Imperatives of a Great Strategy Vol.2

Distinctive Competence and Competitive Advantage

featuring "Competing for The Future"by G.Hamel and C.K.Prahalad

Crafting and executing a successful strategy is a fundamental aspect of organizational leadership. The imperatives of a good strategy design and execution have been explored and articulated by many prominent contemporary strategists whose insights have become widely accepted in the business world.

Suppose we can understand the foundational imperatives commonly shared by these thinkers and identify the recently emerged imperatives that will significantly impact the future. In that case, we can offer a new synergistic and holistic strategy thinking that builds on the foundations and addresses what is needed today.

This is why I analyzed a representative set of books and authors discussing strategy.

I selected ten that had the most significant impact on today's business practices or will have it soon. I targeted to identify and delve into the common imperatives recommended by these selected strategists, drawing from their influential books and studies.

In my research covering ten books and the thinking of their authors, I found ten common imperatives to craft and execute a great strategy:

1.???? Understanding the landscape

2.???? Distinctive Competence and Competitive Advantage

3.???? Strategic positioning

4.???? Agility and adaptability

5.???? Innovation and disruption

6.???? Alignment and Execution

7.???? Customer centricity

8.???? Data-Driven Decision Making

9.???? Continuous Learning and Feedback Loops

10. Ethical Considerations

I covered the 1st imperative, "Understanding the Landscape," coupled with "Competitive Strategy" by Michael E. Porter. in the 1st article. Now we move to the 2nd imperative and the specific book and the authors who covered this specific imperative extensively in the book:

2.???? Distinctive Competence and Competitive Advantage:

Reminder: As we delve into more strategy books, you will undoubtedly witness so many similar topics covered in these books. This points to the foundational imperatives of a great strategy being more or less around the same principles of making choices and did not change for decades (maybe even centuries- look into Art of War by Sun Tzu), and some seem to stay the same. They are driven by Math and Physics Laws like the power of compounding numbers, pressure increasing with lowering the surface area of the applied force or power depending on the duration of the applied force. ??

Building on Porter's work, Gary Hamel and C.K. Prahalad, in "Competing for the Future," argue for identifying and leveraging distinctive competencies. A good strategy capitalizes on an organization's unique capabilities. Sustainable competitive advantage is achieved by focusing on core competencies that competitors find hard to replicate.

The Essence of Understanding the Landscape:

Hamel and Prahalad argue that an organization's success hinges on its ability to comprehend the external environment in which it operates. This understanding goes beyond a superficial analysis of market trends and competition. Instead, it involves a deep dive into the structural and systemic forces that shape the industry and the broader business ecosystem.

Industry Analysis and Beyond:

The authors build on Michael Porter's classic work on competitive strategy, which emphasizes industry analysis, but they extend the scope. While Porter's Five Forces model examines the competitive forces within an industry, Hamel and Prahalad propose a more expansive approach. They advocate for thoroughly examining industry dynamics, including the role of suppliers, buyers, potential new entrants, substitute products or services, and the intensity of competitive rivalry.

Beyond Industry Boundaries:

Hamel and Prahalad encourage organizations to look beyond the immediate industry boundaries. They argue that disruptive changes often emanate from sectors or industries seemingly unrelated to the core business. Therefore, understanding the landscape involves identifying potential disruptions and opportunities from adjacent industries or unrelated markets. We will see this approach more in the recent strategy books covered in this research.

Identification of Discontinuities:

According to Hamel and Prahalad, recognizing industry discontinuities is critical to understanding the landscape. Discontinuities are fundamental shifts in an industry's underlying structure that can redefine competition rules. They can result from technological breakthroughs, regulatory changes, or shifts in customer preferences. Organizations that fail to identify and adapt to these changes risk obsolescence (remember the bad examples from the Sigmoid Curve metaphor, like the Blockbuster case).

Competencies as a Lens for Understanding:

One of the central themes in "Competing for the Future" is the role of distinctive competencies in shaping an organization's strategic direction. Hamel and Prahalad argue that understanding the landscape involves meticulously examining the organization's internal capabilities and core competencies. A distinctive competency is a unique strength or capability that gives an organization a competitive advantage.

Leveraging Distinctive Competencies:

To understand the landscape effectively, organizations must identify their distinctive competencies and strategically leverage them. These competencies are the foundation for developing and implementing innovative strategies that create customer value and differentiate the organization from competitors.

Examples of Distinctive Competencies:

Hamel and Prahalad provide examples of companies that successfully leveraged their distinctive competencies. For instance, Canon's competency in precision engineering enabled the company to dominate the copier and printer markets. Similarly, 3 M's competency in innovation and new product development has been a critical driver of its success across diverse industries.

Continuous Reinvention:

According to Hamel and Prahalad, understanding the landscape is a collaborative exercise. It requires a commitment to continuous learning and reinvention. Organizations must be vigilant in monitoring changes in the external environment, reassessing their distinctive competencies, and adapting their strategies accordingly.

In Competing for the Future, Hamel and Prahalad make a compelling case for the imperative of "Distinctive Competence and Competitive Advantage. " Going beyond traditional industry analysis of landscape understanding and focusing on distinctive competencies of self provides a framework for organizations to navigate the complexities of a rapidly changing business environment. This understanding serves as the bedrock for crafting strategies that position organizations for sustained success in the dynamic and competitive landscape of the future.

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Cheers,

C.Firat Caliskan