On Competing for the Future

I recently finished reading Competing for the Future by Gray Hamel and C.K. Prahalad.

As best summarized by the authors this book is about: “The goal of this book then can be simply stated: to help managers imagine the future and, having imagined it, create it. We want to help them get off the restructuring treadmill and get beyond the reengineering programs that simply rev up today’s performance. We want to help them capture the riches that the future holds in store for those who get there first.”

This book truly and thoroughly re-defines what strategy is and how it can be leveraged to succeed in the future. The authors cover the various required aspects of conceiving a competitive strategy that positions for success. More importantly, the authors also discuss what can hinder the development and execution of a strategy. What particularly resonated with me is the focus on execution and the fundamental role it plays in the strategy.

A must read in the area of Strategy and Competition. Highly recommended.

Below are excerpts that I found particularly insightful:

1- “But without a point of view about the opportunity for change – for revolution – a company is more likely to forfeit the future than own it. The goal of this book is to help individuals, and the institutions to which they devote their efforts, develop such a point of view and turn it into reality. Only those who can imagine and preemptively create the future will be around to enjoy it.”

2- “Any company that succeeds at restructuring and reengineering, but fails to create the markets of the future, will find itself on a treadmill, trying to keep one step ahead of the steadily declining margins and profits of yesterday’s businesses.”

3- “We believe, and will argue strongly, that a company must not only get to the future first, it must get there for less. Yet there is more than one route to productivity improvement. Just as any firm that cuts the denominator and holds up revenue will reap productivity gains, so too will any company that succeeds in growing its revenue stream atop a slower growing or constant capital and employment base. Although the first approach may sometimes be necessary, we believe that the second approach is usually more desirable.”

4- “Out point is simple: It is not enough for a company to get smaller and better and faster, as important as these tasks may be; a company must be capable of fundamentally reconceiving itself, of regenerating its core strategies, and of reinventing its industry. In short, a company must also be capable of getting different.”

5- “The logic is simple: To extend leadership a company must eventually reinvent leadership, to reinvent leadership it must ultimately reinvent its industry, and to reinvent its industry it must ultimately regenerate its strategy. For us, to management’s primary task is reinventing industries and regenerating strategy, not reengineering processes.”

6- “Competition for the future is competition to create and dominate emerging opportunities – to stake out new competitive space. Creating the future is more challenging than playing catch up, in that you have to create your own road map.”

7- “In short, strategy is as much about competing for tomorrow’s industry structure as it is about competing within today’s industry structure.”

8- “Flush with success, challengers often forget the most basic rules of corporate vitality: To be a challenger once, it is enough to challenge the orthodoxies of the incumbents; to be a challenger twice, a firm must be capable of challenging its own orthodoxies…To get to the future, a company must be willing to jettison, at least in part, its past.”

9- “The most foresightful firms aren’t always the most profitable. All the foresight in the world, if not matched by a capacity to execute, counts for little. On the other hand, terrific executional ability, in the absence of industry foresight, is not enough to guarantee future success.”

10- “A strategic architecture identifies “what we must be doing right now” to intercept the future. A strategic architecture is the essential link between today and tomorrow, between short term and long term…Strategic architecture is a broad opportunity approach plan.”

11- “We believe that every firm must proceed toward the future with all due haste. But the way to measure speed in the journey to the future is not how fast one is committing financial resources, but how fast one is gaining additional insight into the precise route that will get one to the future first…The quest every management team should ask itself is, “How do we learn about the future faster than competitors, while making fewer and smaller irrevocable commitments?””

12- “Ultimately, one must find a way to close the gap between resources and aspirations that strategic intent opens up…The goal is to challenge managers to become more ingenious both in multiplying the impact of the firm’s resource base and enlarging it.”

13- “Aspects of Resource Leverage: Converging, Focusing, Targeting, Learning, Borrowing, Blending, Balancing, Recycling, Co-opting, Protecting, Expediting.”

14- “The goal is to minimize both the time and investment required to turn foresight into genuine market opportunity…Stage 1 is competition for intellectual leadership…Stage 2 is competition to shape and foreshorten the migration paths between today’s markets and industry structure and tomorrow’s. Stage 3 is competition for market power and position once the new opportunities “take off” and the new industry structure begins to form.”

15- “A core competence is a bundle of skills and technologies that enables a company to provide a particular benefit to customers.”

16- “To be considered a “core” competence, a skill must meet three tests…Customer Value…Competitor Differentiation…Extendability.”

17- “Competition for Competence: Competition to develop and acquire constituent skills and technologies -> Competition to synthesize core competencies -> Competition to maximize core product share -> Competition to maximize end product share (own brand plus OEM).”

18- “The goal is not to “hardwire” the core competence into the organization through structure changes, but to “soft-wire” the perspective into the heads of every manager and employee. This means (1) establishing a deeply involving process for identifying core competencies; (2) involving strategic business units in a cross-corporate process for developing a strategic architecture and setting competence acquisition goals; (3) defining a clear set of corporate growth and new business development priorities; (4) establishing explicit “stewardship” riles for core competencies; (5) setting up an explicit mechanism for allocating critical core competence resources; (6) benchmarking competence-building efforts against rivals; (7) regularly reviewing the status of existing and nascent core competencies; and (8) building a community of people within the organization who view themselves as the “carriers” of corporate core competencies.”

19- “Everyone remembers the four Ps of marketing: product, price, promotion, and position. We’d like to suggest the 4 Ps of global preemption. The first P is, of course, preemption. We’ve argued that to capture the maximum returns to innovation, a company must have a capacity for global preemption. The other three Ps are the prerequisites for preemption: proximity, predisposition, and propagation.”

20- “The attributes of a banner brand that determines its impact on buyer predisposition include (1) recognition…(2) reputation…(3) affinity…(4) domain…Multiplied together, recognition, reputation, affinity, an domain determine a brand’s share of mind.”

21- “To have a share in the future, a company must learn to think differently about three things: the meaning of competitiveness, the meaning of strategy, and the meaning of organizations.”

22- “”Ambitious” doesn’t mean taking big risks. Ambition means setting a stretching aspiration, and then using the tools of resource leverage to “derisk” that ambition.”

23- “To create the future, a company must succeed in creating a synthesis of what are too often seen as antithetical organizational choices. (Corporate vs Business Units, Centralized vs Decentralized, Bureaucratic vs Empowered, Clones vs Renegades, Technology-led vs Customer-led, Diversified vs Core business.”

Regards,

Omar Halabieh

Competing for the Future

Competing for the Future

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