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Beyond competitive advantage : how to solve the puzzle of sustaining growth while creating value
Author: Todd Zenger
Harvard Business Review Press
This book emerged out of this intense dissatisfaction with the guidance that business professors and though leaders have to offer about to sustain value creation. Relative to most popular business books on the topic, this book takes a distinctly different tack. This book does not distill lessons from the successful firms though the book provides abundant illustrations. Instead the book targets the thoughtful and aspiring strategist with an approach reminiscent of porter’s translation of industrial organization economics. Michael Porter highlights critical questions and trade-offs, and introduced a structured approach to strategic thinking. A central message of the book is that a strategist seeking to sustain value creation needs more than a map to a position. The strategist needs a corporate theory of value creation, something that provides ongoing guidance to the selection of position and a vast array of strategic actions. In much the same way that a scientist’s insightful theory reveals promising experiments to conduct, a well-crafted corporate theory reveals a succession of promising strategic experiments-a succession of strategies and strategic choices. Better corporate theories reveal better strategies- strategies with a higher possibility of success. Moreover, a well crafted corporate theory elevates the strategist’s task of sustained value creation from a series of a la carte decision about acquisitions, investments,design, financing, integration decision, and leadership, each guided by rather fragmented logic to a more coherent set of choices guided by a synthetic logic. The book illuminates the attributes of an effective corporate theory, connects coeporate theory to valuable logic in organization economics and highlights a corporate theory’s role in sustaining value creating. The hope is that upon completion of the book, you will have a clear understanding of strategic thinking that can move your organization beyond competitive advantage and toward sustained value creation.
The basic principles of business level strategy as taught in business schools and practiced in companies are simple: discover, target, and then craft attractive market positions that deliver sustained advantage in competitive markets. Firm achieve these positions as they configure and arrange resources and activities in ways that yield either unique value to customers or common value at unique low cost. This concept of strategy as position remains a central concept to business school curricula across the globe. Valuable positions, protected from imitation or appropriation by others, provide sustained profit streams. The problem with this view of strategy is that investors reward companies only once for discovering, occupying, and defending a valuable market position. Once the achievement of that position is recognized and valued, investors turn and ask for more, and more requires successfully delivering either unexpected extensions of the current advantage or –more desirable-creating new advantages.
To help managers toward that goal, this book presents the concept of the corporate theory as a means of providing managers and executives with a framework for thinking beyond competitive advantage as they negotiate a changing and challenging environment in search of sustained value creation. As with a scientific theory, the object of a corporate theory is to maximize the probability of selecting valuable paths while minimizing costly mistakes. A good corporate theory thus provides a compass for those at the strategic helm and will, from time to time at least, help them beat the expectations baked into their current share prices or, in the case of privately held firms, investors’ valuations.
A corporate theory is not an abstract academic construct set about with obscure equations and language. It is rather a narrative, an explanation, or even an image that reveals how a particular company can accumulate value or compose competitive advantage over time.
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