Similarly being able to offer better service – faster, cheaper and higher quality has long been seen as sources of competitive edge. Citibank was the first bank to offer automated telling machinery (ATM) service and developed a strong market positions as a technology leader on the back of this process innovation. Benetton is on of worlds most successful retailers largely due to its sophisticated it led production network which is innovated over a 10 years period and the same model has been used to great effect by the Spanish firm Zara Southeast Airlines achieved an enviable position as the most effective airline in the USA despite being much smaller than its rivals; its success was due to process innovation in areas like reducing airport turnaround times. This model has subsequently become the template for a whole new generation of low costs airlines who efforts have revolutionized the once cozy world of air travel.
Importantly we need to remember that the advantages which flow from these innovative steps gradually get compared away as others imitate. Unless an organization is able to move into further innovation, it risks being left behind as others take the lead in changing their offerings their operational processes or the underlying models which drive their business. For example, leadership in banking has passed to others particularly those who were able to capitalize early on the boom in information and communications technologies, particular many of the lucrative financial services like securities and share dealing have been dominated by players wit radical new models like Charles Schwab. As retailers all adopt advanced IT so the lead shifts to those who are able like Zara and Benetton to streamline there production operations to respond rapidly to the signals flagged by the IT systems.
With the rise of the Internet the scope for services innovation has grown enormously not for nothing is it sometimes called a solution looking for problems? As Evans and Wurster point out, the traditional picture of services being ether offered as a standard to a large market (high reach in their terms) or else highly specialized and customized to a particular individual able to high price (high richness) is blown to bits by the opportunities of web based technology. Now it becomes to offer both richness and reach at the same time – and thus to create totally new markets and disrupt radically those exist in any information related business.
The challenge which the Internet poses is not only one for the major banks and retail companies, although those are the stories which hit the headlines. It is also an issue – and quite possibly a survival one – for thousands f small businesses. Think about the local travel agent and the cozy way in which it used to operate. Racks full of glossy brochures through which people could browse, desks at which helpful sales assistants sort out the details of selecting and booking a holiday, procuring the tickets arranging insurance and so on. And then think how all of this can be accomplished at the click of a mouse from the comfort of home – and that it can potentially be done with more choice and at lower costs Not surprisingly of the biggest growth areas in dot.com start ups was the travel sector and whilst many disappeared when the bubble burst others like lastminute.com and Expedia have established themselves as mainstream players.
Of course not everyone wants to shop online and there will continue to be scope for the high street travel agent in some form – specializing n personal service, acting as a gateway to the internet based services for those who are uncomfortable with computers etc And as we have seen the early euphoria around the dot.com bubble has give to a much more cautious advance in Internet based business The point is that whatever the dominant technological social and market conditions. The key to creating and sustaining competitive advantage is likely to lie with those organizations which continually innovate.