A core competence is a combination of complementary skills and knowledge bases embedded in a group, or team, that results in the ability to execute one or more, critical processes to world-class standard.
Kevin P. Coyne, Stephen J.D. Hall, and Patricia Gorman Clifford, “Is Your Core Competence A Mirage”, The McKinsey Quarterly, Number 1, 1997.
Showing posts with label Strategy. Show all posts
Showing posts with label Strategy. Show all posts
Friday, August 15, 2008
Lean Thinking
What is the starting point of becoming lean?
The starting point is to acquire a completely new perception of what is value, and what is waste. I don't like the word waste because it is not horrible enough. I use the Japanese word muda. Muda sounds awful. You don't want muda. You need to acquire a new set of glasses-I call them muda glasses-that allows you to see all the way.
Daniel T. Jones, Author of the book, Lean Thinking,1996
In an interview published in Business Today (India), December 7-21, 1997, p.98.
The starting point is to acquire a completely new perception of what is value, and what is waste. I don't like the word waste because it is not horrible enough. I use the Japanese word muda. Muda sounds awful. You don't want muda. You need to acquire a new set of glasses-I call them muda glasses-that allows you to see all the way.
Daniel T. Jones, Author of the book, Lean Thinking,1996
In an interview published in Business Today (India), December 7-21, 1997, p.98.
Thursday, July 24, 2008
Major Classes of Growth Opportunities
Intensive growth
Market penetration
Market development
Integrative growth
Backward integration
Forward integration
Diversification growth
Concentric diversification
Horizontal diversification
Philip Kotler
Market penetration
Market development
Integrative growth
Backward integration
Forward integration
Diversification growth
Concentric diversification
Horizontal diversification
Philip Kotler
Wednesday, July 23, 2008
Competing on Resources
Competing on Resources. By: Collis, David J., Montgomery, Cynthia A., Harvard Business Review, 00178012, Jul-Aug2008, Vol. 86, Issue 7/8
Section: Best of HBR
• EDITOR'S NOTE: This influential 1995 article (originally published as "Competing on Resources: Strategy in the 1990s") introduced the resource-based view of the firm to practitioners hungry for a new approach to strategy. It brings together the strengths of Michael E. Porter's externally focused five-forces framework with those of the internally focused competing-on-capabilities view.
Section: Best of HBR
• EDITOR'S NOTE: This influential 1995 article (originally published as "Competing on Resources: Strategy in the 1990s") introduced the resource-based view of the firm to practitioners hungry for a new approach to strategy. It brings together the strengths of Michael E. Porter's externally focused five-forces framework with those of the internally focused competing-on-capabilities view.
Friday, July 18, 2008
Customers and Employees Drive Profit in Service Chains
Putting the Service-Profit Chain to Work.
By: Heskett, James L., Jones, Thomas O., Loveman, Gary W., Sasser, Jr., W. Earl, Schlesinger, Leonard A.,
Harvard Business Review,
Jul-August 2008, Vol. 86, Issue 7/8
Best of HBR
• HBR EDITOR'S NOTE: This article sets out a simple, elegant, and ultimately tough-minded way to build profitability in a service business. Originally published in 1994, it offers as much today as it did then and is a perennial best seller.
The service-profit chain establishes relationships between profitability, customer loyalty, and employee satisfaction, loyalty, and productivity. The links in the chain (which should be regarded as propositions) are as follows: Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal, and productive employees. Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers.
CEOs of exemplary service companies emphasize the importance of each employee and customer.
(We can intrepet the above sentence as in service companies each employee and each customer is equally very very important.
Customer Loyalty Drives Profitability and Growth
Customer Satisfaction Drives Customer Loyalty
Value Drives Customer Satisfaction
Employee Productivity Drives Value
Employee Loyalty Drives Productivity
Employee Satisfaction Drives Loyalty
Internal Quality Drives Employee Satisfaction
Leadership Underlies the Chain's Success
Authors
James L. Heskett is a Baker Foundation Professor, Emeritus, of Harvard Business School, in Boston, and a coauthor, with W. Earl Sasser, Jr., and Joe Wheeler, of The Ownership Quotient: Putting the Service-Profit Chain to Work for Unbeatable Competitive Advantage, forthcoming from Harvard Business Press. Thomas O. Jones is the president of eLanes, in Andover, Massachusetts. Gary W. Loveman is the CEO of Harrah's Entertainment, in Las Vegas. W. Earl Sasser, Jr., is a Baker Foundation Professor at Harvard Business School. Leonard A. Schlesinger has been named the 12th president of Babson College, in Babson Park, Massachusetts.
By: Heskett, James L., Jones, Thomas O., Loveman, Gary W., Sasser, Jr., W. Earl, Schlesinger, Leonard A.,
Harvard Business Review,
Jul-August 2008, Vol. 86, Issue 7/8
Best of HBR
• HBR EDITOR'S NOTE: This article sets out a simple, elegant, and ultimately tough-minded way to build profitability in a service business. Originally published in 1994, it offers as much today as it did then and is a perennial best seller.
The service-profit chain establishes relationships between profitability, customer loyalty, and employee satisfaction, loyalty, and productivity. The links in the chain (which should be regarded as propositions) are as follows: Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal, and productive employees. Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers.
CEOs of exemplary service companies emphasize the importance of each employee and customer.
(We can intrepet the above sentence as in service companies each employee and each customer is equally very very important.
Customer Loyalty Drives Profitability and Growth
Customer Satisfaction Drives Customer Loyalty
Value Drives Customer Satisfaction
Employee Productivity Drives Value
Employee Loyalty Drives Productivity
Employee Satisfaction Drives Loyalty
Internal Quality Drives Employee Satisfaction
Leadership Underlies the Chain's Success
Authors
James L. Heskett is a Baker Foundation Professor, Emeritus, of Harvard Business School, in Boston, and a coauthor, with W. Earl Sasser, Jr., and Joe Wheeler, of The Ownership Quotient: Putting the Service-Profit Chain to Work for Unbeatable Competitive Advantage, forthcoming from Harvard Business Press. Thomas O. Jones is the president of eLanes, in Andover, Massachusetts. Gary W. Loveman is the CEO of Harrah's Entertainment, in Las Vegas. W. Earl Sasser, Jr., is a Baker Foundation Professor at Harvard Business School. Leonard A. Schlesinger has been named the 12th president of Babson College, in Babson Park, Massachusetts.
