Leader Analysis

Competitive advantage is never permanent. Markets shift, customer tastes evolve, and competitors—old and new—constantly challenge the status quo. Leaders who succeed over time are not simply those who inherit a strong position, but those who think differently, act decisively, and keep innovating.

In today’s fast-moving world, the mindset of a business leader often determines whether their company stays ahead or slips behind. Some leaders adapt, pivot, and protect what makes their company unique. Others complain, hesitate, or rely on past success. The following examples—from China’s ice cream market to U.S. retail, from EV battles in Europe to pharmaceutical breakthroughs—reveal how leadership mindset shapes the development and preservation of competitive advantage.

Localize or Lose: What American Brands Are Missing in China

Mr Wild Man has 1,000 stores in China, while Häagen-Dazs had 456 stores at the beginning of 2024 and at the moment has 356 stores. In recent years, American companies that were doing exceptionally well in China have been struggling. Examples include Tesla, which is falling behind local EV manufacturer BYD; Starbucks, which is getting schooled by Luckin Coffee; and Apple, which is trailing Huawei. The same is true for several luxury brands in the country.

The general narrative from these companies that once thrived but are now struggling is that Chinese consumers are going through difficult economic times. However, local companies in China are growing at tremendous rates. One reason is that they are competing for customers against American brands with a better understanding of the local market and a willingness to do what it takes to provide value.

The founder of the Mr Wild Man ice cream chain in China has said that, without a doubt, the economy is facing short-term pressures, but people are always looking for something better. What these foreign companies fail to realize is that it is not just about price, but about innovation and adapting to the local economy. Because they have relied only on the competitive value of being foreign brands, American and European companies are being challenged by local organizations in China. As Jan Yang of Simon-Kucher puts it, “If there is a premium, there must be a good story and good value behind it.”

What made you a great company yesterday is not going to keep you a great company today, and it will not keep you a great company tomorrow. Particularly in foreign markets, you cannot rest on your laurels and expect to preserve your competitive advantage. Localization and innovation are the keys.

Don’t Rest on a Hit: Make It Easier for Customers

Even when you have a hit product, it is important to continue to innovate and address more markets. Make it easier for consumers in order to remain competitive and to retain your competitive advantage.

From the time of the launch of Ozempic, when it hit social media and the news, celebrities were seen losing weight in a short period of time and crediting the drug. Pharmaceutical company Eli Lilly also created its own drugs, including Mounjaro (a weight-loss drug) and Zepbound (targeted at people with diabetes). It developed its own GLP-1 medicines, which have been doing extremely well in the market. However, they did not stop there.

They saw that one of the things customers needed was an easier way to take GLP-1 medicine. Injecting it was not convenient, so they began working toward developing a pill that could be swallowed while providing the same type of weight loss. In the week of August 29, 2025, they announced they now have the data to seek regulatory approval worldwide. Analysts are projecting that the pill could generate up to $40 billion in sales by 2033. Rather than sitting back and enjoying the success of the current drugs, in a way they disrupted themselves by creating the pill.

The product that works so well today will not remain as competitive in the future. Other companies are going to produce the same thing, and they may even do it better than you. Keep making the product better, easier, and more convenient.

Decisiveness Beats Drift

Being indecisive can limit your ability to compete against other companies, particularly when you are behind. About 35% of AGCO’s $2.85 billion in North America sales in 2024 came from imported products, largely from Europe. Europe represents 60% of the company’s $11.66 billion revenue in 2024. AGCO is the third-largest producer of farm equipment in the U.S. It produces most of its equipment in Europe, but it also has plants in Brazil.

One of the things that has been happening with the company is that it has been losing market share. In the U.S., its precision and sustainability farming equipment has been popular, but now, because of tariffs imposed on imported goods from Europe and Brazil, the company is going to find itself struggling over the coming months.

One of the challenges with its leadership is that, rather than focusing on the competitive advantage they do have—in that they are not 100% dependent on the U.S. market and could seek to serve customers better—they seem to have more of a complaining attitude toward the tariffs. They do not appear decisive about whether they are going to shift production or not. Rather than exploiting a competitive advantage that they do have, they appear caught up in indecision during a time of uncertainty.

For a leader, this is not the right mindset to have. If the tariffs are likely to remain, then the company should be thinking about what it can do to continue gaining market share. Competitive advantage is not handed to you. It is earned and developed even in tough economic conditions.

Pivot When the Real Opportunity Appears

Sometimes you have slowly been developing something that makes you competitive in a different market, and having that flexibility of thought to do something more lucrative can be essential for a business leader.

