T he idea of competitive advantage has evolved over the past 30 years. Concepts such as core competence, unlocking hidden value, customer-driven focus, fast responsiveness, capabilities-driven strategy, and hyper-competition are all commonplace phrases in the business vernacular. These concepts draw from fields such as economics, industrial organization, organizational theory, and behavioral finance. The continuous onslaught of best-selling business books promulgatingNew-Agestrategiesoften fails to take into account leaders’ visions, the influenceofpowerful internal departments and/or external forces, and the evolution of technology itself. Nonetheless, firms of all sizes struggle in their search for new sources of competitive advantage or ignore the latent need to do so. Successful firms are like psalms— that is, their parts fit together harmoniously by focusing on a particular theme to offer customers compelling value. Firms build competitive advantage when they take actions that enable them to gain an edge over rivals in attracting customers in an industry. These actions vary frommaking the highest quality product, to providing the best customer service, to producing at the lowest cost, or devoting resources toa specific segment of the industry. Thus, competitive advantage accrues from the firms’ development of strategic capabilities at the business level. Regardless of the product or service offered, every firm faces the constant, inexorable forces of externally induced change that can render a strong source of competitive advantage obsolete. A powerful force that influences firms is the nature of the product life cycle. Although life-cycle stages are found in each industry, with their own distinct signatures (e.g., duration, timing of transition from one stage to another), these stages are to some extent predictable. Every product evolves through the states of introduction, growth, maturity, and decline at its own rate. The rate of technological change also dramatically impacts firms’ competitive advantage by redefining how products and processes are designed, created, and evolved. The rate of technological change refers to the extent to which new products and processes evolve in ways that are completely different from their predecessors. In this article, we demonstrate that managers need to understand the nature of their industry’s dynamics to formulate effective business strategies. Business strategies, in turn, are formulated with a focus on competing within a given industry. At its core, business strategy addresses the fundamental question: How do we build competitive advantage in our industry? In response to these dynamics, managers need to rethink how to innovate, bundle their firm’s capabilities, create value, and capture customers. To help managers assess this task, we present an integrative approach to analyzing, framing, and managing a company’s set of value-creating capabilities that address many of the strategic tensions that managers now confront when designing effective business strategies.