Top 10 Lessons on Strategy Building and Implementing an Effective Corporate Strategy in an Era of Rapid Change, Evolving Technology, and Intense Competition

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Top 10 Lessons on Strategy Building and Implementing an Effective Corporate Strategy in an Era of Rapid Change, Evolving Technology, and Intense Competition SLOANSELECT COLLECTION TEN OF THE MOST READ AND DISCUSSED ARTICLES FROM THE STRATEGY ARCHIVE Top 10 Lessons on Strategy Building and implementing an effective corporate strategy in an era of rapid change, evolving technology, and intense competition. CONTENTS SLOANSELECT COLLECTION SUMMER 2015 The Strategy Guidebook 1 The Art of Strategic Renewal By Andy Binns, J. Bruce Harreld, Charles O’Reilly III and Michael L. Tushman 4 Strategic Decisions for Multisided Platforms By Andrei Hagiu 14 Beyond Forecasting: Creating New Strategic Narratives By Sarah Kaplan and Wanda Orlikowski 20 Which Strategy When? By Christopher B. Bingham, Kathleen M. Eisenhardt and Nathan R. Furr 28 Optimizing Your Digital Business Model By Peter Weill and Stephanie L. Woerner 36 Creating Value Through Business Model Innovation By Raphael Amit and Christoph Zott 45 How Strategic Is Your Board? By Didier Cossin and Estelle Metayer 52 Closing the Gap Between Strategy and Execution By Donald N. Sull 61 The Strategic Communication Imperative By Paul A. Argenti, Robert A. Howell and Karen A. Beck 68 How Companies Become Platform Leaders By Annabelle Gawer and Michael A. Cusumano Please note that gray areas reflect artwork that has been intentionally removed. The substantive content of the article appears as originally published. Reprint #: STR0715 SPECIAL COLLECTION • “TOP 10 LESSONS ON STRATEGY”• MIT SLOAN MANAGEMENT REVIEW i The Cisneros Group, a Spanish-language media company with operations across the United States and Latin America, assembled teams from across the organization to explore new ventures. [LEADING CHANGE] efforts can be extremely difficult The Art of Strategic Renewal to initiate, fund and lead; many companies, including Xerox, What does it take to transform an organization before a crisis hits? Kodak and Firestone, attempted BY ANDY BINNS, J. BRUCE HARRELD, CHARLES O’REILLY III AND MICHAEL L. TUSHMAN but failed to move ahead of their respective crises. The role of senior management is to In recent years, we have seen enough. Fisher had an oppor- at worst, dangerous. What’s build strategy, experimentation well-established companies tunity; his successor had a crisis. needed is a new approach that and execution into the day-to- such as Kodak, Blockbuster, What can leaders do before enables executives to trans- day fabric of the organization. Nokia and BlackBerry pushed the depth and scope of their form organizations proactively Here are four tests for deciding to the brink by smart competi- companies’ crises come into without resorting to fear. whether your company is ripe tors and changes in their focus? How can they initiate for strategic renewal: industries. In each case, there major transformations proac- Is Strategic Renewal 1. Your profits are domi- were opportunities to act tively? As researchers and Right for You? nated by maturing businesses before a crisis engulfed the managers who have been in- Strategic renewal is neither an in which you see limited op- organization. At Kodak, for volved in numerous corporate event nor a detailed program. portunities for growth. Noth- example, CEO George Fisher transformations in recent Rather, it’s a set of practices that ing breeds complacency like attempted to move the com- years, we have learned that can guide leaders into a new era success, and the right time to be pany into the digital era in the applying standard formulae of innovation. Because strate- paranoid is when you are at the 1990s. However, he was unable to corporate transformations gic renewal involves making top of your game. In 2007, Nokia to change course quickly is, at best, ineffective and, changes ahead of a crisis, the (Continued on page 22) COURTESY OF ADRIANA CISNEROS WINTER 2014 MIT SLOAN MANAGEMENT REVIEW 21 COURTESY OF ADRIANA CISNEROS SPECIAL COLLECTION • “TOP 10 LESSONS ON STRATEGY”• MIT SLOAN MANAGEMENT REVIEW 1 INTELLIGENCE The Art of Strategic Renewal the introduction of the iPhone smartphones and tablets in emotionally. Renewal needs to (Continued from page 21) and Android difficult for Nokia droves. So far, Nintendo has re- be tied to a growth aspiration was the number one mobile to anticipate is that they both fused to make its games for that connects to the company’s handset manufacturer, and came from players that had not other platforms. If the company sense of identity — what moti- BlackBerry was the “killer app” previously been involved in the maintains this position, it could vates employees to come to for mobile email. Now, Nokia’s mobile phone industry. Nokia miss the next wave, a decision work every day. For example, handset business has been sold executives had been bracing that would put the company’s at Nissan Motor Co., when the off to Microsoft, and BlackBerry for incursions from Ericsson, entire future at risk. company’s future was on the is struggling for