Wednesday, July 16, 2008
Toyota Way 2001
'The 'Toyota Way 2001' is an expression of the values and conduct guidelines that all employees should embrace -- this is the basic philosophy for working at Toyota' (Toyota Labour Union, 2001: 3).
The two pillars of the 'Toyota Way' are 'wisdom and kaizen (continuous improvement)' and 'respect for human nature'. The first has the following three components:
Challenge -- following a dream, upholding a vision, challenging with courage and creativity.
Improvement -- the continual pursuit of evolution and innovation, a ceaseless quest for improvement.
Genchi genbutsu -- 'to thoroughly understand a situation, go and see for yourself'; grasp essentials, come to swift agreement, make a decision and pursue implementation wholeheartedly.
The second pillar comprises the following two factors:
Respect -- respect for others, honestly striving for mutual understanding and fulfilling mutual responsibility.
Teamwork -- nurturing talent and gathering together individual abilities.
Toyota Production Systems: The 'Toyota Way' and Labour-Management Relations
Masaki Saruta. Asian Business & Management. Houndmills: Dec 2006. Vol. 5, Iss. 4;
Faculty of Management, Chukyo University, 101-2 Yagoto Honmachi, Showa-ku, Nagoya, Aichi-ken 466-8666, Japan. E-mail: msaruta@mecl.chukyo-u.ac.jp
The two pillars of the 'Toyota Way' are 'wisdom and kaizen (continuous improvement)' and 'respect for human nature'. The first has the following three components:
Challenge -- following a dream, upholding a vision, challenging with courage and creativity.
Improvement -- the continual pursuit of evolution and innovation, a ceaseless quest for improvement.
Genchi genbutsu -- 'to thoroughly understand a situation, go and see for yourself'; grasp essentials, come to swift agreement, make a decision and pursue implementation wholeheartedly.
The second pillar comprises the following two factors:
Respect -- respect for others, honestly striving for mutual understanding and fulfilling mutual responsibility.
Teamwork -- nurturing talent and gathering together individual abilities.
Toyota Production Systems: The 'Toyota Way' and Labour-Management Relations
Masaki Saruta. Asian Business & Management. Houndmills: Dec 2006. Vol. 5, Iss. 4;
Faculty of Management, Chukyo University, 101-2 Yagoto Honmachi, Showa-ku, Nagoya, Aichi-ken 466-8666, Japan. E-mail: msaruta@mecl.chukyo-u.ac.jp
Curveball Strategies to Fool the Competition.
By: Stalk, Jr., George,
Harvard Business Review,
Sep 2006, Vol. 84, Issue 9
Success in the marketplace is ultimately achieved by winning customers, not by defeating competitors.
One way to throw competitors off balance is to mask high performance so rivals fail to see your success until it's too late.
George Stalk, Jr., (stalk.george@bcg.com) is a senior vice president with the Boston Consulting Group and the author of numerous books and articles, including, with Rob Lachenauer, "Hardball: Five Killer Strategies for Trouncing the Competition" (HBR April 2004). He is based in Toronto.
By: Stalk, Jr., George,
Harvard Business Review,
Sep 2006, Vol. 84, Issue 9
Success in the marketplace is ultimately achieved by winning customers, not by defeating competitors.
One way to throw competitors off balance is to mask high performance so rivals fail to see your success until it's too late.
George Stalk, Jr., (stalk.george@bcg.com) is a senior vice president with the Boston Consulting Group and the author of numerous books and articles, including, with Rob Lachenauer, "Hardball: Five Killer Strategies for Trouncing the Competition" (HBR April 2004). He is based in Toronto.
Managing Complementors
WITH FRIENDS LIKE THESE.
By: Yoffie, David B., Kwak, Mary,
Harvard Business Review,
Sep2006, Vol. 84, Issue 9
While in-depth analysis of competitors and suppliers is de rigueur in formulating strategy, surprisingly few companies pay much attention to firms that sell complementary products and services
The first step in managing complementors is to develop a deep understanding of their economics, their strategies and goals, their existing capabilities, their incentives for cooperation, and any potential areas of conflict.
By: Yoffie, David B., Kwak, Mary,
Harvard Business Review,
Sep2006, Vol. 84, Issue 9
While in-depth analysis of competitors and suppliers is de rigueur in formulating strategy, surprisingly few companies pay much attention to firms that sell complementary products and services
The first step in managing complementors is to develop a deep understanding of their economics, their strategies and goals, their existing capabilities, their incentives for cooperation, and any potential areas of conflict.
Creating Shareholder Value
10 Ways to Create Shareholder Value.
By: Rappaport, Alfred,
Harvard Business Review,
September 2006, Vol. 84, Issue 9
Do not manage earnings or provide earnings guidance.
Make strategic decisions that maximize expected value, even at the expense of lowering near-term earnings.
Make acquisitions that maximize expected value, even at the expense of lowering near-term earnings.
Carry only assets that maximize value.
Return cash to shareholders when there are no credible value-creating opportunities to invest in the business.
Reward CEOs and other senior executives for delivering superior long-term returns.
Reward operating-unit executives for adding superior multiyear value.
Reward middle managers and frontline employees for delivering superior performance on the key value drivers that they influence directly.
Require senior executives to bear the risks of ownership just as shareholders do.
Provide investors with value-relevant information.
By: Rappaport, Alfred,
Harvard Business Review,
September 2006, Vol. 84, Issue 9
Do not manage earnings or provide earnings guidance.
