Just when you think you have settled on the right strategy, you may need to change. By understanding the particular circumstances and forces shaping your company’s competitive environment, you can choose the most appropriate strategic framework.
Markets are changing, competition is shifting, and businesses are suffering or perhaps thriving. Whatever the immediate circumstances, corporate managers ask the same questions: Where do we go from here, and which strategy will get us there? To understand how to choose the right strategy at the right time, the authors analyzed the logic of the leading strategic frameworks used in business and engineering schools around the world. They matched those frameworks with the key strategic choices faced by dozens of industry leaders at different times, during periods of stability as well as change.
Two insights emerged from their analysis. First, the frameworks divided into three archetypes: strategies of position, strategies of leverage and strategies of opportunity. What’s right for a company depends on its circumstances, its available resources and how management combines those resources. Second, many of the assumptions about competitive advantage didn’t hold. For example, although strategy gurus talk about strategically valuable resources, sometimes competitive advantage came from very ordinary resources assembled well.
To figure out when it makes sense to pursue strategies of position, leverage or opportunity, the authors advise managers to understand their company’s immediate circumstances, take stock of their current resources and determine the relationships among the various resources. Understanding these factors, they argue, will help managers select the right strategic framework.