Rita Gunther McGrath (Columbia Business School) opened by observing that the holy grail of strategy has always been the pursuit of sustainable competitive advantage, suggesting that pursuit can now be a trap. Rita used a video interview with Jim Balsillie (former CEO of RIM/Blackberry), along with a graph of their share price, as an example that we we can’t assume that stability will remain.
So, the question is what does strategy look like in a world when competitive advantage doesn’t last for very long? Rita used Fuji and Kodak as examples of different organisational approaches. Fuji Film were shocked by a blip in the price of silver and although the price quickly returned to normal, Fuji were unsettled as to why they hadn’t spotted the possibility and what might happen in the future. When the first digital cameras appeared, Fuji quickly spotted what was going on and had the courage to respond quickly. In contrast, Kodak seemed to pursue ‘nostalgia’ as a strategy. Rita challenged us to reflect on what is the silver for our businesses, the change that we’re not focusing on that could change everything?
Rita also explored Nokia as a case study, noting that it was being used as a positive case study in 2007. Lesson: don’t think of competitive advantage as durable.
There has also been a shift in the sources of competition; in the past, we needed to worry most about competition from other companies in our business. This has now changed, and the biggest threats can be from companies in seemingly unrelated industries. For example, some mapping businesses have now closed down as a result of (unexpected) competition from Google. Similarly, banks may not have viewed Apple as a competitor but the recent launch of Apple Pay has changed all that. Lesson: Your competition will come from those you don’t currently see as competitors.
Our people strategies are often based on outdated tools, and things like the 5 forces model and ways of judging ROI just don’t apply today. Further, these tools can be real innovation killers.
The new playbook of strategy involves
– Continuous reconfiguration
– Healthy disengagement (be able to drop things quickly)
– Deft resource allocation (move resources aroundquickly,, not just based on what the
– Innovation proficiency
– A new leadership mindset (old ways of leading just don’t work any more)
– Entrepreneurial career management (career paths are totally different now)
One of the real characteristics that we need to see in leaders is the ability to seek out information that is tough to hear! Rita quoted Ford as an example where a new CEO spotted that the employee car park was full of non-Ford cars. In a meeting, he was being told that everything was OK and that all the performance indicators were green (despite the profit figures and what they could see happening). When somebody voiced a concern about a problem, the CEO applauded them for raising it, saying that ‘you can’t manage a secret’ and it is essential to surface problems.
This has massive implications for the people in our businesses. We need to focus on becoming talent magnets rather than trying to handcuff people to make them stay, we need to be conscious of building powerful networks, of investing in people (and training) even when (and maybe especially when!) times are tough. Entrepreneurs won’t always stick around for long but they are incredibly valuable.
People will provide our competitive advantage. HR has a huge opportunity to step up.
(Rita closed my mentioning bubble-wrap, something that will only make sense if you have been following the Twitter back-channel)
(This was live-blogged during the session at CIPD14 – I’ve tried to capture a faithful summary of what was said, but my own views might occasionally creep in.)