My friend Art Petty writes Too Many Projects Chasing Too Few Resources:

Learning how to say "No" and how to say "No More" are two of the most difficult lessons for a maturing organization.

In particular, Art comments:

The firm that failed had developed such an inbred culture of selling development commitments to make sales that all sense of strategy was lost in the never-ending chase to fulfill.

It doesn't take long before selling development commitments turns into 'selling more than we can deliver'. And 'selling what we cannot deliver' isn't far behind. Like Icarus, these "anything for a sale" companies seem to fly high--but only for a while.

One point I often make is this: deals outside of your market segment are always a bad idea. But invariably someone brings up contract revenue. For enough revenue, many companies will do anything.

The issue isn't contract revenue; the issue is market revenue. Not "can you sell it?" but "can you sell it again and again?" With limited resources--and isn't that the case for all of us--you must focus your efforts on delivering complete products in markets where you can be the dominate vendor.

Netflix has long been a good example of finding the weakness in the competitor's strength. They have leveraged the power of the web with a centralized inventory and a partnership with the post office.

Techdirt writes,

You really have to hand it to Netflix. Every time some new (big) entrant enters the market and prognosticators insist that Netflix is going down, the company has managed to keep on chugging along -- while the competitors eventually capitulate.

Wal-mart tried to copy the Netflix model, turned it over to Netflix, and then dropped it entirely. Now Amazon has abandoned their Netflix-like service too.

The best competitive strategy is to leverage your distinctive competence while undermining your competitor's strength.