The only companies that have a high-profit margin, that can invest in innovation are those who have a strong position on the market, by not competing directly with other companies. Like Google or PayPal. The companies that are on a very competitive market, for example, are French airlines or the British restaurant in Palo Alto.
Instead of competing in an existing market, find a way to make your company truly different.
This means, that no one will threading your position on the market, and you will not have to fight for every customer.