How Innovation Really Works: Using the Trillion-Dollar R&D Fix to Drive Growth

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MISCONCEPTION 2: Uncontested Markets Are Good for Innovation

The first session in my Corporate Strategy class each year is an introduction explaining the distinction between it and Competitive Strategy. Competitive strategy answers the question how to compete in a market, whereas corporate strategy deals with which markets to compete in. To start the discussion, I ask students what type of markets Michael Porter would recommend. This gives them a chance to recite the Five Forces from his book Competitive Strategy: high entry barriers, no close substitutes, weak buyers, weak suppliers, and few rivals.¹ In short, you want an industry that insulates you from any price or cost pressure. This is essentially the prescription in the more recent book ...