Make strategic decisions that maximize expected value, even at the expense of lowering near-term earnings.
Make acquisitions that maximize expected value, even at the expense of lowering near-term earnings.
Carry only assets that maximize value.
Return cash to shareholders when there are no credible value-creating opportunities to invest in the business.
Reward CEOs and other senior executives for delivering superior long-term returns.
Reward operating-unit executives for adding superior multiyear value.
Reward middle managers and frontline employees for delivering superior performance on the key value drivers that they influence directly.
Require senior executives to bear the risks of ownership just as shareholders do.
Provide investors with value-relevant information.
Tuesday, July 15, 2008
Can Science Be a Business?
Can Science Be a Business? Lessons from Biotech.
By: Pisano, Gary P.,
Harvard Business Review,
October 2006, Vol. 84, Issue 10
Biotech has not delivered on its promise because the industry's structure--much of it borrowed from Silicon Valley--is flawed. Businesses engaged in advancing basic science as a core activity need a new design
Financially, biotech still looks like an emerging sector. Despite the commercial success of companies such as Amgen and Genentech and the stunning growth in revenues for the industry as a whole, most biotechnology firms earn no profit. Nor is there evidence that they are significantly more productive at drug R&D than the much maligned behemoths of the pharmaceutical industry.
Gary P. Pisano (gpisano@hbs.edu)is the Harry E. Figgie, Jr., Professor of Business Administration at Harvard Business School in Boston.
This article was adapted from Science Business: The Promise, the Reality, and the Future of Biotech, to be published by Harvard Business School Press in November 2006.
By: Pisano, Gary P.,
Harvard Business Review,
October 2006, Vol. 84, Issue 10
Biotech has not delivered on its promise because the industry's structure--much of it borrowed from Silicon Valley--is flawed. Businesses engaged in advancing basic science as a core activity need a new design
Financially, biotech still looks like an emerging sector. Despite the commercial success of companies such as Amgen and Genentech and the stunning growth in revenues for the industry as a whole, most biotechnology firms earn no profit. Nor is there evidence that they are significantly more productive at drug R&D than the much maligned behemoths of the pharmaceutical industry.
Gary P. Pisano (gpisano@hbs.edu)is the Harry E. Figgie, Jr., Professor of Business Administration at Harvard Business School in Boston.
This article was adapted from Science Business: The Promise, the Reality, and the Future of Biotech, to be published by Harvard Business School Press in November 2006.
MEETING THE CHALLENGE OF CORPORATE Entrepreneurship.
By: Garvin, David A., Levesque, Lynne C.,
Harvard Business Review,
October 2006, Vol. 84, Issue 10
Corporate entrepreneurship is a risky proposition.
New ventures set up by existing companies face innumerable barriers, and research shows that most of them fail. Emerging businesses seldom mesh smoothly with well-established systems, processes, and cultures. Yet success requires a blend of old and new organizational traits, a subtle mix of characteristics achieved through what we call balancing acts. Unless companies keep those opposing forces in equilibrium, emerging businesses will flounder.
Corporations must perform balancing acts in three areas: strategy, operations, and organization.
For companies that wish to succeed with corporate entrepreneurship, the lesson is simple: Success is not an either-or proposition. New businesses should be nurtured through a series of balancing acts that combine entrepreneurship and disciplined management, short-and long-term thinking, and established and new processes.
David A. Garvin (dgarvin@hbs.edu), the C. Roland Christensen Professor of Business Administration at Harvard Business School in Boston, has authored or coauthored 11 previous articles in Harvard Business Review.
Lynne C. Levesque (lynnelevesque@cs.com)is a Boston-based consultant and researcher.
By: Garvin, David A., Levesque, Lynne C.,
Harvard Business Review,
October 2006, Vol. 84, Issue 10
Corporate entrepreneurship is a risky proposition.
New ventures set up by existing companies face innumerable barriers, and research shows that most of them fail. Emerging businesses seldom mesh smoothly with well-established systems, processes, and cultures. Yet success requires a blend of old and new organizational traits, a subtle mix of characteristics achieved through what we call balancing acts. Unless companies keep those opposing forces in equilibrium, emerging businesses will flounder.
Corporations must perform balancing acts in three areas: strategy, operations, and organization.
For companies that wish to succeed with corporate entrepreneurship, the lesson is simple: Success is not an either-or proposition. New businesses should be nurtured through a series of balancing acts that combine entrepreneurship and disciplined management, short-and long-term thinking, and established and new processes.
David A. Garvin (dgarvin@hbs.edu), the C. Roland Christensen Professor of Business Administration at Harvard Business School in Boston, has authored or coauthored 11 previous articles in Harvard Business Review.
Lynne C. Levesque (lynnelevesque@cs.com)is a Boston-based consultant and researcher.
Strategies for Platform Management (Media and Investment Banks)
STRATEGIES FOR TWO- SIDED MARKETS.
By: Eisenmann, Thomas, Parker, Geoffrey, Alstyne, Marshall W. Van,
Harvard Business Review,
October 2006, Vol. 84, Issue 10
Companies in industries such as banking, and media make money by linking markets from different sides of their customer networks--audiences and advertisers (by media), for example. The distinct character of these business demands a new approach to strategy.
1 Challenge: Pricing the Platform
2 Challenge: Winner-Take-All Dynamics
3 Challenge: The Threat of Envelopment
1. See Geoffrey Parker and Marshall W. Van Alstyne, "Two-Sided Networks: A Theory of Information Product Design," Management Science (2005) and Jean-Charles Rochet and Jean Tirole, "Platform Competition in Two-Sided Markets," Journal of the European Economic Association (2003).
Thomas Eisenmann (teisenmann@hbs.edu)is an associate professor at Harvard Business School in Boston.
Geoffrey Parker (gparker@tulane.edu)is an associate professor at Tulane University’s A. B. Freeman School of Business in New Orleans.
