MIT Sloan Management Review

 

The Dynamics of Strategy

Any of the three dimensions of strategy — value, imitation or perimeter — can be the starting point of a strategic initiative. Several sequences of value, imitation and perimeter are possible, and each typifies a strategic development.

When an innovative start-up seeks to implement a new business model, it first focuses on value, then on perimeter and only later on preventing or leveraging imitation. However, a me-too competitor enters the competitive game by imitating incumbent winning concepts, usually altering the existing value proposal and then extending its perimeter. The corporate parent of a multibusiness organization designs its strategic development through enlarging its perimeter and tries to replicate its best practices on new grounds in order to meet its value obligations.

Further, value, imitation and perimeter are linked by feedback loops, not by linear causalities. A new perimeter can result from imitation (even self-imitation and implicit trade-offs between innovation and inertia) or flow from value imperatives (meeting shareholder expectations or customer needs). Conversely, a shift in the perimeter (diversification, refocusing or value migration) can impact the value proposal (or at least should leverage synergies with the existing business model) and, when successful, spawns would-be imitators.

Moreover, some strategic issues can be described as trade-offs or overlaps among value, imitation and perimeter. The growth/consistency dilemma, which limits the extension of diversification... To read the complete article, login or sign-up using the form below.