Comments for Drivers of innovation strategies: beyond hype Mark Chen, Thibault d'argent, Matteo Marta, Alvin Vercruysse 29 October 2018 Francis, D., & Bessant, J. (2005). Targeting innovation and implications for capability development. Technovation, 25(3), 171-183. Executive Summary - Group 5 Key insights The paper Targeting innovation and implications for capability development written by Dave Francis and John Bessant, talks about the importance of considering innovation as the way in which it is organized and managed. This is what the authors call Innovation Management Capability. It follows that enterprises, that are better able to manage innovation than others…Read moreExecutive Summary – Group 5 Key insights The paper Targeting innovation and implications for capability development written by Dave Francis and John Bessant, talks about the importance of considering innovation as the way in which it is organized and managed. This is what the authors call Innovation Management Capability. It follows that enterprises, that are better able to manage innovation than others possess a superior ‘innovation capability’. Nevertheless some innovation initiatives have proved to be dysfunctional and even an excessive rate of innovation can be disadvantageous. That is why, innovation capability needs to include the ability to make the best strategic assessment. An important aspect of innovation is its functionality. The authors refer to this as ‘targeting’. Innovation capability can be targeted in four main ways: by innovating to introduce or improve products and processes, and by defining and re-defining a positioning and paradigm. The positioning relates to the situation where an established product/service is introduced to a new context. Paradigm relates to the situation in which a reframing of the current product/service, process and market context results in seeing new challenges and opportunities and letting go of others. Firms can pursue these 4 P’s at the same time. Implications Most firms concentrate on incremental innovation (“do better”). On the short-term, it is a good strategy as the product’s features constantly improve. On the long-term, a new entrant might come up with a completely new idea and disrupt the market. Therefore, it is important to also focus on radical innovation (“do different”) in order to prevent new entrants to come up with new proposed value. Second, there are two main parts within innovation. First, an invention has to be found. The second part, implementation, is at least as important. An idea without being successfully implemented on the market is not profitable nor useful. As a result, managers should also focus on the implementation part when they plan their capabilities. Last, the 4Ps can be used as a strategic tool. Managers create a diamond containing the 4Ps on each corner. Then, for each dimension, potential actions should be stated and carried on if relevant. At the end, an innovation agenda is build. Limitations From our point of view, there is a lack of diversity and completeness in the data set of the testing model. Indeed, the sample is composed of only five firms, all active in the Pharmaceutical industry. The question that arises is the following : how would the results be different if the sample was bigger and with firms from different industries (mainly, with less time required for implementation and other constraints). After that, the results provided in the table only include innovation that requires strategic commitment. It would be relevant to consider innovation that are “within the box” and take place at lower levels of the organization. Secondly, firms that are reluctant to evolution for various reasons should also be taken into account (e.g. Bpost afraid of losing its customers). Lastly, timing and location for the introduction of an innovation is crucial. Indeed, the market may not be in the best state to welcome the innovation. In terms of location, the strategy should be adapted regarding the local needs of the market. Further References The first paper analyses the innovation of technological strategy and standard competition by covering the cases of Apple and Microsoft. The implementation of strategies is consistent with the potential creation of platforms. And the ability to establish the innovator’s own technology as standard provides a route to competitive advantage. The second reference consists in the analysis of three dimensions: change, strategy, and market impact. Within those three dimension, the following eight innovation types are sub-dimensions: Incremental, Operational, Design, Strategic, Low-end, Paradigm, Industry and Standard-setting innovation. Nevertheless, companies may be forced to develop competing resources and capabilities to succeed with different types of innovations. A further complication arises as some innovation types need time in order to be successful, whereas others provide quick returns. References PRANGE, C., SCHLEGELMILCH, B., Managing innovation dilemmas: The cube solution, Business Horizons, 2018, 61(2), pp. 309-322. WONGLIMPIYARAT, J., Technology strategies and standard competition-Comparative innovation cases of Apple and Microsoft, The Journal of High Technology Management Research, 2012, 23(2), pp. 90-102. Show less Reply LI Jiamin 29 October 2018 Brian Leavy (2003). Assessing