Marshall W. Van Alstyne (mva@bu.edu)is an associate professor at Boston University’s School of Management and a visiting scholar at MIT’s Center for eBusiness in Cambridge, Massachusetts
By: Eisenmann, Thomas, Parker, Geoffrey, Alstyne, Marshall W. Van,
Harvard Business Review,
October 2006, Vol. 84, Issue 10
Companies in industries such as banking, and media make money by linking markets from different sides of their customer networks--audiences and advertisers (by media), for example. The distinct character of these business demands a new approach to strategy.
1 Challenge: Pricing the Platform
2 Challenge: Winner-Take-All Dynamics
3 Challenge: The Threat of Envelopment
1. See Geoffrey Parker and Marshall W. Van Alstyne, "Two-Sided Networks: A Theory of Information Product Design," Management Science (2005) and Jean-Charles Rochet and Jean Tirole, "Platform Competition in Two-Sided Markets," Journal of the European Economic Association (2003).
Thomas Eisenmann (teisenmann@hbs.edu)is an associate professor at Harvard Business School in Boston.
Geoffrey Parker (gparker@tulane.edu)is an associate professor at Tulane University’s A. B. Freeman School of Business in New Orleans.
Marshall W. Van Alstyne (mva@bu.edu)is an associate professor at Boston University’s School of Management and a visiting scholar at MIT’s Center for eBusiness in Cambridge, Massachusetts
THE HBR INTERVIEW with Stanford's James March October 2006
IDEAS AS ART.
By: Coutu, Diane,
Harvard Business Review,
October 2006, Vol. 84, Issue 10
THE HBR INTERVIEW with Stanford's James March
If a manager asks an academic consultant what to do and that consultant answers, then the consultant should be fired. No academic has the experience to know the context of a managerial problem well enough to give specific advice about a specific situation. What an academic consultant can do is say some things that, in combination with the manager’s knowledge of the context, may lead to a better solution. It is the combination of academic and experiential knowledge, not the substitution of one for the other, that yields improvement.
By: Coutu, Diane,
Harvard Business Review,
October 2006, Vol. 84, Issue 10
THE HBR INTERVIEW with Stanford's James March
If a manager asks an academic consultant what to do and that consultant answers, then the consultant should be fired. No academic has the experience to know the context of a managerial problem well enough to give specific advice about a specific situation. What an academic consultant can do is say some things that, in combination with the manager’s knowledge of the context, may lead to a better solution. It is the combination of academic and experiential knowledge, not the substitution of one for the other, that yields improvement.
The Four-Tiered Structure of Markets in Emerging Economies
Emerging Giants.
By: Tarun Khanna, Krishna G. Palepu,
Harvard Business Review,
October 2006, Vol. 84, Issue 10
The Four-Tiered Structure of Markets
In developing countries, the markets for finished goods (products) and raw materials (factors of production) can be broken up into four distinct components.
Global tier
At the apex of the market pyramid is the global tier. In the product market, this section consists of consumers who want offerings to have the same attributes and quality that products in developed countries have and are willing to pay global prices for them. In the talent market, this tier consists of top-notch managers, such as newly minted graduates from the Indian Institutes of Management, who demand global-level salaries.
Glocal tier
Immediately below that is the glocal tier. In the product market, this tier consists of consumers who demand customized products of near-global standard and are willing to pay a shade less than global consumers do. An example would be Chinese and Indian executives who prefer to stay in a Shangri-La or Taj hotel rather than at a Four Seasons. In the talent market, this section consists of high-quality managers who will work only for local companies even if the pay is a little less than it would be at multinational corporations.
Local tier
Consumers in the local tier are happy with products of local quality and at local prices. In the talent market, managers in this section will put up with less-than-world-class working conditions as long as they are paid higher-than-average salaries.
Bottom tier
The bottom of the market consists of people who can afford only the least expensive products.
Multinational corporations typically compete for consumers and talent only in the global tier. Meanwhile, smart local companies, which dominate the local tier, move into the glocal tier and also create breakthrough products for the bottom segment as economies liberalize. These businesses often become emerging giants.
Tarun Khanna (tkhanna@hbs.edu)is the Jorge Paulo Lemann Professor at Harvard Business School in Boston. Krishna G. Palepu (kpalepu@hbs.edu)is the Ross Graham Walker Professor of Business Administration at Harvard Business School. They are coauthors of three previous HBR articles, including "Strategies That Fit Emerging Markets" (June 2005).
By: Tarun Khanna, Krishna G. Palepu,
Harvard Business Review,
October 2006, Vol. 84, Issue 10
The Four-Tiered Structure of Markets
In developing countries, the markets for finished goods (products) and raw materials (factors of production) can be broken up into four distinct components.
Global tier
At the apex of the market pyramid is the global tier. In the product market, this section consists of consumers who want offerings to have the same attributes and quality that products in developed countries have and are willing to pay global prices for them. In the talent market, this tier consists of top-notch managers, such as newly minted graduates from the Indian Institutes of Management, who demand global-level salaries.
Glocal tier
Immediately below that is the glocal tier. In the product market, this tier consists of consumers who demand customized products of near-global standard and are willing to pay a shade less than global consumers do. An example would be Chinese and Indian executives who prefer to stay in a Shangri-La or Taj hotel rather than at a Four Seasons. In the talent market, this section consists of high-quality managers who will work only for local companies even if the pay is a little less than it would be at multinational corporations.
Local tier
Consumers in the local tier are happy with products of local quality and at local prices. In the talent market, managers in this section will put up with less-than-world-class working conditions as long as they are paid higher-than-average salaries.
Bottom tier
The bottom of the market consists of people who can afford only the least expensive products.
Multinational corporations typically compete for consumers and talent only in the global tier. Meanwhile, smart local companies, which dominate the local tier, move into the glocal tier and also create breakthrough products for the bottom segment as economies liberalize. These businesses often become emerging giants.
