Taylor Swift’s Career Is A Lesson In Competitive Strategy

By Pascual Berrone (IESE Business School)

Business leaders could learn a thing or two from Taylor Swift.

The singer has a net worth of $1.6 billion, making her the richest female musician in the world. Her Eras Tour, which came to an end this week after a 21-month stint, was the highest-grossing music tour of all time at a record $2 billion. Her re-recorded albums, which she released after her catalogue was bought out by a record executive, all debuted at Number 1 on the Billboard 200 chart.

In short, she’s an incredibly successful businesswoman. And her rise to stardom cannot be dismissed as simply a stroke of luck. Over the last two decades, Swift has taken key strategic decisions that helped her go from an aspiring teenage singer-songwriter to the global celebrity she is today.

In my case study “Unlucky 13? The Journey of Taylor Swift to Stardom,” I use Swift’s career journey to introduce students to the fundamental concepts of competitive strategy. Her story serves as a framework for understanding the complexities of maintaining a competitive edge in a dynamic environment. How can individuals and businesses shape their legacies in an ever-changing industry? And what are the long-term strategies for maintaining a competitive advantage?

Strategic positioning

It’s incredibly difficult to make it in the music industry – millions of talented individuals are constantly fighting to achieve even one tenth of the success that Swift has accomplished. So how did she do it? How did Swift manage to stand out and become an international icon?

Both external and interior factors were at play.

Over the years, Swift developed a keen understanding of the evolving music industry (external factor) that allowed her to navigate opportunities and challenges alike. One example is her use of social media platforms like Instagram and X (formerly Twitter) to connect with fans at a personal level and build a global fanbase. What’s more, her strong support system (external factor) made up of her family and close-knit team was crucial in helping Swift achieve her goals.

But having an innate talent (internal factor) is just as important. Swift really homed in on differentiation – setting herself apart from her competitors – through personal skills like writing her own songs, developing an exceptional work ethic and showcasing her resilience against public criticism.

While luck certainly played a part, the combination of several factors – strategic acumen, personal resilience, industry knowledge, strong support system – is what likely explains Swift’s success. The lesson, then, for business leaders is: How do you make your company stand out from the crowd? And how do you harness external factors to help your business grow?

Building and growing

To really understand Swift’s strategic achievements, I often have my students look at the concepts of value creation and value capture. In other words, beyond establishing success, how has Swift created and captured value throughout her career?

Songwriting has no doubt been the key source of her value creation. Swift succeeds in connecting with audiences on a personal level through her lyrics, which resonate deeply with listeners. Fans often feel Swift is talking directly to them – through “Easter eggs” that she drops in songs or social media posts, referencing things that only the most attentive followers will notice. In that sense, Swift’s artistic and strategic decisions have continually added value to her brand and career.

But Swift has also worked hard to capture the value she created. One (very literal) example is her decision to re-record her first six studio albums – after losing the rights to her songs – and re-release them under a slightly different title, adding: Taylor’s version. Through this initiative, she regained ownership of her music and re-monetized her past work. What’s more, Swift and her family manage her entire business empire – from controlling tours to fan clubs – and that ensures strategic decisions are aligned with Swift’s personal vision and values.

However, when it comes to Swift’s concerts, there’s a greater emphasis placed on negotiating between short-term revenue and long-term sustainability. Undoubtedly, Swift creates value through her concerts, but she captures only a small fraction. The unprecedented demand for Swift’s concert tickets caused Ticketmaster to crash on the day of the U.S. presale for the Eras Tour – in other words, there were more people interested in attending the concert than there were tickets available. One could argue that Swift loses possible revenue by limiting herself to a certain number of concerts – understandably because of physical and practical constraints. Additionally, second-hand tickets on the black market were estimated to be multiple times higher than the original ticket price. Here, too, Swift loses potential revenue: she could raise her ticket prices, but she prefers to maintain her concerts relatively accessible to keep her fans happy.

This poses several questions for business leaders: What is the source of the value that your company creates? Is value creation and capture sustainable over time? And what will you need to negotiate to strike the perfect balance?

Sustaining success

In 2023, Swift was named Time magazine’s Person of the Year for “spinning her story into a global legend, for bringing joy to a society desperately in need of it.” Indeed, since first coming into the scene 20 years earlier, Swift not only grew her fan base exponentially but managed to sustain it.

One of the most commonly cited reasons for this is her ability to continually reinvent herself. For example, her transition from country music to pop music in 2014 – cemented by her album 1989 – was not just a stylistic choice, but an attempt to broaden her appeal and her audience. This strategic move showed a deep understanding of the market segmentation and the need to evolve with consumer preferences.

Throughout the decades, Swift also has maintained a remarkably strong connection with her fanbase. She has cultivated a loyal, almost cultish following by engaging with fans directly through social media, personalizing interactions and creating experiences like the famous exchange of friendship bracelets at her concerts.

I often use Swift’s career to remind my students that strategy is a continuous process involving three fundamental steps: think, analyze, act. How can businesses envision where they want to be and align their actions accordingly? Should they keep innovating to evolve with changing markets and tastes? And how can firms make sure their expanding management team stays aligned with their core values?

Pascual Berrone is a profesor and Head of the Strategic Management Department at IESE Business School.