The only sustainable competitive advantage...
If you ask a deep tech startup about the nature of their competitive advantage, the expected answer is usually a description of their novel innovations, any IP protection, and the belief that being leaders in their research field means nobody else can do what they do.
However, ask the most successful of these companies a few years later, and the answer is typically quite different. Success is more often attributed to a nuanced position: a set of customers with a common pain point, addressed by an offering so compelling that customer ‘pull’ is strong enough for the business to struggle to keep up with demand.
While the original deep tech may have been the starting point—and likely remains the nucleus of the offering—proportionally far more of the value delivered (and captured) comes from layers that were not fully understood at the outset: configuration, user interface and experience, business model, and the overall solution.
During my MBA (2004-6), we learned about Michael Porter’s generic strategies of cost leadership versus differentiation. These describe how competitive advantage is experienced by the customer, but not necessarily the underlying source of that advantage. Jay Barney later argued that advantage is derived from firm-specific resources that are valuable, rare, inimitable, and non-substitutable.
More recent thinking suggests that, in rapidly evolving industrial and economic contexts, advantages are inherently transient. Sustainable competitive advantage is no longer about locking in a single position indefinitely. Instead, it is about building systems, capabilities, and feedback loops that allow a firm to continually generate and renew advantage faster than competitors can respond.
In our Customer-Focused Strategy module, Sandra Vandermerwe offered a different lens. The question is not “How do I defend my advantage?”, but rather: “How do I embed more deeply into what the customer is trying to achieve?” Sustainability comes from relevance and embeddedness, not just defensibility.
For deep tech startups, a particular challenge is engaging customers who are busy, distracted, and often focused on more immediate operational issues—and who may not even realise they have a problem you can solve. This is where effective communication, marketing, and pre-commercialisation activity are critical. When done well, these create the deep customer engagement—and broader market understanding—required to build a truly sustainable position.
In practice, this is often difficult for founders. It may sit outside their core expertise, or simply compete with too many other urgent priorities. Over time, these vital interactions can give way to the pressures of day-to-day execution.
If you would like to discuss how to maximise your sustainable competitive advantage, please get in touch. DeepTech Commercialisation has a strong track record of supporting organisations across a wide range of industrial sectors and domains. https://deeptech-comm.com/contact-us
Sustainable competitive advantage
Together, these perspectives reflect the evolution of thinking from defending advantage (Porter), to owning resources (Barney), to continually renewing advantage (Teece, McGrath), and finally to embedding within the customer (Vandermerwe).
References:
Foundational Strategy (Positioning)
Michael Porter (1980) Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: Free Press.
Michael Porter (1985) Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press.
Resource-Based View (Sustainability via VRIN)
Jay Barney (1991) ‘Firm Resources and Sustained Competitive Advantage’, Journal of Management, 17(1), pp. 99–120.
Peteraf, M. (1993) ‘The Cornerstones of Competitive Advantage: A Resource-Based View’, Strategic Management Journal, 14(3), pp. 179–191.
Core point: advantage is sustainable if resources are valuable, rare, inimitable, non-substitutable (VRIN)
Dynamic Capabilities (Renewing Advantage)
David Teece, Pisano, G. and Shuen, A. (1997) ‘Dynamic Capabilities and Strategic Management’, Strategic Management Journal, 18(7), pp. 509–533.
David Teece (2007) ‘Explicating Dynamic Capabilities’, Strategic Management Journal, 28(13), pp. 1319–1350.
Core point: firms must integrate, build, and reconfigure competences to address change
Business Models & Value Capture
Teece, D.J. (2010) ‘Business Models, Business Strategy and Innovation’, Long Range Planning, 43(2–3), pp. 172–194.
Zott, C., Amit, R. and Massa, L. (2011) ‘The Business Model: Recent Developments and Future Research’, Journal of Management, 37(4), pp. 1019–1042.
Core point: value comes from how the whole system works, not just the technology
Transient Advantage (Modern View)
Rita McGrath (2013) The End of Competitive Advantage. Boston: Harvard Business Review Press.
Core point: advantages are temporary and must be continuously renewed
Customer Embeddedness / Servitization
Sandra Vandermerwe and Rada, J. (1988) ‘Servitization of Business: Adding Value by Adding Services’, European Management Journal, 6(4), pp. 314–324.
Sandra Vandermerwe (1993) From Tin Soldiers to Russian Dolls: Creating Added Value Through Services. Oxford: Butterworth-Heinemann.
Core point: firms build advantage by expanding into the customer’s activity cycle and embedding in their operations
