[anthony-james]

It does assume these things - but they're relatively reasonable. If your next closest competitor is doing worse than you, then your best employees, on average, must be better than their average employee. If an employee leaves your company for your competitor, they're adding value Day 1, whereas you have to go through the process of hiring a replacement, and hoping that they're just as good.

It also assumes that you don't pay your employees well enough to retire immediately after leaving ;)

[azernik]

That second one? Work being perfectly zero-sum with your closest competitor? Not at all reasonable.

Some of that extra business will be taken from other companies. In fact, unless it's a duopoly or you're by far the largest player in the market, probably most of that extra value will be taken from other companies.