your strategic alternatives from both a market position and core competence perspective. Strategy & Leadership, 31, 29-35 The article published in 2003 by Brian Leavy provides insights on how market position perspective and core competence perspective can be used to assess the strategic alternatives. The author stresses the strengths of both approaches and also mentions the drawbacks if only one approach is adopted by companies. Key Insights Compared with the conventional way of interpretation of the two perspectives,…Read moreThe article published in 2003 by Brian Leavy provides insights on how market position perspective and core competence perspective can be used to assess the strategic alternatives. The author stresses the strengths of both approaches and also mentions the drawbacks if only one approach is adopted by companies. Key Insights Compared with the conventional way of interpretation of the two perspectives, the author points out that the positioning perspective focuses on the industry structure and starts by considering which industry and sector the companies want to be in. Core competence perspective emphasizes the resources companies can take advantage of as well as the relations among core competences, core products and end products. However, simply focusing on one approach is not in favor of companies’ sustainable development, which will either lead to their business model copied by fast followers or identify the core products too late. As a consequence, to leverage both perspectives’ strengths, companies should adopt the “bifocal vision”—combine the two perspectives together. Managerial Implications To become a giant as GE did, managers should restructure diversity to select the best businesses on the market and to focus on their potential growth. Further growth can be possible thanks to potential mergers and acquisitions. At the same time, sharing know-how, taking care of human, relational and structural capital is very important. Furthermore, managers should conduct an analysis (strategy intent, leverage capability, market creation) to identify where company could achieve success. Secondly, managers should consider all options of possible growth. Eventually, continuous spot on the strategy and adjustments are necessary to follow consumer preferences and mega trends. Limitations Nevertheless, there are some more aspects managers should pay more attention to when conducting business. On the one hand, products and functions of multi-business firms like GE are usually quite complex, which requires companies to take conglomerate structure, m&a decisions as well as competitive advantage and added value into consideration. On the other hand, when it comes to strategic renewal like what Nokia, companies should also be able to consider core products’ ability to convince customers as well as the reaction ability to the market. Further References: P. W. Farris, & J. M. Moore. (2004). The Profit Impact of Marketing Strategy Project retrospect and prospects. Cambridge: Cambridge University Press. C. O’ Reilly, & M. Tushman. (2011). Organizational Ambidexterity in Action: how managers explore and exploit. California Management Review, 53(4). S. Tierney, & M. Kuby. (2008). Airline and Airport Choice by Passengers in Multi-Airport Regions: The Effect of Southwest Airlines. Professional Geographer, 60(1), pp. 15-32. Show less Reply Charlotte Boonen, Mayank Deora, Heloise de Villenfagne, Arun Baskaran 29 October 2018 C Kostopoulos, Konstantinos. (2018). The Resource – Based View of the Firm and Innovation: Identification of Critical Linkages. The author of the article first talks about the shortcomings of snapshot industry analysis. The shortcoming is attributed to Increased rate of change in terms of technology, products and customer preferences and also the blurring of borders between industries. In such an environment, snapshot analysis such as five forces, diversification strategy might not be fully helpful. Hence it is the…Read moreThe author of the article first talks about the shortcomings of snapshot industry analysis. The shortcoming is attributed to Increased rate of change in terms of technology, products and customer preferences and also the blurring of borders between industries. In such an environment, snapshot analysis such as five forces, diversification strategy might not be fully helpful. Hence it is the internal resources and capabilities that can help to catch up with these changes. Secondly, Capacity of a firm to innovate is determined by heterogeneous resources such as financial, technical and Intangible resources. This is done through a process involving creation, accumulation and deployment of the resources. This process is determined by the capabilities of the firm. In the end, the article gives the cyclical link between accumulation of resources leading to innovation and in turn, innovation leading to more accumulation of resources. Many organisations primarily focus on responding to competition instead of preventing it. For preventive measures, they need to work continuously and keep an eye on the market trends, analyse them and make strategies to counter it. This requires a dedicated full-time team and have huge implications in terms of cost. In today’s highly dynamic environment, it is very essential to identify indirect competition i.e. disruptive