Nine of the top 10 electric vehicle companies in China, the world’s largest EV market, are Chinese, according to analysis by Boston Consulting Group. This ranking is the polar opposite of the traditional internal combustion engine car market, where nine of the top 10 are global brands (in joint ventures with Chinese partners).

What is it that explains the sudden turn in fortune of these Chinese automakers in such a short period, in an industry that is more than a century old?

It has happened because, as we have argued in previous Fortune articles, the rules of competition have changed as the world fragments from three disruptive forces: the fracturing of the geopolitical consensus; the onward march of digitization,;and the rise of “deep tech” innovation. And the consequences for traditional global companies are profound: The power is shifting to local consumers; the global playground is becoming a multitude of fast-evolving local “mini-playgrounds”; and the winners are those local companies, even newcomers, who meet the differentiated needs of each mini-playground with speed, responsiveness, and innovation.

We call this new basis of competitiveness “fractal advantage.” Global scale and pedigree are no longer guarantees of success in this new world.

It was not that global players were too late with their EV models in the fast-growing Chinese market. But the Chinese EV companies were first to the market with a disruptive, superior solution to the needs of the digitally sophisticated Chinese customers. This calls for a rethink of the traditional innovation proces. And without the traditional mind-set and engineering legacy of their global rivals to hold them back, the Chinese players pivoted quickly to this new approach we call fractal innovation.

For global incumbents, the innovation process that produced winners in the last century could well become the biggest roadblock to success in the present one—unless they master fractal innovation, and change not just how they innovate, but also what they create.