The end of competitive advantage

WRFU: THE END OF COMPETITIVE ADVANTAGE: DR STEYN HECKROODT

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THE END OF COMPETITIVE ADVANTAGE

WRFU

Dr. Steyn Heckroodt

2014

Inspiring thought leadership across Africa

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CHAPTER BREAKDOWN

1. The End of Competitive Advantage

2. Continuous Reconfiguration: Achieving Balance between

Stability and Agility

3. Healthy Disengagement

4. Using Resource Allocation to Promote Deftness (swiftness)

5. Building an Innovation Proficiency http

://lectureonbusiness.com/talks_on_strategy/

6. The Leadership and Mind-Set of Companies Facing

Transient Advantages

7. What Transient Advantage Means for you, Personally

http://lectureonbusiness.com/talks_on_strategy/




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IN A NUTSHELL

• Evolution of strategy

• Sustainable competitive advantage

• The growing gap between traditional approaches to

strategy and the real world

• Transient competitive advantage


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CHAPTER 1: THE END OF COMPETITIVE ADVANTAGE• Your strategy is based on old assumptions

• The new logic of strategy

• Where to compete: Areas, not industries (GPS/Info)Industry Arena

Goal Positional advantage Capturing territoryMeasure of success Market share Share of potential

opportunity spaces

Biggest threat Intra-industry competitive moves

Disruption of exiting model

Definition of customer segment

Demographic or geographic Behavioural

Key drivers Comparative price, functionality, quality

“Jobs to be done” in total customer experience

Metaphor Chess Japanese game of Go


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HOW TO COMPETE

• Mind shift – Temporary, not sustainable competitive

advantage

The wave of transient (temporary) advantage

Launch

Ramp up

Exploit

Reconfigure

Disengage


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HOW TO WIN

• Research (pg. 15)...read...

• Major finding: Strategies with long-term perspective on

where they wanted to go, but also with the recognition

that what-ever they were doing today wasn’t going to

drive their future growth

• Rest of the book is shaped by the lessons learnt from

these companies (pg. 17) – The new strategy playbook


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CONTINUOUS RECONFIGURATION: ACHIEVING BALANCE BETWEEN STABILITY AND AGILITY

From ToExtreme downsizing or restructuring Continuous morphingEmphasis on exploitation phase Equal emphasis on entire waveStability or dynamism alone Stability combined with dynamismNarrowly defined jobs and roles Fluidity in allocation of talentStable vision, monolithic execution Stable vision, variety to execution

Evaluate your current way of working (pg.25)

Example – Milliken & Company (Pg. 30)

Using innovation gradually move from textiles to advanced to

special materials and specialty chemicals


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HEALTHY DISENGAGEMENTFrom ToDefending an advantage to the bitter end Ending advantages frequently, formally, and

systematicallyExit viewed as strategically undesirable Emphasis on retaining learning from exitsExits occur unexpectedly and with great drama

Exits occur in a steady rhythm

Focus only on objective facts Focus on subjective early warnings

Example – RIM – Black Berry

Reed Hastings – cheaper DVDs online

Customers not ready – enraged – thus different

disengagement strategies


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RESOURCE ALLOCATION TO PROMOTE DEFTNESS

From ToResources held hostage in business units Key resources under central controlSqueezing opportunities into the existing structure

Organizing around opportunities

Attempts to extend the useful life of assets for as long as possible

Aggressive and proactive retirement of competitively obsolete assets

Capital budgeting mind-set Real options mind-setInvestment-intensive strategic initiatives Parsimony, parsimony, parsimony (prudence)Ownership is key Access is keyBuild it yourself Leverage external resources

Parsimony example – Under Armour

Material extension – authentic involvement over years


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BUILDING AN INNOVATION PROFICIENCYFrom ToInnovation is episodic Innovation is an on-going systematic processGovernance and budgeting done the same way across the business

Governance and budgeting for innovation separate form business as usual

Resources devoted primarily to exploitation

A balanced portfolio of initiatives that support the core, build new platforms, and invest in options

People work on innovation in addition to their day jobs

Resources dedicated to innovation activities

Failure to test assumptions, relatively little learning

Assumptions continually tested, learning informs major business decisions

Failures avoided and not discussable Intelligent failures encouragedPlanning orientation Experimental orientationBegin with our offerings and innovate to extend them to new areas

Begin with customers and innovate to help them get their jobs done


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LEADERSHIP AND MIND-SET OF COMPANIES FACING TRANSIENT ADVANTAGES

From ToAssumptions that existing advantages will persist

Assumption that existing advantages will come under pressure

Conversations that reinforce existing perspectives

Conversations that candidly question the status quo

Relatively few homogenous people involved in strategy process

Broader constituencies involved in strategy process, with divers inputs

Precise but slow Fast and roughly rightPrediction oriented Discovery drivenNet present value oriented Options orientedSeeking confirmation Seeking disconfirmationTalent directed to solving problems Talent directed identifying and seizing opportunities Extending a trajectory Promoting continual shiftsAccepting a failing trajectory Picking oneself up quickly

Japan and dairy


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WHAT TRANSIENT ADVANTAGE MEANS FOR YOU,PERSONALLYFrom To

Emphasis on analytical strategizing Emphasis on rapid execution

Organizational systems Individual skills

A stable career path A series of gigs

Hierarchies and teams Individual superstars

Infrequent job hunting Permanent career campaigns

Careers managed by the organization Careers managed by the individual

EARLY WARNINGS OF FADING ADVANTAGE

Read pg. 169

The end of competitive advantage

Business

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