Porter (1990)

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Innovation and competitive advantage

New information, according to Porter more often comes from openly sharing information with others and looking in the right places without any assumptions, which narrow the mind and blind it to seeing new things.

“Innovators are often outsiders from a different industry or different country”.

Companies which innovate tend to have worked extremely hard and persevered even under criticism or after failure. “Innovation usually requires pressure, necessity, and even adversity; the fear of loss often proves more powerful than the hope of gain”.

Once innovation has taken place, it needs to be improved upon, as any new product or process can then be imitated and then succeeded by others.

There are two more prerequisites for sustaining a competitive advantage:

1. A firm must become global and sell its products worldwide under its own brand name. It can also take control of the manufacturing, production, and marketing processes in other countries.
2. Once a competitive advantage is established, the company must strive to make it obsolete, or others will do it for them.

Change is difficult in any company as structures and procedures encourage the opposite. For example, training teaches people to do things one way and procedures become institutionalised and ingrained within the workings of the company. This is a form of path dependency “the existing strategy takes on an aura of invincibility and becomes rooted in company culture”.

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