innovations. This requires visionary top management which can anticipate future trends and act well in time. Furthermore, the role of intangible resources is increasingly becoming important. Intangible assets include manpower and skills possessed by them. Employees with risk taking propensity have high probability of innovation. Consequently, they need autonomy, but the real dilemma is how to strike a balance between autonomy and authority. Three limits have been identified. Firstly, the resource-based view is focused on the internal organization because it is based on the resources and capabilities a firm owns. They do not consider the external factors that could affect the strategy or the innovation of a firm. For example the demand, even if a firm has the resources and capabilities to gain a competitive advantage, the customer must be at the center. Secondly, this framework is focused on « what is « instead of what could be. So, it is a good tool to describe and understand the inside of a firm where they know the demand and the market. It lacks feasibility for changing environment. Thus, managers should use it to choose strategies when the rules of the game remain quite fixed. Thirdly, the RBV framework does not take into account the role of the manager in making decisions and choosing strategies. However, resources and capabilities that a company have, is the product of the history of strategic choices and resource commitments made by the firm in the past. Further research: -Theriou, G. & al. (2009). A Theoretical Framework Contrasting the Resource-Based Perspective and the Knowledge-Based View.European Research Studies, Volume XII, Issue (3) -Teece, D. & al. (1997). Dynamic capabilities and strategic management. Strategic management journal, Volume 18:7, 509-533 -Monteiro, A. & al. (2017). Entrepreneurial orientation and export performance: the mediating effect of organisational resources and dynamic capabilities. Journal for International Business and Entrepreneurship Development, 1549-9324 Dio: 10.1504/JIBED.2017.082749 Show less Reply Eva Funcken 27 October 2018 Mintzberg, H. (1994). The fall and rise of strategic planning. Harvard Business Review, 72(1), 107-114. The Fall & Rise of Strategic Planning - Henry Mintzberg (1994) Key Insights This Harvard Buisness Review article was written by Henry Mintzberg, a management professor at McGill University. It was written in 1994 and gives an insightful overview on the pitfalls and fallacies of strategic planning which was thought for many decades to be the one and best way to devise…Read moreThe Fall & Rise of Strategic Planning – Henry Mintzberg (1994) Key Insights This Harvard Buisness Review article was written by Henry Mintzberg, a management professor at McGill University. It was written in 1994 and gives an insightful overview on the pitfalls and fallacies of strategic planning which was thought for many decades to be the one and best way to devise and implement strategies. Mintzberg particularly emphasizes on the difference between strategic planning (based on analysis) and strategic thinking (based on synthesis). Moreover, the false equivalence between strategic planning and strategy making rests on three fallacious assumptions: 1) Fallacy of prediction: In brief, strategic planning wrongly assumes the world holds still when elaborating a strategy and forecasting future events is an exact science. 2) Fallacy of Detachment: Strategic planning is possible thanks to the system which captures knowledge about the task. Thus, true management is possible when the manager is no longer wholly immersed in the details of the task. This assumption is dangerous as the hard data that is passed on to the manager is often over aggregated and lacks qualitative richness. In reality, effective managers also have to understand processes before programming them and also have to rely on soft information. 3) Fallacy of Formalisation: Formal systems do not process information better than human beings. They can process more information but not internalize, comprehend and synthesize it. All in all, Mintzberg affirms that strategic planning has been so far misnamed and should have been labelled strategic programming. Key Implications It is critical to clearly distinct strategic planning and strategic thinking. Operationally speaking, the firm should organise strategic planning in two main roles: strategic programmers and strategy finders. First, strategic programmers should aim to put a high-level strategy into action in three steps: Codification: translate a high-level strategy into operational objectives. Elaboration: break-it down into sub-strategies to reach the objectives Conversion: considering side-effects on the organisation For example, if a firm wants to be the leader on a market, it firstly needs to determine according to what metric, e.g. market share, and how much share it needs (e.g. 15%). Then it needs to know how to get there (what segment to target, what features a product should have, …). And finally consider how all this will affect budgets, FTEs, etc. Second, strategy finders are appointed to identify “micro-strategies” across the organisation and relate it to management. They can in turn broaden their scope and increase their impact. As the author quotes, “strategy happens everywhere in the organisation”. Strategy finders