BOOK REVIEW / Three stages to creating a pregnant future: 'Competing for the Future' - Gary Hamel and CK Prahalad: Harvard Business School, 21.95 pounds
Wednesday 05 October 1994
To them, challenging orthodoxy means finding more efficient solutions to customer problems. The main competitive threat comes not from abroad but from non-traditional competitors who discover new solutions.
Too much top management time is spent shoring up today's business by restructuring and reengineering and too little in creating the markets of the future. The current enthusiasm for re-engineering the company is surgery rather than therapy. It is treating the symptoms but not discovering why the patient became sick.
Becoming better and smaller is not enough. Companies must also be different. Hence the traditional approach to strategy is wrong because it focuses on competing within today's industry structure.
The authors' premise is that a company can only control its own destiny if it understands how to control the destiny of its industry. This means developing an independent view about future opportunities and how to exploit them.
There are three ways companies can 'create the future'. One is to make a fundamental change in the way business is done in a long- standing industry. Another is to redraw boundaries between industries. The third is to create new industries. There are three stages - like pregnancy: conception, gestation and labour and delivery. Most managers spend too much time in the delivery room, waiting for the miracle of birth. It will prove to be a phantom pregnancy unless it is preceded by conception and gestation.
And in developing this, the authors argue that the search for the sources of successful competitiveness has often been too narrow and too shallow. Too narrow because the time-frame has been too short. Too shallow because analysis has been on what makes for competitiveness rather than on why some firms continually create new forms of competitive advantage.
Companies have been working hard to transform their organisations. They have used a common recipe of which the key ingredients are devolution, empowerment, focus, entrepreneurship, personal accountability and customer focus. But there are dangers. The authors challenge the contemporary orthodoxy of thinking about organisations by pointing out these dangers. For example, evolution to business units can mean there is no corporate strategy and that fruitful links between component businesses are missed. Enlightened collective strategy is what is needed.
Similarly, empowerment brings the risk of losing a shared sense of direction.
The authors attack strategic planning because it is neither sufficiently radical nor long-term. Instead, they advocate 'crafting strategic architecture' - an example of their enthusiasm for jargon , although they describe the differences clearly enough.
In strategic planning the goal is incremental improvement in market share and position, while in strategic architecture it is rewriting industry rules and creating a new competitive industry. It is the blueprint for the future. Developing the blueprint should involve many managers, not just a few planning experts.
One of the central concepts is 'core competence', an idea for which the authors are well known. Competition is 'as much a race for competence mastery as it is for market position and market power'. 'Core competencies are the skills that enable a firm to deliver a fundamental customer benefit.'
As such, Competing for the Future is a challenge to traditional teaching and writing on strategy. It is clearly argued and well illustrated with examples and by comparisons with traditional thinking. But it could usefully have been a more international book.
The authors are both professors of strategy and international business; one at the London Business School and the other at the University of Michigan. Yet its focus is on improving the competitiveness of American companies.
European business readers, however, should find the book gives them a wider perspective on how to compete in a global market.
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