BCG Henderson Institute

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Operations have always been, and remain, crucial to achieving a competitive advantage. Tim Cook, who has created more shareholder value than any other CEO at any other company, is an operations specialist. Indeed, he believes that being innovative in operations was crucial to Apple’s success even when the visionary, Steve Jobs was at the company’s helm.

But the nature of competitive advantage shifts over time — and so does the role operations plays in it. Historically, the main strategic value of operations was to create scale in order to gain a self-reinforcing efficiency advantage by riding the experience curve. With the digital revolution, static, physical scale lost its edge: By building or leveraging digital platforms and ecosystems that connected suppliers and consumers, even small start-ups were able to attain dominant positions and high margins.

Resilience: Today’s Operational Advantage

The new source of advantage became flexibility, the ability to adjust business models in tune with shifting technologies and competitive conditions. Flexibility comes in different modes: It can mean being able to rapidly scale up solutions as new opportunities present themselves. It may mean being resilient to unanticipated shocks. Resilience proved to be a key source of advantage during the Covid pandemic, as evidenced by significant divergences in performance between firms. Some never regained their pre-shock performance levels, others were able to recover, but have since lost their temporary edge, and few emerged as structural winners, able to thrive sustainably in the post-shock environment.

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