Entering late without any sort of meaningful innovation can be tough. Compared with noninnovative late entrants, pioneers have an advantage on a number of important fronts: they have higher rates of repeat purchase, their investment in marketing is more effective, and their sales rates tend to grow faster. Innovative late movers, on the other hand, are able to redefine the category, reshaping the category ideal and enjoying many of the same benefits as pioneers.
Think of the way that Apple has come to redefine and dominate the market for mobile devices—a category pioneered by Motorola. If innovation is a key common bond between pioneering and successful late-entering companies, and there are advantages inherent in each role, what are the other factors to consider? When a company can choose whether to be a pioneer or a late mover, the expected life of the product category is important. An example is the market for Y2K solutions software in the late s. When switching from one brand to another would be expensive, the advantage also goes to pioneers, since they can create a kind of monopoly among established customers, while late movers are left competing for just the new customers.
It is also best to pioneer when the value of the product is highly subjective: think of the benefits that Dom Perignon reaps by being known as the pioneer of champagne. That fact lends a prestige that consumers want to be associated with and creates a level of brand equity for Dom Perignon that is difficult for late entrants to compete with, since the quality of champagne is usually a highly subjective judgment.
Strategic Flexibility and Competitive Advantage
When there are more objective standards by which to judge a product, late movers have a greater chance of success. Consider the market for cars.
Late movers have a competitive advantage, too, when the cost of imitating a product is low. This advantage can be neutralized when a product is protected by patents, making the cost of imitation higher. The result is that, in many cases, it makes sense for companies with substantial resources to let others assume the risk of pioneering.
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Buyer learning is an important source of lasting competitive advantage. Performance here will require differentially advancing the societal performance of the supplier base and its stewardship of resources, communities, and trade flows. Achieving this may require backward integration to assure fast and complete upstream transformation and then holding and using these new capabilities for competitive advantage and differentiation.
This competitive typology puts a wide aperture on the business and requires systems analysis to uncover business models that offer the richest competitive and financial options. For example, design for circularity, recyclability, and waste-to-value; create offerings that enable sharing rather than owning to assure high utilization of resources and end-of-life value; construct enabling infrastructure to facilitate circularity and repurposing; integrate into other value chains to capture societal content; educate and enable consumers to choose whole-cycle propositions on the basis of value to people and planet.
Expect to reposition operations, reinvent supply chains and distribution, pursue new backward or forward integration, acquire business adjacencies, or undertake unconventional strategic partnering to achieve these ends. In business-to-business offerings, help customers integrate the full societal value of your products, services, and business model into their own differentiation and ESG ambitions. Use such data to rethink differentiation, the brand experience, customer engagement, pricing for value, ESG reporting, investor engagement, and even launching new businesses.
For example, build local and regional brands that better express local tastes and values; source from smaller local producers to minimize logistics emissions and strengthen local economies; reimagine production networks against total environmental and societal costs; capture local waste streams as new feedstocks into preprocessing; or reconstitute jobs for micro-work to use local talent. For example, work alongside government bilateral aid institutions and NGO development organizations to improve the agricultural capacity of small farmers so they become reliable sources of agricultural inputs to the agro-processing value chain; partner with global environmental organizations and governments to promote the reuse of ocean plastics as feedstocks to production systems; partner with governments to strengthen and corruption-proof social safety nets through digitization and electronic payments; or partner across sectors to restructure recycling systems to enable higher penetration of waste-to-value business models.
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Extend this into industry coalitions for collective action that reshapes broader rights-to-operate and generate new opportunities. All seven types of S-BMI create new sources of differentiation, operating advantage, network dynamics, and societal value — enabling more durable and resilient businesses benefiting shareholders and wider society. Change scorekeeping and transparency. Mangers will need new scorecards for a fuller equation of business value to assess and reward performance and inform decision making. Consequently, scorecards and reporting must go beyond mapping general ESG materiality.
As with financial performance, good companies will integrate these metrics into their managerial software — operating plans, target-setting, investment decisions, executive compensation, and employee recognition. Further, the company will promote radical transparency of its FBV scorecards fully reflecting them in investor relations and corporate communications, quarterly calls, and annual meetings, and making them integral to marketing, social media, public relations, and government affairs.
As such, stakeholders will see the company in new ways and its advantages relative to peers on new dimensions. Lead a purpose-filled organization. Talent prizes purpose. Research shows that companies with a motivating purpose have higher employee engagement, and that higher engagement correlates to better financial performance.
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But building a stronger organization with the right capabilities will take rethinking the skills and capabilities that can really differentiate company performance on both financial and societal metrics. The organization can no longer delegate sustainability and social responsibility to individual departments; rather, those mindsets need to be fully integrated into operations and decision making. That requires augmenting line businesses with nontraditional business skills — finding people capable in systems thinking, anthropology, social dynamics, behavioral economics, sustainability, and development policy.
