Tenet 1: Business Strategy Business strategy is the top-line vision of the company. It is why the company exists. It ensures the long-term growth and sustainability of the organization. It is the basis for the core competencies and offerings, which are the products. In this book, I will use the term “products” to refer to both digital products and digital services. The business strategy is what gives product makers the direction to grow in the marketplace while beating the competition. The business strategy identifies the company’s guiding principles for how it will position itself and still achieve its objectives. For this to happen, the business must continually identify and utilize a competitive advantage. A competitive advantage is essential to the company’s long-term existence. [9] In his classic book, Competitive Advantage, Michael E. Porter lays out the two most common ways to achieve a competitive advantage: cost leadership and differentiation. The advantage behind cost leadership comes from offering the lowest price for products in a particular industry. Whether it is the cheapest car, television, or hamburger, this was the traditional way that companies achieved dominance in the marketplace. After all, allowing the private sector to compete without government regulation is what free market economy is all about! I mean, look at the rampant success of stores such as Walmart and Target. They can offer consumers the best prices and widest selection of merchandise. But what happens when prices hit rock bottom? Then, the battle needs to be about what makes the product better. This brings us to Porter’s second type of competitive advantage: differentiation. Because we are product inventors planning to build disruptive technologies, this is where our actual power lies. With differentiation, the advantage is based on a new or unique product or a unique aspect of the product for which customers will pay a premium because of its perceived value. As consumers, we choose one product over another based on the things we personally value, ranging from the product’s usefulness to how much pleasure we derive from it. That perceived value is what transforms a simple little café and cup o’ joe into the crazy success story of Seattle-based Starbucks. There’s a reason why people pay $5 for a cafe latté — it’s the experience that’s also wrapped into the product. It starts the moment a customer steps into the store and ends when that person tosses his cup and sleeve into the trash.