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Business Strategies In Times Of Digitalization

Today's technology startups have challenged what was known about the ingredients for strategic success.

4/3/2021

At the turn of the millennium, the most popular business professors did not predict a rosy future for Apple. The most important financial advisors advised against Apple shares. As late as 2005, the bestseller on strategy "Competition Demystified" lists Apple as a bad example.

"Apple changes strategy every six months, their search for a competitive advantage in this market is illusory and their competitors are more efficient and productive."

All clear and, according to classical strategic analyses, certainly a plausible and correct derivation. In 2008 Steve Jobs presented the Iphone to the world. You know the rest.

Don't get me wrong. I think the classic theories, such as Porter's "Competitive Advantage" or the book by Greenwald quoted above are good, actually even excellent. Greenwald summarises the findings of the last century in a comprehensible and clear form. And that is indeed the problem. In the last century, organisations' strategies were primarily focused on competition; cheaper, better or faster. Today, new technologies enable fresh markets. There is little help in making the wrong thing even better. Nokia's devices kept getting better even after 2008. It didn't help Nokia much. Because Apple redefined the market.

In 2011, the Harward Business Review selected the 10 most important strategy articles from over a hundred and published the book "HBR's 10 Must Read on Strategy". A successful mix of old ideas, well summarised. In this list, one article seems to better interpret the signs of the times; "Blue Ocean Shift". The authors of this article outline methods to shift one's strategy from the existing competitive view to the blue ocean perspective. By blue oceans, the authors mean fresh markets, free from competition.

"For the past 25 years, the mantra has been customer first. The mantra of the Blue Ocean strategists, on the other hand, is, the non-customer first."

A few years later, the book was published and became a global success. Probably reason for HBR 2020 to bring a new edition of their book; "10 Must Reads On Strategy (Vol. 2)". And look, completely new emphasis on defining strategy. From avoiding disruption to lean start-up methodology, from fostering creativity and at the core of strategy: defining the purpose of the enterprise.

Literature sources: 

Competition Demystified, by Bruce Greenwald

Competitive Advantage, by Michael E. Porter

On Strategy, by Harvard Business Review

Blue Ocean Shift, by w. Chan Kim & Renée Mauborgne

The Blue Ocean as Strategy, by W. Chan Kim & Renee Mauborgne

On Strategy (Vol. 2), by Harvard Business Review

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