Tarun Khanna (tkhanna@hbs.edu)is the Jorge Paulo Lemann Professor at Harvard Business School in Boston. Krishna G. Palepu (kpalepu@hbs.edu)is the Ross Graham Walker Professor of Business Administration at Harvard Business School. They are coauthors of three previous HBR articles, including "Strategies That Fit Emerging Markets" (June 2005).
Monday, July 14, 2008
Academic Response Subsequent to Porter on Strategy
Academics also responded to this new approach to strategy in at least four
important ways.
First, scholars such as Anita McGahan extended Porter’s concepts
through extensive empirical research that broadly supported Porter’s concepts.
Second, a former student of Porter’s, Richard Rumelt, focused strategy
away from industry characteristics toward the characteristics of individual firms.
He found that the industry-level differences highlighted in the five forces model
were actually less predictive of firm profitability than were differences between
firms within a single industry.
Third, a related stream of scholarship called the resource-based view of the firm looked within firms to identify the sources of superior firm profitability, and it isolated ownership of certain key resources as the locus of competitive advantage, rather than the Porterian view of a firm’s position in its market and its value chain.
Finally, a fourth stream examined the role of economic complements to the firm’s own assets. Controlling key complementary assets afforded firms a comparative advantage, which facilitated entry into new industries.
Henry W. Chesbrough
Melissa M. Appleyard
Open Innovation and Strategy
CALIFORNIA MANAGEMENT REVIEW VOL. 50,NO. 1 FALL 2007
important ways.
First, scholars such as Anita McGahan extended Porter’s concepts
through extensive empirical research that broadly supported Porter’s concepts.
Second, a former student of Porter’s, Richard Rumelt, focused strategy
away from industry characteristics toward the characteristics of individual firms.
He found that the industry-level differences highlighted in the five forces model
were actually less predictive of firm profitability than were differences between
firms within a single industry.
Third, a related stream of scholarship called the resource-based view of the firm looked within firms to identify the sources of superior firm profitability, and it isolated ownership of certain key resources as the locus of competitive advantage, rather than the Porterian view of a firm’s position in its market and its value chain.
Finally, a fourth stream examined the role of economic complements to the firm’s own assets. Controlling key complementary assets afforded firms a comparative advantage, which facilitated entry into new industries.
Henry W. Chesbrough
Melissa M. Appleyard
Open Innovation and Strategy
CALIFORNIA MANAGEMENT REVIEW VOL. 50,NO. 1 FALL 2007
Thursday, July 10, 2008
Strategy and Competition HBR 2006
Strategy and Competition
Can Science Be a Business? Lessons from Biotech
Gary P. Pisano
October
Reprint R0610H
Capturing the Ricochet Economy
Vijay Mahajan and
Yoram (Jerry) Wind
Forethought, November
Reprint F0611D
Competing on Analytics
Thomas H. Davenport
January
Reprint R0601H ♦ OnPoint 3005;
OnPoint collection "To Make the
Best Decisions, Demand the Best
Data" 3048
Curveball: Strategies to Fool the Competition
George Stalk, Jr.
September
Reprint R0609G ♦ OnPoint 1055;
OnPoint collection "Hardball
Strategies, 2nd Edition" 1050
Emerging Giants: Building World-Class Companies in Developing Countries
Tarun Khanna and
Krishna G. Palepu
October
Reprint R0610C ♦ OnPoint 1459;
OnPoint collection "Winning
in the World's Emerging
Markets" 1455
Growing by Cutting SKUs at Clorox
Remko Van Hoek and
Kevin Pegels
Forethought, April
Reprint F0604E
The HBR Interview: Growth as a Process
Jeffrey R. Immelt
Interviewed by Thomas A. Stewart
June
Reprint R0606C
The High Cost of Low Wages
Wayne F. Cascio
Forethought, December
Reprint F0612D
How to Implement a New Strategy Without Disrupting Your Organization
Robert S. Kaplan and
David P. Norton
March
Reprint R0603G
Inside the Mind of the Chinese Consumer
William McEwen, Xiaoguang
Fang, Chuanping Zhang, and
Richard Burkholder
March
Reprint R0603D ♦ OnPoint 3528;
OnPoint collection "China
Tomorrow: Prospects and Perils,
2nd Edition" 3552
Localization: The Revolution in Consumer Markets
Darrell K. Rigby and
Vijay Vishwanath
April
Reprint R0604E ♦ OnPoint 4109
Managing the Right Tension
Dominic Dodd and Ken Favaro
December
Reprint R0612C
Meeting the Challenge of Corporate Entrepreneurship
David A. Garvin and
Lynne C. Levesque
October
Reprint R0610G ♦ OnPoint 1462;
OnPoint collection "Building
Breakthrough Businesses in
Established Companies,
2nd Edition" 1456
Profiting from the Long Tail
Daniel G. Goldstein and
Dominique C. Goldstein
Forethought, June
Reprint F0606G
Stop Making Plans; Start Making Decisions
Michael C. Mankins and
Richard Steele
January
Reprint R0601F ♦ OnPoint 2971;
OnPoint collection "What Makes
a Decisive Leadership Team,
2nd Edition" 3056
Strategies for Two-Sided Markets
Thomas Eisenmann,
Geoffrey Parker, and
Marshall W. Van Alstyne
October
Reprint R0610F ♦ OnPoint 1463
Strategies to Fight Low-Cost Rivals
Nirmalya Kumar
December
Reprint R0612F ♦ OnPoint 1684
Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility
Michael E. Porter and
Mark R. Kramer
December
Reprint R0612D
The Top-Line Allure of Offshoring
Arie Y. Lewin and Carine Peeters
Forethought, March
Reprint F0603C
When Your Contract Manufacturer Becomes Your Competitor
Benito Arruñada and
Xosé H. Vázquez
September
Reprint R0609J
With Friends Like These: The Art of Managing Complementors
David B. Yoffie and Mary Kwak
September
Reprint R0609E ♦ OnPoint 1085;
OnPoint collection "Don't
Innovate Alone" 1049
Can Science Be a Business? Lessons from Biotech
Gary P. Pisano
October
Reprint R0610H
Capturing the Ricochet Economy
Vijay Mahajan and
Yoram (Jerry) Wind
Forethought, November
Reprint F0611D
Competing on Analytics
Thomas H. Davenport
January
Reprint R0601H ♦ OnPoint 3005;
OnPoint collection "To Make the
Best Decisions, Demand the Best
Data" 3048
Curveball: Strategies to Fool the Competition
George Stalk, Jr.
