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Competing on the Edge. Strategy as Structured Chaos. 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. Theory and Research.

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competing on the edge

Competing on the Edge

Strategy as Structured Chaos

change is pervasive
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
theory and research
Theory and Research
  • Research
    • in-depth research with 12 global businesses
    • interviews with 100+ managers
  • Theories
    • complex adaptive systems
    • evolutionary change
    • origins of time
edge of chaos
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
laws of competing on the edge
Laws of competing on the edge
  • 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
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
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

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
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
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
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.
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

  • 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
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
Rule 10: Repatch Businesses to Markets and Articulate the Whole
    • continuously realign businesses with emerging opportunities
    • senior managers articulate and occasionally shape emergent strategy
I thought it best to shut up and listen.

--CEO commenting on strategy meeting with key business leaders