Competing on the edge: strategy as structured chaos PDF
Preview Competing on the edge: strategy as structured chaos
Competing On the Edge : Strategy As title: Structured Chaos author: Brown, Shona L.; Eisenhardt, Kathleen M. publisher: Harvard Business School Press isbn10 | asin: 0875847544 print isbn13: 9780875847542 ebook isbn13: 9780585236698 language: English Strategic planning, Organizational change, subject Competition. publication date: 1998 lcc: HD30.28.B7822 1998eb ddc: 658.4/012 Strategic planning, Organizational change, subject: Competition. Page iii Competing on the Edge Strategy as Structured Chaos Shona L. Brown and Kathleen M. Eisenhardt Page iv Copyright © 1998 by the President and Fellows of Harvard College All rights reserved Printed in the United States of America 02 01 00 99 11 109 8 7 Library of Congress Cataloging-in-Publication Data Brown, Shona L. Competing on the edge: strategy as structured chaos / Shona L. Brown and Kathleen M. Eisenhardt. p. cm. Includes index. ISBN 0-87584-754-4 (alk. paper) 1. Strategic planning. 2. Organizational change. 3. Competition. I. Eisenhardt, Kathleen M. II. Title. HD30.28.B7822 1998 658.4'012dc21 97-41459 CIP The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.49-1984. Page v To our parents, Marilyn and Richard Brown and Marie and William Kennedy, with love and thanks. Page vii Contents Preface ix 1 1 Strategic Challenge of Change 2 25 Playing the Improvisational Edge 3 57 Capturing Cross-Business Synergies 4 89 Gaining the Advantages of the Past 5 125 Winning Tomorrow Today 6 161 Setting the Pace 7 189 Growing the Strategy 8 217 Leading the Strategy 9 241 Rules of Competing on the Edge Appendix: Methods 249 Notes 255 Bibliography 259 Index 287 About the Authors 299 Page ix Preface This book began because of our interest in what is probably the most dynamic and fast-paced industry in the worldcomputing. This industry brings to mind the Internet, multimedia, video games, and networking. It has spawned a new vocabulary that includes terms like bandwidth and Internet time, a new way to conduct commerce, and the concept of the global village. When we started working together in the early 1990s, it was difficult not to be caught up in the energy and excitement of the hi-tech scene. Articles in publications from the Wall Street Journal and Business Week to The Economist, Forbes, and Fortune all tracked the industry's progress. Would Sun succeed with Java? What would Bill Gates do next? Could Netscape survive? Would IBM and DEC see a resurgence in their businesses? The players became larger than life and the wealth created was phenomenal. But just as significant, the industry was the harbinger of the tumultuous change that would affect many other industries as the decade progressed. Computing was the prototypical industry for the new reality of high-velocity, intensely competitive markets. This book also began because of our interest in some of the most exciting science, the confluence of complexity and evolutionary theories. As we started working together, scholars from biologists to physicists to paleontologists were exploring the fundamental nature of change. These scientists were uncovering cracks in the fortress of Darwinian evolutionary theory. How could breaks in the fossil record be explained? Did creation reverse the second law of thermodynamics? What explains the tremendous surge of life in the Cambrian explosion? Why did the dinosaurs become extinct? On the physics side, a vocabulary of change arose around non-linearities, chaos, and strange attractors. It was difficult for us not to be excited by the momentum and fervor about the new thinking around evolution. Our interest in the computer industry was pragmatic. To us, the managerial problems were unprecedented. How could executives manage in industries that were so fast-paced and highly competitive? Planning was unrealistic because the marketplace was so volatile. Reacting was not an option because managers were constantly playing catch-up. So, how did managers cope in an industry with slogans like "have lunch or be lunch," "snooze, you lose," and "only the paranoid survive"? In contrast, our interest in science was intellectual. In some ways, we were "science geeks'' and found the ideas simply intrigu- Page x ing. But, more importantly, we were searching for new models to replace the mature paradigms that dominate strategy and organizational thinking. Business and science converged when we undertook the research that forms the basis of this book. We gathered data on strategy and organizing in twelve businesses in Europe, Asia, and North America. Like true inductionists, we built the ideas in this book from the data, which kept us pragmatic and close to the concerns of real managers. But the data also made us better theorists. As any inductionist knows, the data provide the intellectual honesty and the insights into truly new thinking. An important event occurred when we realized that our work was related to complexity and evolutionary theories. We realized that researchers in these traditions were also struggling to understand change, but in a way that was much different from our own approach. Yet, the frameworks that we were finding in our research resembled what they too were finding. "Have lunch or be lunch" turned out to look a lot like the "edge of chaos." The tension in this book is between these two worlds: the very pragmatic and enormously challenging world of managing in rapidly changing and highly competitive markets, and the scientific world of complexity thinking, the nature of speed, and evolutionary theory. We wanted to write a book that had value for managers who not only create stock market miracles but also create companies and jobs. We don't envy the pressure of their world to succeednot just for themselves, but also for those who work with them. Yet, we also wanted to write something for our academic colleagues that was theoretically relevant and pushed their thinking in new ways. Balancing these tensions has been the hardest part of the writingto say something to the pragmatist, the scientist, and to people who, like us, are intrigued by both. Ultimately balancing these tensions reflects our view that research, especially in professional schools, is about rigor and relevance, not as ends of a continuum, but rather as orthogonal dimensions. The very best research is as at home in The Economist, Harvard Business Review, and Business Week (with some jargon translation) as it is in major academic journals. The risk is that we satisfy neither audience. For scientists, we have tried to illustrate the way in which ideas like the edge of chaos, genetic algorithms, patching, semi-structures, self organization, and dissipative equilibrium play out in real firms. We wanted to show how these ideas are valuable and relevant to the pragmatic world of business. After all, fundamental principles of science may be universal, but they unfold in unique ways in each academic discipline. We have added our own take on complexity and evolutionary theories through, for example, definitions of complexity and edge of chaos that emerged from our data. Blindly copying someone else's theo-
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