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Elementary

Given prevailing market conditions, one should strive to develop a "semicoherent strategic direction," and to keep in mind two questions: "Where do you want to go?" and "How are you going to get there?"

Competing on the Edge. When initially encountering that title of a book by Shona L. Brown and Kathleen M. Eisenhardt (Harvard Business School Press; $27.95; 296 pp.), I thought about Sherlock Holmes and Professor Moriarty on the edge of Reichenbach Falls: "AAAAAAAAAAAAAAAAAH!!!" According to the authors, "staying on the edge is essential because that is where systems of all kinds self-organize to create the most vibrant, adaptive, and complex behavior. In more concrete terms, the edge is where businesses adaptively innovate and consistently execute. The result of remaining on the edge is a wider range of strategic options and a better sense of which options to choose." Choose staying on the edge. The alternative is unpleasant.

Then there is the matter of the subtitle: Strategy as Structured Chaos. Uh-oh. We're on tricky ground here: structured and chaos seem to be an oxymoronic combo, as in "jumbo shrimp." Structure is what managers—the audience for this book—are trying to maintain. Chaos is what they are trying to circumvent. But therein may be found the problem that the authors address. Being wound too tight is not advantageous.

Forget cliffs and shrimp and disorganization. A better title for what is found in the book is, simply, Competing. And on that subject, Brown and Eisenhardt are superlative.

Their argument is that given prevailing market conditions, one should strive to develop a "semicoherent strategic direction," and to keep in mind two questions: "Where do you want to go?" and "How are you going to get there?" The "semi-" prefix is not the same as "in-." The point here is that there is randomness, so the strategic direction has to be adaptive.

Historically, planners and strategists have operated as though we're existing in a clockwork universe that's predictable, as tick follows tock, ad infinitum. But that results, generally, in being blindsided because the competitors and the prevailing conditions (social, cultural, political) are anything but static and predictable.

Consider: U.S. auto manufacturers (as is too-well known) missed the high-value, high-quality consumer demands that the Japanese builders addressed; the Japanese manufacturers missed the boat on minivans, pickups, and sport utes.

No company is invulnerable. Think, for example, of Motorola. It wasn't that long ago that Motorola was the benchmark. How many companies worked to emulate the electronics manufacturers' Six Sigma program? How many presentations did you read or see about the Boynton Beach, lot-size-of-one "Bandit" pager line? Nowadays, Motorola is being assessed as a company that's stumbling and fumbling.

If those folks can't do it, if they're teetering on the edge, then who can maintain a competitive position in a given field?

The answer: Anyone—or any company—that is willing to implement at least some (if not all) of the recommendations that Brown and Eisenhardt make. Why do I think they're right? (1) I think that their assessment of continual change is accurate. (2) They've done extensive research of companies that are doing well—and those that have done some cliff diving—that's reported in the book.

The authors have codified 10 "laws" for those who want to compete—and succeed—on the edge. They provide substantial detail about them. In my shorthand of them:

1."Competitive advantage is fleeting." Don't fall in love with present methods.

2.Make plenty of strategic moves. Capitalize on those that work. Leave the others behind.

3.Think value creation, not efficiency. Trying plenty of things can be messy—inefficient.

4.Create just enough structure.

5.Select the best aspects of the past and let the other stuff go.

6.Recognize the future is unpredictable—which leads back to points (1) and (2).

7.Work on change at a consistent pace, not randomly (the authors' discussion of how Intel does it is enlightening: "Producing to Moore's Law made Intel at its core time-paced, and the firm still pulsates to the rhythm some twenty-plus years after Moore's pronouncement.").

8.Let things evolve (or not).

9.Let people at the business level operate. They're on the front line and can react and proact more quickly.

10.Monitor the external environment to find opportunities that match capabilities.

The unfortunate truth is that companies that fall off the edge don't come back because of popular acclaim as Sherlock Holmes did. Once off the precipice...

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