Outthink the Competition

Where factories, distribution channels, and marketing were once concentrated in a few places by a few companies, all of these are now fragmenting into distributed constellations

Coordination costs are falling, and middlemen need to watch out

Like good generals, jazz musicians, and skilled comedians, outthinkers know the key is timing

Niche brands pop up and, at very little cost, pick off small segments of the market from incumbents who invested decades in building mass loyalty

Netflix will only survive over the long-term if it adapts and becomes something different, more valuable, than simply a middleman

Today that advantage is eroding. Even in production-heavy industries, of which there are fewer, factories grow smaller, more specialized, and they are easily turned on and off

But several forces are pushing us beyond the Ford paradigm.
1. The Erosion of Economies of Scale
Previously, a company that wanted to create a new product would have to invest millions to build or retool the factory. Today that company can go to Alibaba.com and find a manufacturer ready to provide the product with minimal incremental cost

There are four challenges, then, for outthinking your competition:
1. You must first recognize where rigidity has taken hold.
2. You must then find a new strategic option (a fourth option) that others ignore.
3. You must figure out whether this new strategy is superior.
4. You must slow your competitors' ability to copy your innovation

. First the players fall into a routine, adopting the same practices. They are the thinkers who think inside the accepted paradigm. Then outliers, a few innovators who defy the standard practices, emerge. We will call them outthinkers, because that's what they do. Outthinkers don't outmuscle their competitors, or outspend them; they out think them