Cisco Business Model

Technology is one of the main drivers of competitive advantage today. The emergent technologies such as artificial intelligence, big data and alternative energy are all powerful means by which a company can extract competitive advantage, if the company stakes out a leadership position in the technology. The key to deriving competitive advantage is to be a leader in the field, which means having the people in place to develop cutting edge technology.

An example would be Tesla. The company's cars are beautifully-designed and the marketing has been top-notch but the company's competitive advantage rests on a couple of key technological competitive advantages. First, the company is the leader in developing battery technology. This has not only allowed it to make inroads into the battery market but has also allowed it to have the best range of any electric car. This gives it a competitive advantage over all other electric cars, allowing it to capture market share, and enjoy premium pricing (Fehrenbacher, 2016).

By 2014, the company's batteries were reportedly "years ahead of the competition", which was a critical point of competitive advantage in terms of how it relates to Tesla's long-run strategy. The company at that point was quite small – and it still is. But as a niche market player, it faced intense competition from established players, and as such needed to have an edge that would allow it to build itself to scale. Being years ahead of the competition in battery power allowed Tesla to establish a clear niche that would give it the breathing room it needs in order to get to scale (Zart, 2014).

But the company recognizes that technological competitive advantage is not something that one can easily sustain, especially in a competitive field like electric cars, with strong established players. Big data has become a critical part of the Tesla strategy. Looking forward, the company sees autonomous vehicles as the future. It has invested a lot of money in recording driving data from its current fleet of automobiles. The result is that Tesla has a much larger body of knowledge from which to draw than the companies – such as Google and Apple – that are also working on self-driving cars (Ahdoot, 2016).

Studying its vehicles also has benefits in the short run. Tesla uses the data that it gathers to enhance each iteration of its vehicles. By learning about customer preferences, and about driving patterns, Tesla is in a better position to deliver vehicles that appeal to the customer. This use of data is above and beyond what other companies in the automobile space are doing. Again, with this adoption of technology, Tesla is enjoy the competitive advantages that come with being the first mover (Enderle, 2014).
Tesla also leverages technology for competitive advantage by adapting its technologies to new applications. While it works on building its electric car business to scale, it has also taken the lead in bringing electric semi-trucks to market. This application of its technology solves an entirely different pain point for society – the use of fossil fuels to drive the global supply chain. Just announcing that it was working on the project attracted the interest of major companies like PepsiCo, UPS, Syco and Wal-Mart (Carey, 2017), and those pre-orders are helping to finance the development of the product. Furthermore, having high profile backers gets the company more headlines, which attracts more pre-orders and enhances the company’s brand.

All told, Tesla uses technology in a lot of ways. Being a technological innovator has always been its major source of competitive advantage and there are many different examples of how technological leadership is built into the company’s strategy. As long as Tesla maintains technological leadership, it will be able to maintain its competitive advantage and grow its business.