September
Reprint R0609G ♦ OnPoint 1055;
OnPoint collection "Hardball
Strategies, 2nd Edition" 1050
Emerging Giants: Building World-Class Companies in Developing Countries
Tarun Khanna and
Krishna G. Palepu
October
Reprint R0610C ♦ OnPoint 1459;
OnPoint collection "Winning
in the World's Emerging
Markets" 1455
Growing by Cutting SKUs at Clorox
Remko Van Hoek and
Kevin Pegels
Forethought, April
Reprint F0604E
The HBR Interview: Growth as a Process
Jeffrey R. Immelt
Interviewed by Thomas A. Stewart
June
Reprint R0606C
The High Cost of Low Wages
Wayne F. Cascio
Forethought, December
Reprint F0612D
How to Implement a New Strategy Without Disrupting Your Organization
Robert S. Kaplan and
David P. Norton
March
Reprint R0603G
Inside the Mind of the Chinese Consumer
William McEwen, Xiaoguang
Fang, Chuanping Zhang, and
Richard Burkholder
March
Reprint R0603D ♦ OnPoint 3528;
OnPoint collection "China
Tomorrow: Prospects and Perils,
2nd Edition" 3552
Localization: The Revolution in Consumer Markets
Darrell K. Rigby and
Vijay Vishwanath
April
Reprint R0604E ♦ OnPoint 4109
Managing the Right Tension
Dominic Dodd and Ken Favaro
December
Reprint R0612C
Meeting the Challenge of Corporate Entrepreneurship
David A. Garvin and
Lynne C. Levesque
October
Reprint R0610G ♦ OnPoint 1462;
OnPoint collection "Building
Breakthrough Businesses in
Established Companies,
2nd Edition" 1456
Profiting from the Long Tail
Daniel G. Goldstein and
Dominique C. Goldstein
Forethought, June
Reprint F0606G
Stop Making Plans; Start Making Decisions
Michael C. Mankins and
Richard Steele
January
Reprint R0601F ♦ OnPoint 2971;
OnPoint collection "What Makes
a Decisive Leadership Team,
2nd Edition" 3056
Strategies for Two-Sided Markets
Thomas Eisenmann,
Geoffrey Parker, and
Marshall W. Van Alstyne
October
Reprint R0610F ♦ OnPoint 1463
Strategies to Fight Low-Cost Rivals
Nirmalya Kumar
December
Reprint R0612F ♦ OnPoint 1684
Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility
Michael E. Porter and
Mark R. Kramer
December
Reprint R0612D
The Top-Line Allure of Offshoring
Arie Y. Lewin and Carine Peeters
Forethought, March
Reprint F0603C
When Your Contract Manufacturer Becomes Your Competitor
Benito Arruñada and
Xosé H. Vázquez
September
Reprint R0609J
With Friends Like These: The Art of Managing Complementors
David B. Yoffie and Mary Kwak
September
Reprint R0609E ♦ OnPoint 1085;
OnPoint collection "Don't
Innovate Alone" 1049
STRATEGIES TO FIGHT LOW-COST RIVALS
STRATEGIES TO FIGHT LOW-COST RIVALS.
By: Kumar, Nirmalya,
Harvard Business Review,
Dec 2006, Vol. 84, Issue 12
Companies have only three options: attack, coexist uneasily, or become low-cost players themselves. None of them is easy, but the right framework can help you learn which strategy is most likely to work.
Low-cost players will continue to mushroom, and some will succeed. However, there will always be two kinds of consumers: those who buy on the basis of price and those who are partial to value. Therefore, there will always be room for both low-cost players and value-added businesses. How much room each will have depends not only on the industry and customers' preferences, but also on the strategies traditional businesses deploy. If incumbents don't take on low-cost rivals quickly and effectively, they can blame no one for their failure but themselves.
Nirmalya Kumar (nkumar@london.edu) is a professor of marketing at London Business School, where he is also the director of the Centre for Marketing and codirector of the Aditya V. Birla India Centre. He is the author or coauthor of two books, including, with Jan-Benedict E.M. Steenkamp, Private Label Strategy: How to Meet the Store Brand Challenge (Harvard Business School Press, forthcoming in February 2007).
By: Kumar, Nirmalya,
Harvard Business Review,
Dec 2006, Vol. 84, Issue 12
Companies have only three options: attack, coexist uneasily, or become low-cost players themselves. None of them is easy, but the right framework can help you learn which strategy is most likely to work.
Low-cost players will continue to mushroom, and some will succeed. However, there will always be two kinds of consumers: those who buy on the basis of price and those who are partial to value. Therefore, there will always be room for both low-cost players and value-added businesses. How much room each will have depends not only on the industry and customers' preferences, but also on the strategies traditional businesses deploy. If incumbents don't take on low-cost rivals quickly and effectively, they can blame no one for their failure but themselves.
Nirmalya Kumar (nkumar@london.edu) is a professor of marketing at London Business School, where he is also the director of the Centre for Marketing and codirector of the Aditya V. Birla India Centre. He is the author or coauthor of two books, including, with Jan-Benedict E.M. Steenkamp, Private Label Strategy: How to Meet the Store Brand Challenge (Harvard Business School Press, forthcoming in February 2007).
