1. Strategy as Structured Chaos
Competing on the Edge
Strategy as Structured Chaos

2. Change is pervasive react quickly anticipate when possible
lead change where appropriate
competing on the edge is...
unpredictable
often uncontrolled
often inefficient
best practice when change is pervasive

3. Theory and Research Research Theories
in-depth research with 12 global businesses
interviews with 100+ managers
Theories
complex adaptive systems
evolutionary change
origins of time

4. Edge of Chaos intermediate state between order and chaos
organizations do not settle into a stable equilibrium but never quite fall apart
zone where all types of systems--biological, physical, economic, social--are most vibrant and flexible

5. Laws of competing on the edge
10 rules that articulate key assumptions and best practices about
strategy
organization
leadership

6. Strategy Rule 1: Advantage is Temporary
continuously generate new sources of advantage
change as opportunity, not threat

7. Rule 2: Strategy is Diverse, Emergent, Complicated
diverse collection of moves, loosely linked in a semi-coherent direction
let strategy emerge
play a broad array of options and expect to shift strategy over time

8. Rule 3: Reinvention is the goal
seek new ways to create value, rather than focus on efficiency
focus on innovative products and processes
profitable fortresses are rare

9. I can’t say that we had a really smart strategy going forward
I can’t say that we had a really smart strategy going forward. We had a strategy and when it didn’t work, we went back and regrouped until we finally hit on something Phil Knight, CEO, Nike

10. Organization Rule 4: Live in the Present maximize minimum structure
minimal necessary structure
well-understood priorities and responsibilities
a few strict rules
a few key operating variables are monitored very carefully
just enough structure to keep things from flying apart

11. Rule 5: Stretch Out the Past
exploit derivative products
extend offerings to new market segments
refresh existing businesses with learnings from new ventures
but guard against being locked into outdated competitive models

12. Rule 6: Reach into the Future
manage a longer time horizon
launch more experimental products and services
create more alliances geared toward nascent markets and emerging technologies
employ more futurists
revisit the future often

13. Rule 7: Time Pace Change set a rhythm and tempo around
number of new products and services offered per year
refreshment of brands
building manufacturing capacity
try to match tempo to change to rhythm of market
choreograph transitions in products, acquisitions, etc.

14. It was all in the rhythm. Have you ever seen Michael Jordan play when he is on a rhythm run? It was exactly like that.
--billionaire businessman commenting on his success

15. Leadership Rule 8: Grow the Strategy
grow the business like a prairie, not assemble it like a toaster
dismantle megastructures
pay attention to the order in which strategy is grown
begin with current businesses, then incorporate the past and work in future opportunities
never start with the future but rather with the basics of today

16. Rule 9: Drive Strategy from the Business Level
strategy cannot be driven top-down--the pace of change is too fast for trickle-down
success comes from skilled, fast and agile moves at the business level

17. Rule 10: Repatch Businesses to Markets and Articulate the Whole
continuously realign businesses with emerging opportunities
senior managers articulate and occasionally shape emergent strategy

18. I thought it best to shut up and listen.
--CEO commenting on strategy meeting with key business leaders