Competing on the Edge

1. 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 • 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. 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market segments • refresh existing businesses with learnings from new ventures • but guard against being locked into outdated competitive models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