LeoLabs, founded in 2016 by firms such as Insight Partners and Bessemer Venture Partners, develops radar technology that offers detailed tracking of objects in low orbit, including satellites and space debris. About a year ago, it realized that its product had potential for serving the defense market, transitioning from a space-tech company into a defense-tech startup. It has booked $50 million in revenue and grown by around 140%, targeting sustained growth of 40%–50%.

This is an example of the willingness to pivot. Because it has an analytics platform, it appeals to countries that want independent sensing capabilities they can control. With U.S. defense spending, and that of U.S. allies, this can be extremely lucrative. Sometimes you don’t start off in the right market; sometimes it requires pivoting into the one with greater growth.

Protect the Advantage You Already Built

Sometimes the law needs to be involved when it comes to protecting a company’s competitive advantage. Over the past couple of years, Taiwan’s Investigation Bureau has investigated more than 120 cases involving trade secret theft.

TSMC reported employees who were accessing classified files inappropriately, discovered during a routine security check. Taiwanese authorities indicted three people, and prosecutors recommended various prison sentences of up to 14 years. The motive was to help a Japanese supplier improve its etching technologies so it could increase its orders.

TSMC represents an important organization for Taiwan because of its success and because of the businesses it supplies—Nvidia, Apple, and Tesla. The company has stated that it will pursue trade secret theft to the fullest extent possible and work with authorities to protect its competitive advantage. Sometimes your competitive advantage is information that must be kept from others. Leaders must ensure that intellectual property—copyrights, patents, and trademarks—is protected.

A Model Can Beat a Moat

You don’t have to fear a bigger competitor—sometimes taking a piece out of their weakest market is possible. Apple Music comes with every iPhone, and new buyers get free trials. That looks unbeatable. Yet Apple’s share of U.S. digital music subscribers fell to 25% from 30% in 2020, while Spotify’s share increased to 37% from 31%. Apple’s global share also fell from 16% to 12% since 2020.

Spotify proved you can take something from a much larger organization by using a model that gives you an advantage. Apple has trial offers but no ad-supported free model, while Spotify’s free, ad-supported version draws customers into its paid option. Sometimes competitive advantage comes from the way you address the market and present your product. Some models work significantly better than others.

Premium Alone Won’t Protect You

There is no one strategy that is going to work in all situations. Sometimes the strategy that has worked for you for a long time is going to fail you. Tesla sold 6,600 cars in Europe—42% lower than a year ago—while BYD tripled sales to 9,698. SAIC Motor also outsold Tesla in Europe.

Tesla used to be the EV brand that was in demand and desired by everybody. It is a well-built, high-technology, high-quality vehicle. However, in recent years, EV makers from China have challenged Tesla’s dominance, and in Europe it seems Tesla is losing ground. BYD’s progress comes from lower prices and a wider lineup. Ultimately, customers are looking for value. If you are the dominant player but you are not providing value and variety—and most of your higher price comes from branding—you are open to being challenged.

Leaders should prepare for the day when lower-cost products will come and challenge that dominance. Do not rest on your laurels; be ready to carve out the premium market you can defend.

Attitude Matters Most

The right attitude demonstrates itself in the words that we use. Burlington has grown by 6.8% so far in 2025, as of August, and has increased full-year sales guidance to 7%–8%, with comparable store sales up by 1%–2%. Consumers have become more price sensitive, and tariffs on imported goods are a challenge, but leadership hasn’t given in to complaining. CEO Michael O’Sullivan has said they will stay nimble, chase consumer trends, and respond quickly to shifting economic realities.

This is the mindset leaders need in turbulent times—stay engaged with challenges and watch trends so you don’t miss opportunities. Many leaders focus on threats and weaknesses and miss the chance to build on strengths. That is precisely when disruptors gain advantage and take share.

Competitive advantage is, first of all, a mindset. Leaders must ensure their teams are prepared to take advantage of whatever opportunities—large or small—present themselves.

Conclusion

These cases—from Mr Wild Man to Tesla, Eli Lilly to AGCO, Spotify to TSMC—reveal that competitive advantage is not a static possession. It is dynamic, fragile, and requires constant renewal.

The difference between effective and ineffective competitors is mindset.

• Effective leaders adapt locally, innovate continuously, act decisively, pivot when necessary, protect their assets, and experiment with models that create customer value.
• Ineffective leaders rely on past success, complain about external conditions, hesitate when decisions are needed, or assume customers will remain loyal to a premium brand forever.

What made you a great company yesterday will not keep you great tomorrow. Leaders who sustain competitive advantage are those who never stop asking: What do our customers need next, and how do we move there before anyone else does?