Strategy as stretch and leverage
(Originally published on the OUBS Blog)
This article by Gary Hamel and C.K. Prahalad focusses on competitiveness itself. They say we are at a stage were we can diagnose a problem once it is there but we can’t keep people from getting sick… or rather companies.
They argue that: “Long-term competitiveness depends on managers’ willingness to challenge continually their managerial frames.” On top of that they believe that a company that is doing badly didn’t have too much resources it didn’t get buyers for, but rather it didn’t have high enough ambitions. They say that “Creating stretch, a misfit between resources and aspirations, is the single most important task senior management faces.”
As an example they say that there were times when CNN was providing 24 hour news coverage with one fifth of the budget of CBS turning out only 1 hour of news in the evening.
The best point they made, in my mind, was this:
Downsizing is reducing the buck paid for the bang.
Resource leveraging is getting a bigger bang for the buck.
Then they go on explaining what management can do, in terms of broad overviews.
1. Convergence and Focus is about some key goal. I quote: “When Komantsu (who were trying to overtake Caterpillar) initiated its total quality control programme, every manager was given explicit instructions to vote quality in a choice between costs and quality.” If you have few resources, set them to achieve one specific task.
2. Extracting and borrowing is about drawing from a companies pool of experiences. You can have a million but what you need to do is use every one of them. On top of that a company can use its core competence and try to entice other companies to use that instead of building their own expertiese. You can then also borrow from their expertise.
3. Blending and balancing is about finding ways to blend different resources in the idea of 1 + 1 > 2\. The company also needs to balance product development, production and distribution. All three legs need to be there.
4. Recycling, co-opting and shielding is about:
5. never forgetting some resource as it might come in handy later
6. making others see the importance of your success
7. building up force out of sight of major competition