Great Strategy or Great Strategy Implementation — Two Ways of Competing in Global Markets

On 19 April 1775, British troops (Redcoats) marched toward Concord, Massachusetts, to destroy military stores that had been collected by the American revolutionaries (Minutemen). At Lexington Green, a large, flat, open area, the Redcoats met the Minutemen in the first battle of the day. Both sides employed a similar battle strategy, firing at each other in the open from closed ranks. It was the dominant battle strategy of the day. The Redcoats quickly prevailed, and the Minutemen dispersed after a few volleys and a number of casualties.

Later in the day, as the Redcoats returned to Boston, a second battle developed. At various points along the road, Minutemen fired upon the Redcoat formations from inside houses and behind stone fences. When the Redcoats charged these positions, the Minutemen withdrew into the countryside and reappeared farther down the road. The Minutemen’s skirmish tactics took a heavy toll on the massed and extremely vulnerable Redcoats, who could do little but set fire to the buildings the Minutemen had already abandoned.

The two battles between the same opponents on the same day produced two very different results. It seems reasonable to suggest that between the two battles the Minutemen made a fundamental shift in their battle strategy, and this new strategy, rather than luck or chance, produced the significant difference in results.

Like the Minutemen, competitors frequently don’t compete the way one expects them to. This is one of the key difficulties for managers trying to understand, prepare for, and manage global competition. Western firms, and U.S. firms in particular, generally try to compete through some kind of strategic advantage. That is, they often try to develop a unique business strategy that will allow them to outmaneuver competitors. Yet many global Asian firms appear to compete successfully without much attempt to develop distinctive business strategies. Instead, they try to implement not-so-unique business strategies better than competitors and thereby to gain competitive advantage.

In this paper, I will distinguish between these two modes of competing, discuss some of their implications, and illustrate my analysis with research conducted in U.S. and Japanese semiconductor companies.1 I will then consider what happens when these two modes confront each other in a global market and discuss some of the implications for U.S. competitiveness in global markets.<

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References

1. The research is described in more detail in:

R.N. Langlois, T.A. Pugel, C.S. Haklisch, R.R. Nelson, and W.G. Egelhoff, Microelectronics: An Industry in Transition (Boston: Unwin Hyman, 1988).

2. A good, nontechnical description of the semiconductor industry and its evolution to 1987 can be found in:

“The Global Semiconductor Industry, 1987” (Boston: Harvard Business School, Case No. 9-388-052, 1987).

3. See B.R. Scott, “National Strategy for Stronger U.S. Competitiveness,” Harvard Business Review, March–April 1984, pp. 77–91. Also:

M.L. Dertouzos, R.K. Lester, and R.M. Solow, Made in America: Regaining the Productive Edge (Cambridge, Massachusetts: MIT Press, 1989).

4. This view about the importance of differentiation in high-technology industries such as semiconductors is supported by Krishna and Rao. They argue that U.S. high-tech industries need to be “higher tech” relative to overseas competitors if they are to be competitive. See:

E.M. Krishna and C.P. Rao, “Is U.S. High Technology High Enough?” Columbia Journal of World Business, Winter 1986, pp. 81–86.

5. This finding is consistent with Prahalad and Hamel’s view that Japanese firms pay great attention to developing and maintaining core competencies within a firm and avoid outside dependency in these areas. See:

C.K. Prahalad and G. Hamel, “The Core Competence of the Corporation,” Harvard Business Review, May–June 1990, pp. 79–91. A related view is expressed in:

C.H. Ferguson, “Computers and the Coming of the U.S. Keiretsu,” Harvard Business Review, July–August 1990, pp. 55–70. Ferguson sees digitalization as creating interdependencies across many industries bordering on semiconductors and believes it can also be managed with keiretsu-like relationships among clusters of firms.

6. Ohmae alludes to the Japanese preference for competing through strategy implementation and for giving less attention to the strategy being implemented:

Japanese managers are victims of their own success and of the habits that success creates. Not long ago, I was talking with the CEO of a large Japanese machinery company who had been an oarsman in college. According to his view of the world, if you want to win, all eight guys in the boat bend over a little farther, pull a little harder, work a little better as a team. That’s how you beat the other boats. That was his idea of strategy: hunch over and pull harder. No change in course, no pause to look at the distant horizon, no time to take new bearings. If your goal is to beat the competition, you win by narrowing your field of vision and doing more better.

K. Ohmae, “Companyism and Do More Better,” Harvard Business Review, January–February 1989, pp. 125–132.

7. In a recent article, Hamel and Prahalad state, “The new global competitors approach strategy from a perspective that is fundamentally different from that which underpins Western management thought.” They, however, see Japanese firms as possessing “strategic intent,” which means an obsession with winning at all levels of the organization. An active management process supports this obsession. This view does not appear to be the same as my distinction between competing through superior strategy and competing through superior strategy implementation, although we both arrive at some of the same conclusions. See:

G. Hamel and C.K. Prahalad, “Strategic Intent,” Harvard Business Review, May–June 1989, pp. 63–76.

8. For insightful discussions of such industry-level factors, see:

C.H. Ferguson, “American Microelectronics in Decline: Evidence, Analysis, and Alternatives” (Cambridge, Massachusetts: Massachusetts Institute of Technology, VLSI Memo No. 85-284, 1985);

M.T. Flaherty and H. Itami, “Finance,” in Competitive Edge: The Semiconductor Industry in the U.S. and Japan, eds. D.I. Okimoto, T. Sugano, and F.B. Weinstein (Stanford, California: Stanford University Press, 1984);

C.V. Prestowitz, Jr., “U.S.-Japan Trade Friction: Creating a New Relationship,” California Management Review, Winter 1987, pp. 9–19; and

Semiconductor Industry Association, The Effects of Government Targeting on World Semiconductor Competition: A Case History of Japanese Industrial Strategy and Its Costs for America (Cupertino, California: Semiconductor Industry Association, 1983).

9. See E. Mansfield, “Industrial Innovation in Japan and the United States,” Science, September 1988. He found that Japanese firms enjoy significant cost and time advantages over U.S. firms when commercializing externally developed innovations.

10. See W.G. Ouchi and M.K. Bolton, “The Logic of Joint Research and Development,” California Management Review, Spring 1988, pp. 9–33.

11. M.E. Porter, “The Competitive Advantage of Nations,” Harvard Business Review, March–April 1990, pp. 73–93.