The Belgian cinema industry was collapsing in the 1980s. The average Belgian's moviegoing had dropped to two from eight times per year, profit margins were dwindling, the industry was in a shake-out, and videos, cable and satellite TV were penetrating Belgian homes.

While Belgian cinema operators followed the predictable path of minimizing fixed cost investments and fighting to increase their share of declining demand, the Bert Claeys Group did something different and radically superior. It broke with the conventional  thinking of its industry and in 1988 built Kinepolis, the world's first megaplex with 25 screens and 7,600 seats. The cinema center was built just off the ring road circling Brussels. And with wide screens, spectacular sound, comfortable seating, the best pick of blockbusters, free and safe parking at a competitive price, Kinepolis offered the mass of Belgian movie-goers a quantum leap in value. Within its first year Kinepolis not only won 50% of the entire Brussels market but expanded cinema demand by some 40%. Burt Claeys did not compete. It made the competition irrelevant. This is what we call "value innovation."

Why did other Belgian cinema operators fail to act on the same opportunity? Was it because these companies were less ambitious than Bert Claeys? Or that they were incumbents while Bert Claeys was new to the industry? Or that they were disadvantaged in terms of resource reach. In fact, none of these is the case. Bert Claeys acted differently because it thought differently. Its basic assumptions about strategy led it to raise a fundamentally different set of questions and to  see and understand opportunities and risks in fresh and innovative ways. We spent the last five years studying over 30 high-growth companies around the world like Bert Claeys and their less successful competitors to understand what distinguished these two groups of companies. In short, the most consistent difference is in the way each approached strategy. While low growth companies were trapped in conventional thinking , high growth companies broke away from the pack by pursuing value innovation. Here is how innovators like Bert Claeys do it.

Challenge the inevitableness of industry conditions.  Most companies take industry conditions as given and let that frame their range of what is possible and profitable. Value innovators don't. Irrespective of industry conditions, they challenge their managers to discover blockbuster ideas and ways to deliver a leap in value. As a result, they explore a far wider range of strategic options than other players. This increases their creative scope and consideration of ideas that rivals are not open to considering.

Think of Bert Claeys. Had it taken its industry conditions as given, the idea of building a megaplex would have been unthinkable though it revitalized the entire industry. Sound too heroic ? Reflect for a moment on many of the greatest industries. Didn't Ford create mass demand in the auto industry. Xerox in the copier industry. Netscape in the Internet browser industry. McDonald's in the fast food industry? If single companies can drive entire industries with powerful ideas, cannot single firms at least shape existing industries? Value innovators believe they can and do.

Competition is not the benchmark. Most companies focus on outpacing the competition and building competitive advantages. They use the competition as their bench mark. Value innovators don't. They refuse to let the competition set the parameters of their strategic thinking. They don't assume that just because competitors are doing something they should follow suit and do it too. They pursue a quantum leap in value. As Hasso Plattner, vice chairman of SAP, a German-based global leader in business application software put it, "I'm not interested to know if we are better than the competition. The real test is, will most buyers seek out our products, even if we don't market them?"

It is the drive to offer a giant leap in value that opens these companies eyes to the difference between what industries are competing on and what the mass of buyers actually value. This is how CNN got the insight to drop costly big name anchors through ABC, CBS and NBC had long competed on them. The result: CNN offered 24 hours of real time news for around one-fifth the cost of producing one hour of CBS news - and viewers loved it.

Focus on what most customers value.  Many companies focus on the differences in what customers value. They seek out what makes customers unique and try to accommodate those differences. In the end, companies expend significant resources but often achieve marginal gains and even meaningless variation like 83 types of dog food. Value innovators follow a different path. They build on powerful commonalities in what most customers value.

Take the French budget hotel industry. While hotels in the industry were scrambling to accommodate customers diverse needs, the French hotelier Accor figured out that most budget customers value a good night's sleep at a low price. Focusing on these two widely shared needs it conceived of a radically new chain of budget hotel, Formule 1. With bed quality, hygiene and privacy better than the average two-star hotels and price only slightly above the average no-star hotel, Formule 1 made the competition irrelevant and won the mass of French budget hotel customers. New customers including business people on the run were also drawn into the market.

Ask, what would we do it we were starting anew?  Most companies assess business opportunities from the lens of their existing assets and capabilities. They ask, given what we have, what is the best we can do? Value innovators don't. They take a clean slate approach. When Virgin Music Retail asked what would it do if it were starting anew, it discovered the opportunity of megamusic entertainment stores. Seeing that its chain of small music stores couldn't be leveraged to seize this opportunity, in the late 1980s it sold off its entire chain. By continuously asking what if we start anew, value innovators not only gain more lucid insight into where buyer value resides and how it is changing, but are more likely to act on that insight.

Think in terms of the total solution buyers seek. Many companies set out to maximise the value of the products and services of their industry. Value innovators don't. They think in terms of the total solution buyers seek in using the products and services of their industry. Their aim is to solve buyers major problems and eliminate compromises across the total solution even if that takes them beyond the industry's traditional offerings. That is what Bert Claeys did by providing free parking to solve moviegoers problems of the scarcity and high cost of city parking, and what Virgin Atlantic Airways did by providing round-trip limousine service to and from airports for hurried business class passengers. By challenging the existing assumptions of companies on the five basic dimensions of strategy-industry conditions, strategic focus, customers, assets and capabilities, and product an service offerings-and reframing them around value innovation, new opportunities for profitable growth come into focus. And by doing this companies will not incrementally improve but break away from the pack and generate high growth in both revenues and profits.