This book offers a practical, fact-based approach to explain how enterprises deliver performance over time. Rigorous methods explain how to quantify the growth, decline and interdependence within the organisation's resources and capabilities as well as the continuous interactions with competitors and other external factors. These methods create clear and practical pictures of the strategic architecture driving earnings and other performance outcomes, not just for commercial firms, but for non-profit cases too. Management is then well-equipped to answer three crucial questions in their strategy development : why has the business performed as it has to date? where is performance headed in the future if we carry on as now? and how can we alter this future for the better? The book provides the basis for an entire course on the time-based perspective on competitive strategy, connecting strongly to established static frameworks. Alternatively it offers a vital missing component for existing courses in strategy and general management, as well as a key reference text for professionals in corporate development, consulting and business analysis.
Table of Contents:
Preface ix
Acknowledgments xv
Part I Getting Started 1
1 The Critical Path—the Meaning of ‘‘Dynamics’’ 3
Strategic resources and performance 7
The problem of valuing businesses and their strategies 10
Industry factors and firm performance 12
2 Strategic Resources—the Fuel of Firm Performance 15
A sharper focus on strategic resources 15
What is already known about resources and sustained performance 17
SWOT analysis—a poor basis for sound strategy 19
Winning and keeping resources 21
Defining and measuring resources and their flows 25
3 Getting Specific—Quantifying Change 31
Get quantitative!—the importance of scale, rates of change, and time charts 31
Adding ‘‘lumps’’ of resource 34
Stimulating and exploiting potential resources 36
Developing resources within the business 41
Using time charts to estimate resource development 44
An illustrative scenario for staff development 45
Developing resources beyond the firm 46
The failure of correlation methods to explain business performance 47
4 Building the Machine—Reinforcing Feedback between Resources 51
Current approach to linkages within and beyond the business 51
‘‘To he who hath shall be given’’—the strength of complementary resources 53
Resource interdependence—an example of self-reinforcement in brand building 55
Reinforcing feedback—the magic of exponential growth (but dangers of collapse) 61
Completing the resource-system in brands—adding limits to potential resources, resource losses, and management decisions 63
Most resources need not be depleted to build others 65
Be clear where revenues and costs arise 66
Resource dynamics and value-chain analysis 68
A practical example—rejuvenating a knitwear brand 70
5 Removing the Brakes—Balancing Feedback Holds Back Growth 75
Recognizing balancing feedback 75
Further developments of the banking example 82
Self-balancing resources 83
A note on spreadsheets, system dynamics, and simulation modeling 85
6 The Strategic Architecture—Designing the System to Perform 89
Industry example—new product development in car manufacture 90
A seven-step process for capturing the Strategic Architecture 91
Strategic Architecture: diagnosing performance challenges 105
Part II Further Concepts 115
7 The Hard Face of Soft Factors—the Power of Intangible Resources 117
Features and impact of intangible resources 119
Measuring intangible resources 120
‘‘Indirect’’ resources, reflecting people’s feelings or expectations regarding issues that concern them 121
Resource attributes 134
Integrating intangible resources into the strategic architecture 149
8 Into Battle—the Dynamics of Rivalry 157
Type 1 rivalry: developing potential customers 158
Type 2 rivalry: capturing rivals’ customers 175
Type 3 rivalry: competing for sales to shared customers 181
Simplifying multi-competitor dynamics: Strategic Groups 196
Extending rivalry to resources other than customers 198
9 Building the Capability to Perform 207
Measuring capabilities 210
Learning as capability building 212
A process for dealing with capabilities in analyzing performance dynamics 223
The impact of capabilities on performance of the entire business 225
From team learning to organizational learning 231
Leadership team competence 238
10 Keeping the Wheels on the Road—Steering the Dynamics of Strategy 243
Managing a single resource—the ‘‘goal and control’’ structure 244
Dissecting interference between policies 256
Conflicting goals 264
Limits to human decision making 271
Interference between goals and policies 272
Goals, controls and the Balanced Scorecard (BSC) 276
Illustration of valuing a strategic initiative 279
11 Further Developments on Existing Strategy Concepts 283
Other firm-level strategy frameworks 284
Industry-level approaches to strategy 289
The strategy process 301
Further opportunities from a resource-system approach—corporate-level strategy 303
Appendix 307
References 317
Index 319
About the Author :
KIM WARREN has an engineering background and both an MBA and PhD from the London Business School where he is now Adjunct Associate Professor of Strategic Management. His early career was spent in the oil and petrochemicals industry. He was later retail strategy director for the retailing group, Whitbread PLC during the group's growth and domination of several leisure sectors.
Kim is author of several simulation-based learning materials, covering sectors such as brand management, professional services, retailing, banking and airlines, designed to communicate a rigorous, fact-based approach to strategy. The Strategy Dynamics approach underlying these materials is a popular option to all groups of degree students at London Business School, and is also offered via distance learning from MIT.
Recent consulting and research collaborations include projects with major international companies and top strategy consulting firms, with whom leading-edge models of competitive strategy are being applied in industries as diverse as financial services, car manufacture, software development and telecommunications.
Kim is chairman of The Centre for Strategy Dynamics whose purpose is to provide management education and establish standards of good practice in the application of the Strategy Dynamics approach. He also heads Global Strategy Dynamics Ltd, which publishes simulation-based learning materials and other publications to enhance understanding and management of business situations.
Review :
"...many valuable ideas..." (Long Range Planning, Vol 37 2004)
