Articles

Warren Bennis and a panel of experts in leadership development discuss the “legitimization of doubt.”

Most corporate executives are by now convinced that the scale and pervasiveness of technological change requires a fundamental review of business strategy. Web-based technology is creating opportunities to rethink business models, processes and relationships along the whole length of the supply chain. Successful e-strategies translate established strategic concepts into contexts in which they previously were not economically viable. For example, in the 1960s and 1970s IBM won the loyalty of major corporate customers through highly paid account executives who provided so-called relationship management. Today that same concept -- now technologically based -- is being deployed to tailor support to individual consumers. But there is still enormous uncertainty within the business community about the future shape of e-business -- as evidenced by the mood swings of the financial markets and the faltering fortunes of even the icons of the New Economy. The sheer scope of potential change presents some challenges: How can executives make sense of the burgeoning e-business ideas, and where does strategic analysis begin? Behind the new e-business language, how new are the strategic concepts? And what form will a company's strategic e-opportunity take? As a platform for answering those questions and exploring the new strategic landscape, author David Feeny constructs a coherent map of the e-opportunity. He identifies three layers of e-opportunity, or domains, that exist within operations, marketing and customer service. In each domain, technology may enable a radical new vision of what a business can accomplish. Although every business should be considering opportunities across all three domains, the potential significance of each domain and of individual ideas within it will vary widely across industry sectors and businesses.

Because software is an increasingly pervasive part of the New Economy, delegating decisions about its development to technical staff can be risky for executives. Today's general manager needs to have a good grasp of the most effective methods for developing and deploying software products and services throughout the organization. So what is the best approach to software development? Recent research from Harvard Business School professor Alan MacCormack and colleagues proves a theory about software development that has been gaining adherents for some time: The best process is an evolutionary one. Focusing on the area of Internet-software development, the researchers uncovered four practices that lead to success: an early release of the evolving product design to customers, daily incorporation of new software code and rapid feedback on design changes, a team with broad-based experience of shipping multiple projects, and major investments in the design of the product architecture. Among the development projects cited are Linux, the poster child of the open-source movement, and Internet Explorer 3.0. Commenting on the latter, a project in which Microsoft came from behind with a product equal to Netscape's, a team member declared, "If someone asked what the most successful aspect of [Internet Explorer 3.0] was, I would say it was the job we did in componentizing the product." The new research supports componentizing. Getting a low-functionality version of the product into customers' hands at the earliest opportunity was shown to improve quality dramatically. The research also demonstrates that although age doesn't count, experience still does. The more projects shipped, the more capable a programmer becomes. But in environments with rapidly changing markets and technologies, the usefulness of the evolutionary model extends beyond developing software. By dividing tasks into microprojects, a company can tailor the model to reflect any context. Traditional market research has limited value in the uncertain context of the Internet-software industry, and short microprojects are called for, with an early working version for feedback on the product concept. In more-mature environments, however, companies can specify more of the product design upfront, use longer microprojects and develop greater functionality before feedback is needed. Flexibility is key. Thus, an evolutionary-delivery model represents a transcendent process for managing the development of all types of software, with the details tailored to reflect each project's unique challenges.

The purchasing function is caught in a gap between strategic intentions and tactical realities.

The quest for competitive advantage often inspires executives to imitate the strategies of the most successful companies. Interestingly, however, precisely opposite factors are considered sources of competitive advantage at different points in time. Henry Ford's emphasis on focus has been touted as the key to success right alongside General Motors' product-line breadth. IBM's vertical integration was considered an unassailable source of competitive advantage a generation ago; today, everyone admires the outsourcing flexibility inherent in the nonintegrated business models of Cisco Systems and Dell Computer. But strategists whose anecdotal understanding of competitive advantage runs only as deep as "If it's good for Cisco, it must be good for everybody" are likely to succeed only in building yesterday's competitive advantages. If history is any guide, the practices and business models that constitute advantages for today's most successful companies confer those advantages only because of particular factors at work under particular conditions at the particular time. Harvard Business School's Clayton Christensen, a leading thinker on disruptive technologies, alerts managers to the imperative of understanding the context that supports a particular competitive advantage. He explains why, for example, pharmaceutical companies' current focus on ever larger mergers is moving them in exactly the wrong direction at exactly the wrong time. He blames their strategists (and investment bankers) for not thinking deeply about cause and effect in competitive advantage. He also notes that the very existence of competitive advantage sets in motion creative innovations that, as competitors strive to level the playing field, cause the advantage to dissipate. That does not mean the search for competitive advantage is futile. Rather, it suggests that successful strategists need to cultivate a deep understanding of the processes of competition and progress and of the factors that undergird each advantage. Only then will they be able to see when old advantages are poised to disappear and how new advantages can be built in their stead.

When a CEO departs, choosing the best successor depends on why the incumbent left.

To grow steadily and avoid stagnation, a company must learn how to scale up and extend its business, lengthen its expansion phase, and accumulate and apply new knowledge to products and markets faster than competitors. Managers can't leave growth to chance. They need a plan that renders consistent sales growth over the long term -- one that captures management's vision for expansion and that addresses the product and market combinations the company intends to pursue, the size it hopes to achieve in a particular time frame and the know-how and organizational structures needed. Such planning has an internal focus. It aims to help a company exert more control over its own fate as it rises to external challenges. Three thriving companies demonstrate three different strategies in action. The Netscape experience shows how a company can scale up -- do more of what it already does well. Netscape went from $80 million in sales in 1995, its first full year of operation, to $500 million just three years later. IKEA used duplication -- repeated the business model in new regions. Established in 1954 as a small domestic furniture manufacturer and retailer in Sweden, by 1999 IKEA had 50,000 employees and a presence in 25 countries. As the authors explain in depth, IKEA's success is tied to the way it manages and transfers knowledge. SAP's growth strategy is an example of granulation -- growing select business units. SAP started with a basic enterprise-resource-planning system, then moved to multiple products for e-commerce and Internet activities. Using one product as a platform, it began allowing customers to fine-tune virtually any resource-planning system. The authors emphasize the importance of combining strategies for growth with explicit strategies for learning. Companies must decide what kind of growth strategy they want to pursue, given their capabilities and market opportunities. They must then make the strategy work by changing their structure and processes in a way that lets them acquire or create specific knowledge about new technologies, customers and industries. The integration of growth strategies and learning strategies is at the heart of success.