Those workers will become part of agile teams that conceive innovative operating models optimizing for both operational effectiveness and societal benefit within value chains, markets, and customer segments.
That requires developing and rewarding new ways of working that are more flexible, embedding rapid cycles of learning and deployment, and reaching into the wider business and societal ecosystem to create positive change and performance. Successes in doing so create the stories that bring purpose alive for the organization and energize its culture. Build corporate statesmanship. Rather than ignoring these risks or mobilizing their government affairs groups to block change, they will instead practice strategic statesmanship and build coalitions for collective action within their industry, and sometimes across industries, to find and scale new solutions.
They will seek new partnerships with the public and social sectors that could multiply what the industry could accomplish alone and shape new models of collective action for positive societal change. Elevate board governance. As with current management, most directors spent their careers focused on financial performance, with some sidelined activities in CSR and sustainability. They will need to challenge long-held views about the boundaries and time horizons of business, about what makes a good CEO, about new risks and rights-to-operate, and about measuring performance, and they will need to expand their view of managerial competence beyond the ability to hit annual business targets.
It is an exciting era for leaders, business and society. The above agenda challenges us to re-conceive business, commit to purpose, and pursue sustainable business model innovation. Doing so will open up new opportunities for growth, shareholder value, and benefits to society and the planet. The stakes in the race for AI leadership are high.
Given the breadth of AI, with its ability to influence defense, diplomacy, intelligence, economic competitiveness, social stability, and the information environment, falling behind in AI development and implementation would present a risk for U. The act of launching a person into space by the Soviet Union in was so audacious — and public — that it demanded a response.
Yet leadership in AI will not be just about the technology itself, but about how societies manage the technology. Moreover, unlike in the space race, the key technologies are likely to be built anyway for commercial reasons, and private sector companies are the leaders in technological invention, not governments.
Bridging the gap between the creation of AI technology and its effective usage both inside and outside government will be an enormous challenge.
Is The AI Race A Zero-Sum Game?
We still do not know whether it will be most important in the age of AI to be first in the creation of a technology, or to be first in figuring out how to use a technology. Thus, strategies for leveraging the technology will become essential. The task of policymaking in the AI arena is complicated by the vulnerabilities of narrow AI methods at present, both due to the potentially deliberate actions of adversaries and due to some inherent uncertainty about AI systems. The intersection with cyber and information security, in particular, will require a great deal of coordination to ensure that AI systems are not just advanced but safe to use.
These documents provided an initial toehold on the challenges to come, but sustained effort across the U.
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The White House OSTP should lead a renewed interagency effort, in coordination with Congress and the private sector, to take action on the items listed below. Similarly, members of Congress have shown tremendous interest and leadership on AI by creating an AI caucus, sponsoring hearings, and drafting legislation on a National Commission on Artificial Intelligence. In coordination with the executive branch and private sector, Congress should identify priorities for AI in national security, authorize and fund government AI initiatives, establish reporting requirements for agencies, and pass appropriate regulations to advance the priority areas below.
This report recommends that the U. The series examines the potential consequences of advances in artificial intelligence for the national security community. Nearly every aspect of national security could be transformed by artificial intelligence. AI has applications for defense, intelligence, homeland security, diplomacy, surveillance, cybersecurity, information, and economic tools of statecraft. The United States must not only anticipate these developments, but act decisively to prepare for uses by competitors and take advantage of the opportunities AI presents.
Learn more at cnas. Michael C.
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Horowitz is a professor of political science and the associate director of Perry World House at the University of Pennsylvania. He is also an adjunct senior fellow Elsa B. Her research focuses on Chinese m Gregory C. Allen focuses on the intersec He is the award-winning author of Army By Kara Frederick. By Elsa B. Past industrial revolutions have generated significant changes in the balance of power. Organizations with larger datasets thus have an advantage in developing superior applications.
Whereas refining technology more or less makes all oil equivalent, data is not nearly so interchangeable. The right type of data depends upon the desired application. If one seeks to develop a narrow AI system to automatically identify objects in satellite reconnaissance imagery, then having a large quantity of cell phone user data is simply useless.
AI will augment the national power of those countries that are able to identify, acquire, and apply large datasets of high economic and military importance in order to develop high-performance AI systems. Getty Images. Training, sustaining, and enabling an AI-capable talent pool — The human capital skills required for advanced AI system development are relative rare at present.
Currently, there are far more worthwhile applications of existing AI technology than there are skilled programmers to develop and implement them. As such, newly minted Ph. This is expensive and requires access to high technology. Actors with fewer resources can utilize previously trained systems, meaning some AI technology may proliferate more easily to less capable actors. Organizations that have greater resources will have an advantage, however, in building original, cutting-edge AI systems.
Organizations incentivized and aligned to effectively adopt AI — Merely developing the best advanced AI systems is not enough to secure an enduring advantage in national power. Technology in and of itself is of limited utility if companies and government organizations lack people who can use it, effective strategies for how to use it, and training to be good at using it.