(by Evan Matthew Dudik)
Table of contents
The author used astrology to illustrate the finer point of strategizing; that is, thinking outside the box. He cited the Italian philosopher Bruno who first made the scientific observations that the universe is infinite and the earth is just one of the many planets which revolve around greater astrological bodies. He also cited that other planets might have humans who also inhabit other outer spaces. Galileo also made the same breakthroughs when he challenged the Copernican theory that the earth is the center of the universe. His telescope also enabled him to see other planets such as Jupiter and he also observed the moon and its finer characteristics.
The present corporate strategic thinking has very much in common with astrology than with science. There is so much speculation and breakthroughs which managers need to observe and further validate through testing and falsification. Hence, many managers are feeling enthusiasts and doubtful about their companies’ strategies. This chapter suggests that companies build their corporate strategies on scientific foundations. This is especially true in hypothesis creation, testing and falsification. Thus, the author wants the readers to be inspired by the inventions of Bruno and by the boldness of Galileo. They are fearless and radical and they believed in what their geniuses and their instincts told them. He urged the managers to steer from the Middle Ages type of thinking when it comes to strategizing.
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In this chapter, Dudik describes four major elements of a successful strategy that business can emulate. While the author says that there is no solid prescription for business strategies’ success, there are several variables which require to be evaluated and there are four basic guidelines which may be useful in strategic plan development.
The first element of a successful strategy is creating a strategic hypothesis about something vital or focal to the company. If something is very important to the company, an added value is to make it more important. Then, the winning strategy can be developed. The second strategy is the “if-then” statements. Strategies are conditional and these conditional clauses aid decision-makers view the possible results more instantly. The “if” segment of the strategic hypothesis gives the conditions for the anticipated outcomes. The “then” segment sets out the outcomes or the possible outcomes. The third element is the “pivot and the hammer.” The hammer is the part where managers decide to focus on their effort and play offense with their rivals. It depends on the pivot. The pivot is the part where resources are linked to the hammer. It holds the line. The forth element is “complementarity” which implies that strategies must complement what the company is set to do.
This chapter begins the crucial parts of the book. It sharply analyzes how the concept of “hammer and pilot” strategy works. This is illustrated using military history and other instruments. The Hammer and Pivot Strategy is important and it reveals two supporting factors: the Hammerhead and the Bearing. In order to be secured with your company’s strategy, you need to have a firm hold of these two factors.
This also steers the company to focus on the competitors in the orientation of a judo master attacking his enemy. The company concentrates its efforts and plays offense with its competitors through its base, the hammer. The hammer depends on the bearing. The bearing is the place of strategic defense. It is the strategy which holds the line while resources are linked to the hammer. The author suggests that strategic planners must use the hammer and bearing to pull forces from their defensive places (the bearing) to their offensive place (the hammer) and beat the competitors with an overwhelming might.
Dudik used Costco to exemplify the hammer and pivot strategy. He has traced back to some of the world’s all-time great military leaders. In a business perspective, the pivot is the company’s strength or its major product line. The hammer is the company’s ability to use its strength to extend into a new market area or branch out into a new industry.
When Costco started, they were just pivoting on office supplies and food items. Now, they will branch out into a new market segment such as selling cars with their knowledge of logistics and the warehouse environment.
Sustainable competitive advantage is the extended advantage of implementing several special value-creating strategy based on extraordinary combination of the organizational resources and capabilities of the company which cannot be copied by its competitors. The inherent goal of a business strategy is to achieve a sustainable competitive advantage. Competitive advantage exists when the company has the ability to deliver the same benefits with its competitors but at a cheaper cost or deliver benefits that far exceeds those of rival products or services. In a nutshell, a competitive advantage allows companies to build superior value for its customers and higher margins for itself.
Traditionally, sustainable competitive advantage is the cornerstone of a corporate strategy. However, Dudik challenges this model as an outmoded model of evaluation. He asserts in this chapter that business managers need a new vision of strategy evaluation in order for them to be more efficient and effective in the current market system. The author introduces a new goal: opportunity creation and exploitation (OCE). He said that the old notion of sustainable competitive strategy should be replaced as today’s businessmen and managers need a newer vision of business strategy to replace the old ones.
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In this chapter, Dudik introduces the concept of Opportunity Creation and Exploitation vis-à-vis the obsolete concept of Sustainable Competitive Advantage. He places it in a business context where corporate strategy must be framed with the utmost considerations for the dynamism and instability in the market system. As plainly put, there is great randomness in the present business world. Hence, this chapter suggests that companies assess the randomness of their businesses through four major elements. Then, they will see the need to be more flexible and adaptive and ready to embrace a more dynamic vision of their own business strategies. This is represented in the concept of opportunity creation and exploitation.
This concept is aware of the fact that strategies have a very dogmatic business cycle. By knowing which area of the business cycle their company is in, managers can better prepare their own corporate resources in a more competitive and dynamic way which beat their competitors.
In other words, the idea of opportunity creation and exploitation determines the company’s strategic life-cycle OCE and better equip the executives to orchestrate their human and material resources that can fairly outcompete their rivals. This is in a framework of a predictable business cycle. However, this is not an easy process. There must be a balanced approach to opportunity creation and exploitation for it to be successful and innovative. This is a challenge for most business leaders; they need to produce the product or service with the economic benefits in mind.
Dudik suggests that managers approach this concept with the notion that a business strategy is just a hypothesis which needs to be continuously tested. There is the awareness that the strategy may or may not work. Also, the outcomes must be measured. This is where the opportunity creation and exploration’s four phases must be carefully studied before application.
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