It's basically just a succession of incremental experiments. I say that method will rarely work, because the essence of strategy is choice and trade-offs and fit. What makes Southwest Airlines so successful is not a bunch of separate things, but rather the strategy that ties everything together. If you were to experiment with onboard service, then with gate service, then with ticketing mechanisms, all separately, you'd never get to Southwest's strategy. You can see why we're in the mess that we're in.
Competition is subtle, and managers are prone to simplify.
What we learn from looking at actual competition is that winning companies are anything but simple. Strategy is complex. The good news is that even successful companies almost never get everything right up front. When the Vanguard Group started competing in mutual funds, there was no Internet, no index funds. John Bogle understood the essence of that, and he took advantage of incremental opportunities over time.