A Framework for Strategic Thinking
I started off today trying to write a blog post on the hot new tech-world term "product/market fit", and how it ties into more classical writings on business and strategy. However, I realized that I should describe my framework for strategic thinking first. Put more simply, it makes sense to describe the tools currently in my toolbox before I try to explain how a new tool complements (or conflicts with?) them.
My current set of tools for defining and analyzing a company's strategy all come from the time I spent in and around Stanford's "Business Management for Engineers" class. This is a great class that takes you on a whirlwind ride through some of the most seminal writings in business (disclaimer: I helped teach it one year). Porter, Christensen, Levitt - all of your favorites are there. There's so much interesting material that, while taking the class, I got a little overwhelmed and felt the need to organize things into a sort of workflow. Without further ado, I'll share that here.
1. What is Strategy?, by Michael Porter
In this 1996 essay, Porter attempts to answer the question (you guessed it) "what is strategy?" This is a bit of a spoiler, but it boils down most simply to another question - what are you doing differently than your competition? Don't stop there, though. Porter presents different ways to think through the problem of differentiating yourself from your competition accompanied by anecdotes that make the concepts crystal clear. This is the essence of thinking strategically; there's no better place to start.
2. The Five Competitive Forces that Shape Strategy, by Michael Porter
Porter wrote this article 20 years before What Is Strategy?. This essay is often credited with kicking off the more modern era of strategic thinking as more than just analyzing one's competition. In it, Porter describes the other factors at play when it comes to being strategic about a company's operations - specifically, the power of buyers, the power of suppliers, the threat of new entrants, and the threat of substitutes. Despite coming before What Is Strategy?, this reading is the logical next step as an analysis tool. Once you've used What Is Strategy? to think through differentiating yourself from your competition, use this one to think through the other factors that influence a solid strategic positioning.
3. Match Your Innovation Strategy to Your Innovation Ecosystem, by Ron Adner
Ron Adner is a relatively new voice in the world of business strategy, but I believe this article to be just as important as anything by Porter when it comes to strategically evaluating an idea or a company. In it, Adner makes the point that there is more to strategic success than just your activities. Rather, there are a variety of partnership and timing constraints that must be evaluated before your hot new idea can have a real shot at success. He backs this up with some great examples of killer ideas that fell flat on their face for lack of considering the bigger picture.
4. "Why Good Companies Fail to Thrive in Fast-Moving Industries" - an excerpt from The Innovator's Dilemma, by Clayton Christensen
The term "disruptive" is thrown around so much now it has essentially become meaningless. Refer to Christensen's critical work The Innovator's Dilemma to revitalize it. Here Christensen coins the term "disruptive innovation", and describes what it actually means - a product or service that underperforms existing products, but has other redeeming features (such as low cost or ease of use) that a newer market values. Over time these products have a chance of catching up to the technical capabilities of their predecessors while retaining their desirable additional features - a combination that can have devastating effects on the old guard. Read this excerpt to be able to speak intelligently on what it actually means to be disruptive.
5. Note on Marketing Strategy, by Robert Dolan
This reading is the originator of the "5 C's" and the "4 P's", if that rings a bell. It's a little dry compared to the others, but plays a valuable role. The Note is a framework in and of itself. It incorporates elements of Porter, Christensen, Adner, and more into the "5 C's", and then takes things a step further to describe how those insights of market analysis can and should affect your company's activities (the 4 P's).
6. Marketing Myopia, by Theodore Levitt
Admittedly, I'm overusing the word "seminal", but it's hard to use anything else to describe Levitt's 1960 essay on marketing. In it, he poses the classic question - what business are you really in? Levitt encourages you to take the long and broad view about your company's activities, because if you don't, something will eventually come along to make you irrelevant. His (now quintessential) example is that of the railroads. If the railroad companies had asked themselves "what business are we in?", they might have realized the answer is "the transportation business", not "the railroad business." They might have invested in disruptive technologies like air travel and automobiles, instead of slowly being made (mostly) obsolete. In this regard, it ties in well with Christensen. I like this reading as a counterpoint to the others, which are focused on a detailed investigation of the here and now. Levitt encourages you to take a step back, think broadly, and make sure you're not missing the forest for the trees.
This has turned into quite a wall of text, and is plenty enough for one day's blogging. At some point I'm going to spend some time diving deeper into each of these readings. I've already gotten started with a discussion of What Is Strategy? found here.