survival. Execu- Samsung and Motorola, not line, CEO Carlos Ghosn estab- tives at both companies were Apple and Google. They were The Strategic lished the goal to “renew seduced by their success into focused on the industry as it Renewal Playbook Nissan.” This provided a rally- thinking they had time to react. was, and they didn’t anticipate Though strategic renewals are ing cry that encouraged Although they saw their respec- the extent to which the new- often more difficult to pull off dispirited employees to get tive threats as serious, they made comers would break the rules. than corporate turnarounds, behind the turnaround effort. the mistake of assuming that the Dramatic change is often they can result in positive out- Without a crisis, the emo- threats were all part of normal driven from the outside, chal- comes if they are initiated early tional energy needs to come competition rather than an exis- lenging the very basis of an enough. IBM’s experience is from somewhere else. A goal tential danger. Both companies industry and stimulating an instructive. In 1999, IBM con- that anticipates success and didn’t grasp, in time, that the immune response from the cluded that while it was once speaks to the core identity of smartphone introduced a fun- incumbent. again a stabile business follow- employees can be more com- damentally new capability to the 4. New ways of making ing a near-death experience pelling than fear of loss. For market and thus represented a money are a threat to your core five years earlier, it had lost its example, compare how Ciba different type of competitor. capabilities. Nintendo’s intro- ability to innovate, something Vision, a global contact lens 2. There is a direct threat to duction of the Wii video game dozens of new competitors manufacturer, framed its pro- your core source of profits. console in 2006 was a master- (including Cisco and Akamai) gram for strategic renewal in Regional newspapers in the stroke of innovation that didn’t hesitate to seize upon. the eye-care solutions business United States have seen their enabled it to regain market Yet over the past 14 years, around “healthy eyes for life” profits dry up as classified ad- leadership. It opened up a whole IBM has become a new com- with how one British manu- vertising has largely left print new market for computer pany. It has successfully moved facturer defined its goals media and moved online. We gaming by introducing a sim- away from hardware and soft- around 5/10/2010: 5% revenue have passed the point where pler interface that made it ware and refocused itself around growth and 10% profit growth incremental innovation (for possible for parents (and grand- consulting, analytics and indus- by 2010. While that mantra example, better printing tech- parents) to play alongside their try-specific solutions. Based on had a catchy ring, the only per- niques) will matter; local children without having to this experience (one of the au- son it inspired was the CEO. listings can be posted on memorize a list of arcane com- thors of this article, Bruce Not only did the company Craigslist for free. New digital mands. However, the next wave Harreld, reported to IBM CEO miss its numbers, it suffered a business models have put the of innovation may be more Sam Palmisano from 2001 to major contract loss, where- profits of incumbents at risk. problematic, as it will put one of 2008) and our work with other upon the stock plunged, in Whether the threat is digital Nintendo’s fundamental rules organizations including Ciba part because of the relentless technology, emerging markets about only producing software Vision, Analog Devices and Ball focus on short-term results. reshaping economics, foreign for its own consoles to the test. Corporation, we have developed 2. Treat strategy as a dia- competition or breakthroughs Popular Nintendo games like a set of principles for strategic logue as opposed to a rit- in genetic medicine, if it has Super Mario Brothers and Don- renewal that we believe can be ualistic, document-based the potential to redistribute key Kong operate exclusively on applied to other organizations planning process. Turning an profits, beware. Nintendo devices. But the over- aiming to renew themselves aspiration into reality requires 3. The opportunity (or all market is changing. Starting ahead of market disruption. going beyond highly formatted threat) is outside your core in 2011, consumers began mov- 1. Select growth aspira- planning processes and having markets. One thing that made ing from game consoles to tions that connect with people tough, fact-based conversations. 22 MIT SLOAN MANAGEMENT REVIEW WINTER 2014 SLOANREVIEW.MIT.EDU SPECIAL COLLECTION • “TOP 10 LESSONS ON STRATEGY”• MIT SLOAN MANAGEMENT REVIEW 2 In this spirit, some companies media. However, since it wasn’t At Cisneros, managers were 2007 that was designed to get are looking beyond PowerPoint clear what the best business wary of entering technology multiple levels of executives presentations in an effort to model would be, management businesses, which were very involved in identifying and find new ways of engaging initiated several pilots.
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