should thus look for patterns in failed experiments or best practices to leverage for instance. Key Limitations One of the main limitations that have been found in this paper is the focus on managerial choices to tackle strategic innovation. Mintzberg theorizes that in order to make a strategic change, new categories have to be invented. But this is not the only path to have a strategic change. Oriol Iglesias and Nicholas Ind theorizes that through branding and marketing, strategic change can be introduced to the company. Nowadays the mindset of the consumer is in the middle of the consumer, and rearranging expired, actual or future categories to fit the mindset of the consumer is a different path to follow for companies. An example provided is Barbie, that recently had problems selling their product to the new consumer. An instead of having a managerial shift and create new categories, they took the core product, an existing category, and invested heavily in marketing to change the image of the category, and fitted the existing product to the current situation. Additional Resources Iglesias, O., and Ind, N. (2016). Brand Desire. London, United Kingdom: Bloomsbury. Mintzberg, H. (1993). The pitfalls of strategic planning. California Management Review, 36(1), 32-47. Rigby, D. K., Sutherland, J. & Takeuchi, H. (2016) Embracing Agile. Harvard Business Review, 94(5), 40-50. Show less Reply Winter, S. (2003). ‘Understanding dynamic capabilities’ 26 April 2018 Winter, S. (2003). ‘Understanding dynamic capabilities’ There has much debate over the last few years about the definition and even the existence of such a concept of dynamic capabilities. According to Winter, a capability is a set of learned processes and activities that enable a company to produce a particular outcome, and we can distinguish two types of capabilities: the zero-level capabilities, which allow the company to run its…Read moreThere has much debate over the last few years about the definition and even the existence of such a concept of dynamic capabilities. According to Winter, a capability is a set of learned processes and activities that enable a company to produce a particular outcome, and we can distinguish two types of capabilities: the zero-level capabilities, which allow the company to run its regular business and make profit in the long-term, and the dynamic capabilities which enable the company to adopt changes. The latter ones are considered as idiosyncratic to a company and can be of different orders, depending on the investment made by the company in the learned, patterned change roles of employees. However, there is another way for companies to accomplish change: what is called ‘ad-hoc solving’. This is not highly patterned and repetitious as the dynamic capabilities, and it consists of the ability to response to novel challenges from the environment or other relatively unpredictable events. While dynamic capabilities will involve long-term commitments to specialized resources and can end up being very costly, ad-hoc solving does not require such investments. An example would be to adapt because a competitor launch a new product on the market or because of Brexit. A concrete example to illustrate the importance of the ability to react to external changes is Nokia, who failed to adapt to the smartphone era because they kept investing in what they were good at: R&D. On the contrary, IBM successfully transitioned from a seller of hardware to a very successful IT-based services, software and cloud computing business, because the company was able to sense changes in the market and seize these opportunities. Implications on today’s industry are consequently diverse. Firstly, due to our current fast-changing environment, it is essential for companies to be ready to change, either by investing in dynamic capabilities or by developing ad-hoc solving. The question is therefore whether companies should either invest in high-order dynamic capabilities or favor ad-hoc solving skills. Investing in dynamic capabilities requires specialized personnel and investments, and finding no occasion for change would merely consist of carrying a cost burden. However, attempting too much change could also end up imposing additional costs, if the cost of these capabilities is higher than the value of novelty achieved. Consequently, a cost-benefit analysis would be necessary in order to assess which of the two solutions would suit the best the company. Even though this article brings some answers in terms of competitive advantage and ability for a company to adapt to change, some limitations have been raised. Firstly, developing ad-hoc solving skills in order to deal with change can surely be less cheaper but it involves a high degree of unpredictability, which requires you to develop a separate team for contingency management. From a cost point of view, this will trigger high investments which are not affordable for each company, and not feasible for small or lean companies. Finally, the dynamic capabilities approach can not be applied in every industry (e.g. where imitation is easy) or to all types of innovations (e.g. business model innovations). For further readings, we suggest the two following articles: « Developing Innovation Capability in Organizations: a Dynamic Capabilities Approach » by Benn Lawson and Danny Samson (2001), and « Entrepreneurship and Dynamic Capabilities: A Review, Model and Research Agenda » by Shaker A. Zahra, Harry J. Sapienza and Per Davidsson (2006). In the first article, the writers use the dynamic capabilities approach to define innovation management as an organizational capability and provide a framework for managers showing that the process of innovation can be managed and replicated within organizations. The second one tackles the concept of dynamic capabilities in new vs established firms, and try to understand what these differences imply for these companies. Show less Reply Parmar, R., Mackenzie, I., Cohn, D., & Gann, D. (2014). The new patterns of innovation 26 April 2018 Parmar, R., Mackenzie, I., Cohn, D., & Gann, D. (2014). The new patterns of innovation The search for new business ideas is a hit-or-miss in most corporations. In particular, tested ways of framing this search already exist, precisely by looking at competency, customer or business environment. The authors of the paper, moreover, identified a fourth approach that complements the previous ones and focuses on opportunities generated by the explosion of digital information and tools. According to this, they have…Read moreThe search for new business ideas is a hit-or-miss in most corporations. In particular, tested ways of framing this search already exist, precisely by looking at competency, customer or business environment. The authors of the paper, moreover, identified a fourth approach that complements the previous ones and focuses on opportunities generated by the explosion of digital information and tools. According to this, they have developed five patterns to explain the creation of value: augmenting products to generate data; digitizing assets; combining data within and across industries; trading data; codifying a distinctive service capability. Turning to the implications , managers should understand why these patterns are emerging now. The trend is actually based on an IT-enabled innovation, which is driven by three factors: the explosion and increasing availability of digital data; better tools for data analysis and the opportunity to conduct business more vitally, in the cloud, nowadays. An example may be the Smart Energy Meter, which shows how several patterns can be combined to successfully structure the creation of new business ideas. Managers should ask themselves some core questions regarding each of the patterns in order to uncover new business opportunities and to dive deeper into the topic. Finally, managers need to know that successful innovation initiatives have four things in common: strong technology presence; inputs from external parties; motivated leadership and emotional commitment (beyond hygiene factors like a cross-functional team, adequate resources and top management support). Nevertheless, some limitations are present. First, when digitizing physical assets, we found some concerns in the way this pattern can be applied by entrepreneurs. If we take the example of Yeerida, which is an Italian book-streaming platform launched in 2016, we can have a better idea of the huge implicit risks. Indeed, the company realized soon that books could be easily decrypted by using the HTML source of the web page, so damaging the business. Another limitation can be seen in the way sensitive information and privacy concerns may arise for companies dealing with personal data. A case which may be seen as broadly related to this the Facebook one, with reference to the sales of 3000 political ads bought during US Presidential elections in 2016. As a consequence of the scandal, the company had to promise to hire new 1,000 employees in order to supervise on future advertisement. In terms of further references , several barriers can be identified: (1) leaders have a tech-implementation view and take the wrong metrics as KPI for the success of the implementation; (2) vendors oversell the promise of instant change through the digital technology and (3) are paid for selling it, not getting it used; (4) such a change encounters high costs. Concerning management style, some companies are born digital and others might even enjoy bigger gain from digital technology adaptation. Therefore they need to hire specialists and redefine the understanding of “judgement”. It is not about intuition anymore. Appendix: Bonnet, D. (2014). Convincing Employees to Use New Technology. Harvard Business Review. 92 (2), 12-14. McAfee, A. & Brynjolfsson, E. (2012). Big Data: The Management Revolution. Harvard Business Review. 