OE competition shifts the productivity frontier outward, effectively raising the bar for everyone. But although such competition produces absolute improvement in operational effectiveness, it leads to relative improvement for no one. Consider the $5 billion-plus US. Commercial-printing industry. The major players-RR Donnelley & Sons Company, Quebecor, World Color Press, and Big Flower Press-are competing head to head, serving all types of customers, offering the same array of printing technologies (gravure and web offset), investing heavily in the same new equipment, running their presses faster, and reducing crew sizes. But the resulting major productivity gain are being captured by customers and equipment suppliers, not retained in superior profitability. Even industry leader Donnelley’s profit margin, consistently higher than 7% in the 1980s, fell to less than 4.6% in 1995. This pattern is playing itself out in industry after industry. Even the Japanese, pioneers of the new competition, suffer from persistently low profits. (see the insert “Japanese Companies Rarely Have Strategies.”)