Pixar Animation Studios, whose worldwide megahits include the Toy Story movies and Finding Nemo, uses rules such as “great story first, then animation” to guide its strategy.
Image courtesy of Pixar Animation Studios
Markets are changing, competition is shifting and your business may be suffering or perhaps thriving, at least for now. Whatever the immediate circumstances, managers are forever asking the same questions: Where do we go from here, and which strategy will get us there? Should we fortify our strategic position, move into nearby markets or branch out into radically new territory? To help guide our decisions, most of us have a smorgasbord of strategic frameworks to draw on. But which one is the right one, and when? The strategic plans, market analyses and hefty binders that strategy consulting firms leave behind often jumble strategic lenses: Five-Forces analysis, portfolio review, assessment of core competencies; examination of profit pools, competitive landscape and so on. But which analyses are most helpful right now?
Most managers recognize that not all strategies work equally well in every setting. So to understand how to choose the right strategy at the right time, we analyzed the logic of the leading strategic frameworks used in business and engineering schools around the world. Then we 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. (See “About the Research”) Two surprising insights emerged.
The Leading Question
How can managers know which strategic framework is the most appropriate one?
Findings
- What’s right for a company depends on its circumstances, its available resources and how it puts the resources together.
- Sometimes ordinary resources assembled well can be used to create competitive advantage.
- To identify the most appropriate strategic framework, start by assessing whether your industry is stable, dynamic or somewhere in between.
First, we discovered that the logics of the different strategic frameworks break 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 together. (See “Choosing the Right
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