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Which strategy when? (How to Choose the Right Strategy (Understand Your…
Which strategy when?
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The Opportunity Strategy
In contrast to stable industries, dynamic industries are characterized by superabundant flows of fast-moving but often unpredictable opportunities
opportunity strategy is like surfing: Performance comes from catching a great wave at the right time, even though the duration of that wave is likely to be short and the ride a precarious “edge of chaos” experience where falling off is always a possibility.
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For companies pursuing opportunity strategies, competitive advantage comes from capturing attractive
but fleeting opportunities sooner, faster and better than competitors. This strategy, which is commonly associated with “simple rules” heuristics
Requires combining two elements: choosing a focal strategic process and developing simple rules to guide that process.
In choosing a focal strategic process, the key is to choose one where the flow of attractive opportunities is steady and deep.
When an opportunity flow becomes less attractive (e.g., greater competition for the opportunities or
lower payoff from the opportunities) or when more attractive opportunity flows emerge, it’s time to pivot to the superior flow and its related strategic process
The Position Strategy
Industry stability ensures that the position of the fortress provides a long-term competitive advantage, thereby justifying repeated investments to reinforce and preserve the position.
With a position strategy, competitive advantage depends first on choosing a valuable and unoccupied strategic position in a given industry, and second on creating and linking company resources to defend that position.
Like any strategy, position strategy has an Achilles heel: change. When industries change, moving a fortress locked into a strategic position is tough. Changing a tightly linked system means dismantling the very synergies that management worked so hard to build and putting the organization at risk during the transition to a new strategy.
Change forces managers to dismantle their existing resource systems and reassemble them in new strategic positions. This is difficult and time-consuming — a combination that can potentially be lethal because performance may not improve until the pieces are reassembled and linked.
The Leverage Strategy
In markets where change is moderate, leverage
strategies often beat position strategies.
Since change is incremental and predictable, it makes sense for managers to coevolve their strategically important resources with the industry. So while position strategies are based on the fortress analogy, leverage strategies are more like chess, where competitive advantage comes from both having valuable pieces and making smart moves with them.
Leverage strategies can focus on refreshing and
consistently deploying core resources in current markets
Leverage strategy is not only about expansion. Sometimes, it makes sense to pull back and redeploy resources.