Achieving a sustainable competitive edge is nearly impossible these days. A playbookfor strategy in a highvelocity world by Rita Günther McGrath
62 Harvard Business R
ARTWORK Tara Donovan, Untitted (Styrofoam Cups), aoo8, Styrofoam cups •and glue, installation dimensions variable
SPOTLIGHT ON STRATEGY FOR TURBULENT TIMES
Each month we illustrate our Spotlight package with works from an accomplished artist. We hope that the lively, cerebral creations of these photographers, painters, and installation artists will infuse the pages with additional energy and intelligence and amplify what are often complex and abstract concepts. This month we showcase Tara Donovan, a ...view middle of the document...
(See "The Wave of Transient Advantage.") periods of time—firms such as GE, IKEA, Unilever, But when advantages arefleeting,firmsmust rotate Julius Berger, and Swiss Re. But it's now rare for a through the cycle much more quickly and more often, company to maintain a truly lasting advantage. Com- so they need a deeper understanding of the early and petitors and customers have become too unpredict- late stages than they would if they were able to mainable, and industries too amorphous. The forces at tain one strong position for many years. work here are familiar: the digital revolution, a "flat" A competitive advantage begins with a launch proworld, fewer barriers to entry, globalization. cess, in which the organization identifies an opporStrategy is still useful in turbulent industries tunity and mobilizes resources to capitalize on it. In like consumer electronics, fast-moving consumer this phase a company needs people who are capable goods, television, publishing, photography, and... offillingin blank sheets of paper with ideas, who are well, you get the idea. Leaders in these businesses comfortable with experimentation and iteration, and can compete effectively—but not by sticking to the who probably get bored with the kind of structure resame old playbook. In a world where a competitive quired to manage a large, complex organization. advantage often evaporates in less than a year, comIn the next phase, ramp up, the business idea is panies can't afford to spend months at a time craft- brought to scale. This period calls for people who can ing a single long-term strategy. To stay ahead, they assemble the right resources at the right time with need to constantly start new strategic initiatives, the right quality and deliver on the promise of the building and exploiting many transient competitive idea. advantages at once. Though individually temporary, Then, if afirmis fortunate, it begins a period of exthese advantages, as a portfolio, can keep companies ploitation, in which it captures profits and share, and in the lead over the long run. Firms that have figured forces competitors to react. At this point a company this out—such as Milliken & Company, a U.S.-based needs people who are good at M&A, analytical decitextiles and chemicals company; Cognizant, a global sion making, and efficiency. Traditional established IT services company; and Brambles, a logistics com- companies have plenty of talent with this skill set. pany based in Austraha—have abandoned the asOften, the very success of the initiative spawns sumption that stability in business is the norm. They competition, weakening the advantage. So the firm don't even think it should be a goal. Instead, they has to reconfigure what it's doing to keep the advanwork to spark continuous change, avoiding danger- tage fresh. For reconfigurations, afirmneeds people ousrigidity.They view strategy differently—as more who aren't afraid to radically rethink business modfluid, more customer-centric,...