Competing on the Edge - PowerPoint PPT Presentation

Competing on the Edge

Strategy as Structured Chaos

• 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

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

• 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

• 10 rules that articulate key assumptions and best practices about
• strategy
• organization
• leadership

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

• 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

• seek new ways to create value, rather than focus on efficiency
• focus on innovative products and processes
• profitable fortresses are rare

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

• 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

• 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• but guard against being locked into outdated competitive models

• 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

• 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.

--billionaire businessman commenting on his success

• 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

• 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

• continuously realign businesses with emerging opportunities
• senior managers articulate and occasionally shape emergent strategy

--CEO commenting on strategy meeting with key business leaders