There’s a big difference between firms that innovate and firms that compete. Take your average local restaurant startup. To be successful, it has to be able to compete with the surrounding restaurants and food outlets for business. No matter how good the food it serves is, it still has to entice customers away from other places where they could spend their money, either through better food, superior service or bargain basement deals.


There’s another type of company, however: the innovative company. This type of company doesn’t bother to compete with what’s already out there on the market. Instead, it goes ahead and creates something totally unique and new that people haven’t seen before. The reason these companies are so successful isn’t because they outcompeted everybody else: it’s because there is nobody else.






A great example of a company like this is Tesla. The media has been going mad over investor valuations of the company, rating it higher than both GM and Ford, despite the fact that the company only made 20,000 cars last quarter. Tesla is now worth more than $54 billion according to analysts, making it one of the largest car companies in the world by market cap.


What’s different about Tesla, however, is that it isn’t really a car company. Thanks to the fact that it has an integrated business model where it’s able to adjust both the manufacturing of cars as well as the software they contain, the business is better thought of as a consumer electronics business – albeit where those electronics are very expensive.


We’ve seen this sort of innovation before from a company called Apple. Back in 2004, Apple was worth about as much as Tesla is worth today. However, like Tesla, Apple had a few tricks up its sleeve. The first was visionary leadership: like Elon Musk, Steve Jobs wanted to remake the world and provide incredible products for his customers. The release of the iPod proved that the company was serious about innovation and it was set apart from the rest of the businesses in the industry at the time. Musk’s objectives are similarly lofty: in his mind, it’s the job of Tesla to save the world.


The other significant factor was innovation. Both companies have hired a vast array of IP companies, like Bhole IP Law, to protect their intellectual property from the competition. This allows them to access profits that would not have been possible had they merely competed. It was thanks to innovation that Apple managed to grow itself into a $700 billion company and it looks as if Tesla will do the same.






Of course, these aren’t the only two businesses that have relied on innovation to get to where they are today. Amazon is another example of an otherwise mundane company pushing the limits of its industry and winning. But the story of Tesla is far from over. Like Apple, it has a visionary leader, an integrated product development strategy primed for innovation and the “halo effect” where customers are willing to try other products from the company because they love its existing products so much.


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