Imagine you’re on the open sea and not simply sailing, but your goal is to move forward faster than everyone else. You want to gain distance, not just keep up. That’s exactly what an outpacing strategy means in competition: not just good performance, but overtaking the competition. But how does a company manage both at once — high quality and low costs? This article explains clearly and practically how companies can successfully apply an outpacing strategy.
What is the outpacing strategy?
The outpacing strategy is a strategic concept formulated by the management scholars Xavier Gilbert and Paul Strebel. It is understood as a hybrid competitive strategy that aims to increase profitability by offering high-quality products at the lowest possible cost. The word outpacing means something like ‘leaving the competition behind’. The idea is not to oscillate between extreme differentiation or radical cost leadership, but to combine both intelligently.
According to Porter, many strategies classify companies either as differentiators (benefit maximisation) or cost leaders (cost minimisation). The outpacing strategy breaks open this dilemma and pursues both goals dynamically and depending on the situation.
Successfully applying the outpacing strategy?
Outpacing combines: Differentiation strategy: products or services should be perceived such that customers experience them as especially valuable. Cost-leadership strategy: production and distribution costs are optimised so that prices remain competitive.
This combination is complex, because high value is often associated with higher costs and vice versa. This is where the outpacing logic comes in: innovations and process optimisations should simultaneously enable higher customer benefit and lower costs.
Sequential vs. simultaneous outpacing
Successfully applying an outpacing strategy is not quite so simple. Besides the design, the timing of the sequence also needs to be considered.
Sequential outpacing means that a company first relies on one strategy (e.g. differentiation) and later switches to cost leadership.
Simultaneous outpacing means that both strategies are pursued in parallel.
Timing and strategic investment decisions are decisive here — wrong timing can become expensive. Successfully applying the outpacing strategy presupposes that competitive advantages are continuously built up, evaluated, and reinvested in new activities. Once a company is strong in one area, it can shift resources to catch up or move ahead in another area.
The benefit of the outpacing strategy
For customers, this means: better value at a better price. For companies, it means increased profitability in the long term and a stronger position in the market. A classic example: a car manufacturer uses research to develop innovative premium features and, in parallel, more efficient production processes to push costs down — without diluting the brand.
Practical examples of successfully applying the outpacing strategy
Companies like Hyundai were able to gain market share through continuous quality improvement at moderate prices. Or car brands that first launch new models in a differentiated way and later produce them with more efficient processes in order to compete in the price-performance segment.
The challenge is not to dilute either goal. Too strong a fixation on costs can damage product perception; too much focus on differentiation can make costs explode. Successful outpacing requires clear prioritisation, continuous analysis and agile implementation processes.
Conclusion
The outpacing strategy is not a buzzword, but a strategic approach to being permanently faster than others in dynamic competition. It challenges you to think not in either-or terms, but to master the balance between customer benefit and efficiency. In a world where simple strategies often no longer suffice, outpacing can make the difference. Customer centricity is demanding — but it pays off. The challenge is to orchestrate processes, product development and pricing step by step so that you don’t just keep up, but leave the competition behind.