4-9. Show less Reply Giovanni Rinciari Laurent Clerbois Ernest van Zuylen Gustaf Orsucci 26 April 2018 Nalebuff , B.J. Adam M. Brandenburger, (1997),”Co-opetition: Competitive and cooperative business strategies for the digital economy” This paper analyses how a company should behave towards stakeholders to achieve optimal results. In today’s business environment you often hear the phrase “business is war”, but is it perhaps better to aim for peace? Nalebuff and Brandenburger gives their thoughts on the topic with a modified version of game theory; with the ultimate goal of creating a larger pie and being entitled to…Read moreThis paper analyses how a company should behave towards stakeholders to achieve optimal results. In today’s business environment you often hear the phrase “business is war”, but is it perhaps better to aim for peace? Nalebuff and Brandenburger gives their thoughts on the topic with a modified version of game theory; with the ultimate goal of creating a larger pie and being entitled to as large of a piece as possible. The first key-point is to create the right relationship to the other players on the field. They introduce the concept of co-opetition, the fact that a company should find a balance between cooperation and competition with other players. The second point is that it is important to not consider all competitors as the enemy. They introduce the concept of a complementor; if a customer purchases their product and the value of your product increases due to that transaction, then the company in question is a complementor. If your value decreases, then you are dealing with a regular competitor. The third point of the paper is that business can be linked to Game-Theory. The important message here is that in the game of business you have an opportunity that you do not have in regular games. If you’re not satisfied with how the game is played, then you can just change the game through disruption. The author emphasize that a manager should create the value-net of his industry; a stakeholder canvas where you study the other players’ behaviour & strengths, and strategize accordingly. It is also important to identify your complementors and cooperate with them. Your goods are complementary so a strategy to boost sales is mutually beneficial. The authors suggest a strategy based on low prices so that the client can afford both products. We found the concept of complementors to be slightly theoretical. We found some examples where their definition of complementors and competitors did not work. Netflix and Warner Bros is an example. Warner Bros creates movies which Netflix pay for to use on their platform, making them complementors. But they are also fierce competitors through Warner Bros owned HBO Go, an online service identical to Netflix. The authors do also suggest price-agreements with complementors without warning for regulations regarding price-collusions. This does of course only apply to limited scenarios but it is an important limitation for companies operating in more regulated sectors. Group 1 Innovation and Corporate Strategy 2/10/17 Appendix FURTHER REFERENCES Article 1: Maurice E. Stucke, “Is competition always good?” Journal of Antitrust Enforcement, Volume 1, Issue 1, (1 April 2013), Pages 162–197, • Discusses competitions effect on society. Article 2: Malcolm R. Burns , “Predatory Pricing and the Acquisition Cost of Competitors,” Journal of Political Economy 94, no. 2 (Apr., 1986): 266-296. • This paper investigates whether predatory price cutting reduces a trust’s cost of acquiring its competitors. Show less Reply Anonymous 26 April 2018 Prajogo, D. I. (2016). The strategic fit between innovation strategies and business environment in delivering business performance The author of the article “The strategic fit between innovation strategies and business environment in delivering business performance”, Daniel I. Prajogo analyses the influence of the business environments (dynamic or competitive) on effectiveness of product or process innovation strategies in delivering business performance. There are three key insights enclosed: 1. Majority of scholars focus only on internal factors’ influence on innovation,…Read moreThe author of the article “The strategic fit between innovation strategies and business environment in delivering business performance”, Daniel I. Prajogo analyses the influence of the business environments (dynamic or competitive) on effectiveness of product or process innovation strategies in delivering business performance. There are three key insights enclosed: 1. Majority of scholars focus only on internal factors’ influence on innovation, as it is believed to be under entity’s full controll; 2. However, the author believes that it is the business environment that has significant effect on innovation strategies’ success; 3. Moreover, outcome depends on the factor combination: dynamic markets favor product innovation, while process innovations fit competitive ones. Furthermore, the major managerial implications are the following: 1. Dynamic environment makes company respond faster to changing customer tastes or preferences. Thus, product innovation strategy fits this market the most; 2. Cost competition casues process innovation to be more dominant in the competitive market as customer preferences are rather stable, while resources are limited; 3. If the market has big variations in terms of environment, it is more useful for entities to have both product and process innovations (BNP Paribas example). However, during the work we identified several limitations to the content showcased within the text: 1. Waiting for new niche could take too much time and money spent on R&D; 2. Fast development of new technologies decreases relevance of past process innovations; 3. Implementing both product and process innovation strategies creates risk of losing the focus due to running various programs at once. After further research, we recommend the following articles listed in the references bellow. The first one analyses the effect of customer orientation on innovation performance. The next one is another text from Mr. Prajogo