Five Future Strategies You Need Right Now

By George Stalk and John Butman

It's easy to miss many innovations in strategy until they appear on the front page of a major business publication. But by then everyone--including all your competitors--is using them.

As a CEO or senior executive, your job is to detect these strategies?and implement them--before your competitors.

That's where this book comes in.

Author George Stalk has often been called a guru of business strategy. In the 1980s, before anyone else saw its importance, he and his colleagues at The Boston Consulting Group developed the concept of time-based competition: how meeting the needs of your customers faster than your competitors can give you an unassailable advantage.

In this Memo to the CEO, Stalk discusses five strategies that have not yet become widely practiced but are nonetheless worthy of your attention now. He offers advice on how to identify and manage them while they still present opportunities to jump ahead of the competition. They are:

Addressing supply chain deficiencies

One example of a supply chain crisis is the growing lack of West Coast port capacity. Stalk reviews the strategic implications of this problem, reveals its impact, and recommends specific courses of action.

Sidestepping economies of scale

Many business leaders are reexamining their assumptions about the benefits of scale. Scaling down, not up, and building "disposable factories" and even "disposable strategies" are becoming new keys to lowering costs and boosting performance.

Profiting from dynamic pricing

Today, using real-time data, it is increasingly possible to match the price of your product or service with the immediate, second-by-second needs of the customer.

Embracing complexity

Simplicity is the mantra of the day. But with examples from a few leading-edge companies, Stalk shows that embracing complexity can achieve competitive advantage.

Utilizing infinite bandwidth

In a world of infinite bandwidth, companies that know how to take advantage of it become more productive, efficient, and profitable, and create entirely new businesses along the way.

Written in a refreshingly clear, concise format, Five Future Strategies You Need Right Now is filled with actionable ideas for seizing these emerging strategic opportunities.

• Language: English
• Publisher: Harvard Business Review Press
• Release date: Jan 29, 2008
• ISBN: 9781422156315

Book preview

Authors

Introduction The Five Strategies

There are always important business issues forming like storm clouds on the horizon, but that are not yet so potent that they seem to demand your concerted attention. However, this is precisely the best time to focus on these issues and decide whether you should put more resources against them—right now. By doing so, you can gain an advantage over your competitors who haven’t even glanced at the horizon yet or, if they have, are waiting to see what develops before they take any action. The danger is that, if you don’t look ahead, those emerging wisps of vapor can rapidly turn into fast-moving thunderheads that hit before you’ve lifted a finger, especially if a competitor has taken action.

All too frequently I read in the business press about a new strategy miracle that underpins the rising fortunes of some company or executive, and I am struck by how out-of-date the story and the news really are. For example, I recently read a feature about the miracle of flexible manufacturing and how Chrysler, in an effort to lower costs, would be implementing a system that enabled the company to assemble more than one car platform on a single assembly line.

Miracle? Yes. New? No. Over twenty-five years ago, in 1981, Mazda opened its new Hofu plant outside of Hiroshima, Japan. The plant was designed to handle up to eight platforms. I know. I was there.

Time as a competitive weapon for manufacturers started gaining visibility in the late 1970s, but it’s still being discovered as if it were invented yesterday.

Many innovations in strategy are like that—faint signals that gain strength until, years later, they appear in Business Week or the Wall Street Journal and become commonplace. That’s how it went with strategies based on experience, average costing, stalemate, and the new economics of information.

The hard part is figuring out which emerging strategic issues contain sufficient opportunity or significant-enough threat that they deserve attention now. That’s where I hope to help.

My colleagues and I are in the habit of keeping open files—a repository of relevant information on some intriguing topic or issue—that we add to as new material becomes available. The topic usually comes to our attention as a faint signal but gradually becomes clearer as the file fills.

Sometimes a client will ask for help on one of our open issues. The file for supply chain gymnastics came into being when a client was approached by FastShip, Inc., which sought funding to develop jet-powered container ships. Our investigation into this very novel concept revealed the looming problems of demand and capacity imbalances in container shipping. That file quickly thickened.

I have three categories of open files:

Faint signals: Issues that will probably become strategies but have shown only a few, very slight, signs so far. A lot of development is needed.

Watch list: Potential strategies where the sources of competitive advantage are not entirely clear.

Hallucinations: Provocative issues that are so out there they may never materialize, or at least not within this lifetime.

The five strategies I’ll discuss in this memo all began as faint signals, but the files on them are now sufficiently thick that the sources of advantage are not only abundantly clear, but undeniable:

Supply-chain gymnastics: No, I’m not talking about your continuing efforts to lower production costs by outsourcing and off-shoring or even about the prospect of increased pressure from China-based competitors in worldwide markets. I’m referring to the increasingly thorny problem of managing your supply chain when it includes suppliers or partners in Asia, especially China, and how it affects your strategy. What’s the problem? It’s the yawning gap between demand for shipping and transit-related capabilities and the available supply. The very real possibility is that your goods or components will be caught in a riptide that can cost you time, money, market share, and opportunity. If you can swim against the tide while your competitors are treading water, significant competitive advantage awaits you.

Sidestepping economies of scale: Although companies have long and correctly believed that achieving economies of scale is a sure path to greater volume and higher profits, companies in developing economies have explored new approaches to mass production that do not require access to capital or technology. The disposable factory, as I call it, is a labor-intensive, dedicated facility designed for temporary mass production with high throughput at low cost. As markets continue to become less predictable, and as product and even business life cycles become shorter, disposability can be an effective model even for companies that could take a more traditional