Wednesday, July 9, 2008
Porter on Corporate Social Responsibility
Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility. By: Porter, Michael E., Kramer, Mark R., Harvard Business Review, 00178012, Dec2006, Vol. 84, Issue 12
Corporations are not responsible for all the world's problems, nor do they have the resources to solve them all. Each company can identify the particular set of societal problems that it is best equipped to help resolve and from which it can gain the greatest competitive benefit. Addressing social issues by creating shared value will lead to self-sustaining solutions that do not depend on private or government subsidies. When a well-run business applies its vast resources, expertise, and management talent to problems that it understands and in which it has a stake, it can have a greater impact on social good than any other institution or philanthropic organization.
Four Prevailing Justifications for CSR
Broadly speaking, proponents of CSR have used four arguments to make their case: moral obligation, sustainability, license to operate, and reputation. The moral appeal – arguing that companies have a duty to be good citizens and to "do the right thing"– is prominent in the goal of Business for Social Responsibility, the leading nonprofit CSR business association in the United States. It asks that its members "achieve commercial success in ways that honor ethical values and respect people, communities, and the natural environment." Sustainability emphasizes environmental and community stewardship. An excellent definition was developed in the 1980s by Norwegian Prime Minister Gro Harlem Brundtland and used by the World Business Council for Sustainable Development: "Meeting the needs of the present without compromising the ability of future generations to meet their own needs." The notion of license to operate derives from the fact that every company needs tacit or explicit permission from governments, communities, and numerous other stakeholders to do business. Finally, reputation is used by many companies to justify CSR initiatives on the grounds that they will improve a company's image, strengthen its brand, enliven morale, and even raise the value of its stock. These justifications have advanced thinking in the field, but none offers sufficient guidance for the difficult choices corporate leaders must make.
Responsive CSR. Responsive CSR comprises two elements: acting as a good corporate citizen, attuned to the evolving social concerns of stakeholders, and mitigating existing or anticipated adverse effects from business activities.
Good citizenship is a sine qua non of CSR, and companies need to do it well.
The second part of responsive CSR – mitigating the harm arising from a firm's value chain activities–is essentially an operational challenge. Because there are a myriad of possible value chain impacts for each business unit, many companies have adopted a checklist approach to CSR, using standardized sets of social and environmental risks. The Global Reporting Initiative, which is rapidly becoming a standard for CSR reporting, has enumerated a list of 141 CSR issues, supplemented by auxiliary lists for different industries.
Strategic CSR. For any company, strategy must go beyond best practices. It is about choosing a unique position – doing things differently from competitors in a way that lowers costs or better serves a particular set of customer needs. These principles apply to a company's relationship to society as readily as to its relationship to its customers and rivals.
Strategic CSR moves beyond good corporate citizenship and mitigating harmful value chain impacts to mount a small number of initiatives whose social and business benefits are large and distinctive. Strategic CSR involves both inside-out and outside-in dimensions working in tandem. It is here that the opportunities for shared value truly lie.
Strategic CSR unlocks shared value by investing in social aspects of context that strengthen company competitiveness.
At the heart of any strategy is a unique value proposition: a set of needs a company can meet for its chosen customers that others cannot. The most strategic CSR occurs when a company adds a social dimension to its value proposition, making social impact integral to the overall strategy.
---------------
Authors
Michael E. Porter is the Bishop William Lawrence University Professor at Harvard University; he is based at Harvard Business School in Boston. He is a frequent contributor to HBR, and his most recent article is "Seven Surprises for New CEOs" (October 2004). Mark R. Kramer (mark.kramer@fsg-impact.org) is the managing director of FSG Social Impact Advisors, an international nonprofit consulting firm, and a senior fellow in the CSR Initiative at Harvard's John F. Kennedy School of Government in Cambridge, Massachusetts. Porter and Kramer are the cofounders of both FSG Social Impact Advisors and the Center for Effective Philanthropy, a nonprofit research organization.
Corporations are not responsible for all the world's problems, nor do they have the resources to solve them all. Each company can identify the particular set of societal problems that it is best equipped to help resolve and from which it can gain the greatest competitive benefit. Addressing social issues by creating shared value will lead to self-sustaining solutions that do not depend on private or government subsidies. When a well-run business applies its vast resources, expertise, and management talent to problems that it understands and in which it has a stake, it can have a greater impact on social good than any other institution or philanthropic organization.
Four Prevailing Justifications for CSR
Broadly speaking, proponents of CSR have used four arguments to make their case: moral obligation, sustainability, license to operate, and reputation. The moral appeal – arguing that companies have a duty to be good citizens and to "do the right thing"– is prominent in the goal of Business for Social Responsibility, the leading nonprofit CSR business association in the United States. It asks that its members "achieve commercial success in ways that honor ethical values and respect people, communities, and the natural environment." Sustainability emphasizes environmental and community stewardship. An excellent definition was developed in the 1980s by Norwegian Prime Minister Gro Harlem Brundtland and used by the World Business Council for Sustainable Development: "Meeting the needs of the present without compromising the ability of future generations to meet their own needs." The notion of license to operate derives from the fact that every company needs tacit or explicit permission from governments, communities, and numerous other stakeholders to do business. Finally, reputation is used by many companies to justify CSR initiatives on the grounds that they will improve a company's image, strengthen its brand, enliven morale, and even raise the value of its stock. These justifications have advanced thinking in the field, but none offers sufficient guidance for the difficult choices corporate leaders must make.
Responsive CSR. Responsive CSR comprises two elements: acting as a good corporate citizen, attuned to the evolving social concerns of stakeholders, and mitigating existing or anticipated adverse effects from business activities.
Good citizenship is a sine qua non of CSR, and companies need to do it well.
The second part of responsive CSR – mitigating the harm arising from a firm's value chain activities–is essentially an operational challenge. Because there are a myriad of possible value chain impacts for each business unit, many companies have adopted a checklist approach to CSR, using standardized sets of social and environmental risks. The Global Reporting Initiative, which is rapidly becoming a standard for CSR reporting, has enumerated a list of 141 CSR issues, supplemented by auxiliary lists for different industries.
