodak, for example, has slept through the emerging of digital photography, while Nokia was not able to develop an innovative smartphone. Meanwhile Apple made the iPhone. The consequences are well known: in the huge market of digital photography Kodak plays no role at all. And Nokia now belongs to Microsoft.

The systematic development of innovative products and services with great customer benefits (including compliance with the three above-mentioned key criteria) is therefore established companies and start-ups more than a matter of survival – it is a key to success. Only through innovation competitive advantages can be achieved, maintained or expanded.

Young, small and agile

On the way to the top position start-ups have an advantage over large enterprises, because the former are less hierarchically organized, much more flexible and more courageous than the latter. Start-ups should make use of this advantage over established companies to make up for much smaller resources.

[December 2014]