and provides further insights on the topic discussed during the workshop. Third article considers relevance of organizational capabilities for innovation, but also its link to customer satisfaction and profitability. The final piece concerns usage of tangible and intangible assets for gaining competitive advantage and shows how innovations are developed through services, co-creation with customers and supplier integration. REFERENCES: Prajogo, D. I. (2016). The strategic fit between innovation strategies and business environment in delivering business performance. International Journal of Production Economics, 171, 241-249. Wang, Q., Zhao, X., & Voss, C. (2016). Customer orientation and innovation: A comparative study of manufacturing and service firms. International Journal of Production Economics, 171, 221-230. Jayaram, J., Oke, A., & Prajogo, D. (2014). The antecedents and consequences of product and process innovation strategy implementation in Australian manufacturing firms. International Journal of Production Research, 52(15), 4424-4439. Lun, Y. V., Shang, K. C., Lai, K. H., & Cheng, T. C. E. (2016). Examining the influence of organizational capability in innovative business operations and the mediation of profitability on customer satisfaction: An application in intermodal transport operators in Taiwan. International Journal of Production Economics, 171, 179-188. Zhang, M., Zhao, X., Voss, C., & Zhu, G. (2016). Innovating through services, co-creation and supplier integration: Cases from China. International Journal of Production Economics, 171, 289-300. Show less Reply David Bilicz, Carolina Godinho, Ivana Kopkovà, Alexandra Rombis and Elena Zerbino 26 April 2018 What is Strategy? By Michael Porter What are the key insights of the paper? The first key insight observed is the concept of operational effectiveness (OE). Per se, OE is not enough to be the best in the market; companies therefore must be able to deliver greater value or create comparable value at lower cost or both. If they do so, they can strive to avoid…Read moreWhat are the key insights of the paper? The first key insight observed is the concept of operational effectiveness (OE). Per se, OE is not enough to be the best in the market; companies therefore must be able to deliver greater value or create comparable value at lower cost or both. If they do so, they can strive to avoid aggressive competition. The second insight pertains strategic fit as it locks out imitators by creating a coherent and organized chain that is almost impossible to replicate. The last insight retained is the importance of trade-offs in a strategy. Trade-offs most often come within the company and help the organization differentiate. What are the managerial implications of those insights? Regarding the first insight, managers should use less benchmarking, focus more on creating value and generating different activities from its competitors. Ikea, for instance, has a clear strategic position as it meets the home furnishing needs of its target customers. They do so by offering a set of services that are uniquely aligned with customers’ exigencies that competitors are unable to mimic. Regarding the strategic fit, consistency makes it easier to communicate strategy while ensuring competitive advantage on cumulated activities. In addition, a consistent position allows the company to transmit its values to both customers and employees. Continental Airlines for example unsuccessfully tried to be both a regular and low-cost airline. This created confusion for customers and costed the company an enormous straddling penalty. Lastly, growth that is coherent with the company’s strategy reinforces its unique position and identity. If the company succeeds in performing the right trade-offs, there is potential for growth and profit. What are the limitations of those insights and our outstanding issues? Firstly, Porter’s theory is difficult to apply to small/medium firms, which often do not possess the capabilities to become market leaders, and do not focus their strategies towards it. They are more focused on delivering value and making enough profit to sustain their business, appealing to their niche market, rather than being the best within their industry. Secondly, focusing within one industry limits growth and companies can strive even if present in multiple industries. Lastly, due to the present fast changing environment, flexibility is key. Companies should be able to sustain a quick adaptation if urgent change is required. Further References 1. Operational Effectiveness vs Strategy https://www.youtube.com/watch?v=X01qb0Y18eU 2. What is Strategy? The Three Levels of Business Strategy https://www.youtube.com/watch?v=uhfFoINNEKI 3. Business Planning & Market Strategy by E.K. Valentin 4. Porter, M., 2008, The Five Competitive Forces that Shape Strategy, HBR. https://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy Show less Reply Leave a Reply Cancel reply Your email address will not be published. Required fields are marked *Comment Reference Identify the bibliographic reference you are commenting. You may use simple HTML tags to add links or lists to your comment:<a href="url">link</a> <ul><li>list item 1</li><li>list item2</li></ul> <em>italic</em> <strong>bold</strong>Name * Email * Notify me by email when the comment gets approved.