Strategic CSR. For any company, strategy must go beyond best practices. It is about choosing a unique position – doing things differently from competitors in a way that lowers costs or better serves a particular set of customer needs. These principles apply to a company's relationship to society as readily as to its relationship to its customers and rivals.
Strategic CSR moves beyond good corporate citizenship and mitigating harmful value chain impacts to mount a small number of initiatives whose social and business benefits are large and distinctive. Strategic CSR involves both inside-out and outside-in dimensions working in tandem. It is here that the opportunities for shared value truly lie.
Strategic CSR unlocks shared value by investing in social aspects of context that strengthen company competitiveness.
At the heart of any strategy is a unique value proposition: a set of needs a company can meet for its chosen customers that others cannot. The most strategic CSR occurs when a company adds a social dimension to its value proposition, making social impact integral to the overall strategy.
---------------
Authors
Michael E. Porter is the Bishop William Lawrence University Professor at Harvard University; he is based at Harvard Business School in Boston. He is a frequent contributor to HBR, and his most recent article is "Seven Surprises for New CEOs" (October 2004). Mark R. Kramer (mark.kramer@fsg-impact.org) is the managing director of FSG Social Impact Advisors, an international nonprofit consulting firm, and a senior fellow in the CSR Initiative at Harvard's John F. Kennedy School of Government in Cambridge, Massachusetts. Porter and Kramer are the cofounders of both FSG Social Impact Advisors and the Center for Effective Philanthropy, a nonprofit research organization.
Managing the Right Tension.
By: Dodd, Dominic, Favaro, Ken,
Harvard Business Review,
Dec 2006, Vol. 84, Issue 12
Profitability or growth? Short term or long? Synergy or stand-alone unit performance? All companies struggle to reconcile these tensions. But in any given company, one is more important than the others – and that's the one to manage.
Our research shows that most companies struggle to succeed in managing the three tensions. Between 1983 and 2003, only 38% of the companies we studied achieved both positive profitability and real revenue growth in the same year more often than they failed to do so. On the short-term/long-term tension, the results were little better: In a typical year, only 44% of companies grew earnings over the previous year while also being on the path toward economic profit growth over the next five years. Finally, we found that fewer than 45% of companies were able to add value to their divisions and business units through both synergy and improving stand-alone performance at the same time.
But no matter how difficult it is to do, working hard to strengthen the common bond in your company's lead tension is the only truly reliable route to improving performance for all your stakeholders.
Dominic Dodd (ddodd@marakon.com) is a director of Marakon Associates, an international management consulting firm headquartered in New York and London. Ken Favaro (kfavaro@marakon.com) is Marakon's cochairman and was recently the firm's chief executive. They are the authors of The Three Tensions: Winning the Struggle to Perform Without Compromise (Jossey-Bass, forthcoming).
By: Dodd, Dominic, Favaro, Ken,
Harvard Business Review,
Dec 2006, Vol. 84, Issue 12
Profitability or growth? Short term or long? Synergy or stand-alone unit performance? All companies struggle to reconcile these tensions. But in any given company, one is more important than the others – and that's the one to manage.
Our research shows that most companies struggle to succeed in managing the three tensions. Between 1983 and 2003, only 38% of the companies we studied achieved both positive profitability and real revenue growth in the same year more often than they failed to do so. On the short-term/long-term tension, the results were little better: In a typical year, only 44% of companies grew earnings over the previous year while also being on the path toward economic profit growth over the next five years. Finally, we found that fewer than 45% of companies were able to add value to their divisions and business units through both synergy and improving stand-alone performance at the same time.
But no matter how difficult it is to do, working hard to strengthen the common bond in your company's lead tension is the only truly reliable route to improving performance for all your stakeholders.
Dominic Dodd (ddodd@marakon.com) is a director of Marakon Associates, an international management consulting firm headquartered in New York and London. Ken Favaro (kfavaro@marakon.com) is Marakon's cochairman and was recently the firm's chief executive. They are the authors of The Three Tensions: Winning the Struggle to Perform Without Compromise (Jossey-Bass, forthcoming).
Monday, July 7, 2008
Corporations and NGOs are Collaborating
Cocreating Business's New Social Compact.
By: Brugmann, Jeb, Prahalad, C. K.,
Harvard Business Review,
Feb 2007, Vol. 85, Issue 2
Corporations and NGOs are together creating innovative business models.
First, NGOs emerged as the corporate sector's de facto regulators, occupying the vacuum that governments were leaving behind. They aren't newcomers to the task; for many years, NGOs have influenced markets in areas such as chemical regulation, oil spill liability, air emissions, liquid waste, pharmaceutical and food standards, child labor, and employment discrimination. Their influence has created a regulatory framework tougher than the legal requirements corporations face.
Second, companies have invested heavily to develop expertise to cope with NGOs. They have spent time and money launching countercampaigns to protect their reputations.
Third, markets are emerging as an arena in which companies and NGOs interact.
While companies have discovered the importance of NGOs as paths to markets, social groups have realized that carefully calibrated business models can unleash powerful forces for good.
By: Brugmann, Jeb, Prahalad, C. K.,
Harvard Business Review,
Feb 2007, Vol. 85, Issue 2
Corporations and NGOs are together creating innovative business models.
First, NGOs emerged as the corporate sector's de facto regulators, occupying the vacuum that governments were leaving behind. They aren't newcomers to the task; for many years, NGOs have influenced markets in areas such as chemical regulation, oil spill liability, air emissions, liquid waste, pharmaceutical and food standards, child labor, and employment discrimination. Their influence has created a regulatory framework tougher than the legal requirements corporations face.
Second, companies have invested heavily to develop expertise to cope with NGOs. They have spent time and money launching countercampaigns to protect their reputations.
Third, markets are emerging as an arena in which companies and NGOs interact.
While companies have discovered the importance of NGOs as paths to markets, social groups have realized that carefully calibrated business models can unleash powerful forces for good.
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