One major theme of business strategy is that companies should focus primarily on rivalry and defeating the competition, whether by beating their competitors in a particular market or protecting themselves against fierce competition by creating and exploiting barriers. A concept that is central to this view of strategy is that of a "sustainable competitive advantage," a special asset or competence that enables a company to earn supercompetitive profits for an unusually long time.

But what, exactly, is a sustainable competitive advantage, and how can a company know that it has one? In his 1984 staff paper, "Sustainable competitive advantage," Kevin Coyne painstakingly analyzes the term, setting forth a rigorous test to determine whether a company has an advantage upon which a strategy can be based. In Coyne's view, a sustainable competitive advantage begins with a unique capability that shields a company from competition—usually something measurable, physical, and concrete, not a vague abstraction such as "technological leadership." This capability must pertain to at least one of the few product features upon which customers base their buying decisions. And, suggests Coyne, the whole arrangement must be likely to last for a long time. Similar "capability-based" views of strategy were to...