St. Edward’s University - MBA Program Managing the Organization MGMT 6305 Dr. Rex Draman October 23, 2000

Contents Creating Tomorrow’s Advantages Strategies for Growth Michael Porter Strategies for Growth CK Prahalad Reinventing the Basis for Competition Gary Hamel

Creating Tomorrow’s Advantages Thinking in new ways: Creating advantages rather than just eliminating disadvantages. Using specialization and innovation as the basis for a competitive strategy. Being different at what you do, not only being better.

Creating Tomorrow’s Advantages Learn strategy on a continuous basis: First because we don’t know all there is to know. Second because as we all learn we create the need for further knowledge. Pitfalls in strategic thinking: The need for the largest market share. All companies should reduce their cycle times.

Creating Tomorrow’s Advantages Principles that define a good strategy: Shape the nature of the competition. Risk - Make choices. Be different in ways that involve trade-offs with other ways of being different. Trade-offs should differentiate a company thereby reducing the risk of imitation. Adapting to change: Continuity of strategy and rapid change are not inconsistent. Adapt operations to market changes while retaining core strategy goals.

Creating Tomorrow’s Advantages Importance of innovation and the role of technology: Innovation is about finding new ways of combining things. Apply the technology the company has mastered to improve the way it delivers value to its customers.

Creating Tomorrow’s Advantages Whom should the company involve in the process of developing and implementing a strategy? The essence of strategy is cross-functional, cross-activity integration. Strategy should be developed in a multifunctional team. Rethinking globalization: The paradigm of globalization is that it is putting a greater premium on specialization, on doing particular things in particular locations. We are entering a new phase where globalization is putting an emphasis on the home-base.

Creating Tomorrow’s Advantages What should we do right now to plot a successful course into the twenty-first century? Create an environment where people don’t resist change but really expect it. Cannibalize our own products instead of waiting for a competitor to do it. Render our processes obsolete instead of letting someone else do it. Article’s end

Strategies for Growth Continuity of the corporation: Focusing on the botton line is not enough. Envisioning the future is what is important. Having the ability to “influence the evolution of industries.” Having the right resources are a key ingredient in the company’s growth strategy.

Strategies for Growth Strategic Architecture: Provides a blueprint to turn what is envisioned into reality. Links between the present and the future. Big picture: New competencies New customer groups Opportunity share: Financial services Genetically engineered drugs

Strategies for Growth Questions to be answered: What share of future opportunities can we capture with our current portfolio of core competencies? Which new competencies will we have to build in order to maximize our share of those future opportunities?

Strategies for Growth Bottom line – successful companies attributes: Manage to stretch and enlarge their resource base. View the future through a process of synthesis. Have a strategic intent to have an aspiration that is widely shared Have a goal, which is clear, and an obsession with winning. Articles’s end

Reinventing the Basis for Competition The author states that “Benchmarking” is the old basis for competition. “Path-breaking” is the new basis that will lead to new wealth. The company’s focus should not be in restructuring and reengineering.

Reinventing the Basis for Competition Reinventing the basis of competition means becoming different as a company. Reinventing the existing competitive space. Creating a fundamentally new space.

Reinventing the Basis for Competition Rethinking competition: Past: Before there was clarity of industry. Competition was between players in a well-structured industry. Present: Competition is fluid. Competition should influence the shape of emerging opportunity areas.

Reinventing the Basis for Competition Understanding the future: The goal is to try to imagine a future that one can create. There is no proprietary data about the future. Must learn from outside the industry. It is better to study an industry that has already been transformed.

Reinventing the Basis for Competition Innovation in an organization: It is not up to the leader alone, it is a mix of creative people. Balanced market approach and management style (conservative vs risking-taking). Maximizing the ratio of learning over investment.

Reinventing the Basis for Competition Creating the incentive: Create a deep sense of restlessness with the status quo. Think in terms of competition as a process of shaping the evolution of space, rather than competing within existing space. Find and encourage people interested in change as a solution.

Reinventing the Basis for Competition Global competition: It is not only foreign competition but untraditional competition. It is not product versus product but business model versus business model. Imagination is central to future success of creating a better business model. Replace a company's hierarchy of experience with a hierarchy of imagination. Article’s end

Integration Between Articles Companies must transform strategy, competitive advantage and competition from a process of defining past performance as the basis for competition to redefining industry opportunity. Companies’ competitive advantages depend on embracing change to identify new products, customers, markets and industries before the market reshapes competition.

Integration Between Articles Key Concepts of Rethinking Competition Envisioning the future is what is important. Strategy Reshaping competitive space. Growth Defining new products and markets. Competition Anticipating industry evolution. If well implemented these tools can lead a company to a “visionary” future.

We invite you to peruse our presentation and we will be happy to answer your questions.

Now Go to the Discussion Forum