The end of competitive advantage

By James Heskett via hbswk.hbs.edu   Article

How Relevant is Long-Range Strategic Planning?

“Some are even suggesting that the mind set that has given us strategic planning concepts such as SWOT (strengths, weaknesses, opportunities, threats) analysis, the “five forces,” growth share matrices, five-year plans, and an emphasis on core competencies of the firm may lead to competitive disadvantage in a technology-transformed world in which markets, employee and customer mind sets, and innovations, evolve at a rapid rate. …

Now comes a new book, The End of Competitive Advantage, by Rita Gunther McGrath. Hers is a frontal attack on accepted strategic planning methods designed, in her opinion, for another time. These are methods based on the presumption that competitive advantage is sustainable. It’s a presumption that she claims “creates all the wrong reflexes” in a world in which the best one can hope for is “transient competitive advantage.”

McGrath’s prescription for achieving transient competitive advantage includes such things as smaller, faster, more agile organizations–and where management-by-consensus is a thing of the past. The emphasis is on marshalling rather than owning assets, including talent. …

These organizations engage in “shape shifting” based on systematic innovation and the constant testing of assumptions, all required to maintain transient advantage. They are organizations designed to create and test options, practicing “continuous deployment,” doing things “fast and roughly right” rather than relying on strategic planning as we have known it.”

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