What do Nokia, Kodak, Blackberry have in common? Both thought that their competitive advantage was there to stay for ages, but did not see the ongoing changes in the market and the related industry.
Interesting book from a smart lady!
Author McGrath argues that businesses must stop basing their strategies on the idea of sustainable competitive advantage, because competitive advantage is dead! says McGrath. Instead, businesses should focus on pursuing short-lived opportunities with speed and decisiveness.
Today, the most important competitor you have may not even exist in your industry. Industries face massive competition from different industries.The book was based on a series of case studies considering world’s largest companies. Only 8% of world’s largest companies could sustain 5% growth for 5 years in a row. Only 10 companies had been able to sustain 10% growth over year.Tsingtao, ACS, Indra, Atmos Energy, Infosys, Cognizant, Yahoo Japan, KRKA, Factset and HDFC Bank.Why?
McGrath recommends a new playbook for strategy as summarized below:
1 - Continuous Reconfiguration
Businesses have to be good at executing the traditional stuff but they also have to be in a state of continuous reconfiguration. Be aware of, hypersensitive to, the environment around you.
Verizon – often spooked analysts by discarding existing highly profitable business units and focusing on longer term growth areas. Has paid off in long terms as others have stuck with existing businesses that eventually fail.
Pallet manufacturer and distributor Brambles found supermarkets has major issue with handling of e.g. soft fruit. Developed packages that are picked and packed into trays directly. Reduces handling significantly and gets product to market faster. Don’t think of themselves as a pallet distributor, see themselves as solving logistic challenges for customers.
2 - Healthy disengagement
How do you recognize when things need to change before it is too late to do something about it?
3 - Deft resource allocation
Powerful people control where the resources go in businesses. They tend to be senior within companies and want to support the status quo – Blackberry’s vast spend on relaunch of BB10 for example. The allocation of resources for the future has to be separated from the people who control the existing profitable lines.
4 - Innovation Proficiency
Innovation today has to happen faster and more routinely than at times in the past. It cannot be episodic.
5 - New leadership mindset
More open, candid. “Don’t bring me any surprises” “Don’t bring me problems, bring me solutions”. It means the executives only hear about the stuff that really matters when it is obvious to everyone. People in the executive suites need to be more willing to embrace uncertainty and surprises.
Author McGrath argues that businesses must stop basing their strategies on the idea of sustainable competitive advantage, because competitive advantage is dead! says McGrath. Instead, businesses should focus on pursuing short-lived opportunities with speed and decisiveness.
Today, the most important competitor you have may not even exist in your industry. Industries face massive competition from different industries.The book was based on a series of case studies considering world’s largest companies. Only 8% of world’s largest companies could sustain 5% growth for 5 years in a row. Only 10 companies had been able to sustain 10% growth over year.Tsingtao, ACS, Indra, Atmos Energy, Infosys, Cognizant, Yahoo Japan, KRKA, Factset and HDFC Bank.Why?
McGrath recommends a new playbook for strategy as summarized below:
1 - Continuous Reconfiguration
Businesses have to be good at executing the traditional stuff but they also have to be in a state of continuous reconfiguration. Be aware of, hypersensitive to, the environment around you.
Verizon – often spooked analysts by discarding existing highly profitable business units and focusing on longer term growth areas. Has paid off in long terms as others have stuck with existing businesses that eventually fail.
Pallet manufacturer and distributor Brambles found supermarkets has major issue with handling of e.g. soft fruit. Developed packages that are picked and packed into trays directly. Reduces handling significantly and gets product to market faster. Don’t think of themselves as a pallet distributor, see themselves as solving logistic challenges for customers.
2 - Healthy disengagement
How do you recognize when things need to change before it is too late to do something about it?
3 - Deft resource allocation
Powerful people control where the resources go in businesses. They tend to be senior within companies and want to support the status quo – Blackberry’s vast spend on relaunch of BB10 for example. The allocation of resources for the future has to be separated from the people who control the existing profitable lines.
4 - Innovation Proficiency
Innovation today has to happen faster and more routinely than at times in the past. It cannot be episodic.
5 - New leadership mindset
More open, candid. “Don’t bring me any surprises” “Don’t bring me problems, bring me solutions”. It means the executives only hear about the stuff that really matters when it is obvious to everyone. People in the executive suites need to be more willing to embrace uncertainty and surprises.
