Strategic Optionality: Pathways Through Disruptive Uncertainty PDF
Preview Strategic Optionality: Pathways Through Disruptive Uncertainty
Strategic Optionality Pathways Through Disruptive Uncertainty Surja Datta · Tobias Kutzewski Strategic Optionality Surja Datta • Tobias Kutzewski Strategic Optionality Pathways Through Disruptive Uncertainty Surja Datta Tobias Kutzewski Oxford Brookes University VU Amsterdam Oxford, UK Amsterdam, The Netherlands ISBN 978-3-031-17353-0 ISBN 978-3-031-17354-7 (eBook) https://doi.org/10.1007/978-3-031-17354-7 © The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer Nature Switzerland AG 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover illustration: © Alex Linch shutterstock.com This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG. The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Acknowledgement We are able to look further because we have had the good fortune to stand on the shoulders of giants. Isaac Newton said something similar, and we wholeheartedly agree with him on this. We have benefited from insights produced in diverse disciplines like cognitive science, complexity science, anthropology and sociology. We have attempted to introduce a new way of strategic thinking in this book, one which embraces uncer- tainty rather than try to wish it away. To do so, we had to look for ideas outside of the conventional strategy literature. Once on the journey, we found plenty of gems strewn elsewhere, and we have not been hesitant to borrow them for our endeavour. We express our gratitude to all the think- ers who have impacted our thinking in myriad ways. Throughout the writing of the book, we have actively shared the emer- gent ideas with a host of entrepreneurs and industry practitioners, greatly profiting, in the process, from those interactions. There are too many of you to name here individually, but you know who you are, and we thank you profusely for your time and viewpoints. Our institutions, Oxford Brookes University and Vrije Universiteit Amsterdam, provided us with generous research hours which greatly v vi Acknowledgement facilitated the authorship of this book, and for that we are grateful to them. At the end, we have to acknowledge the support of our families. They have been our rock, and without their understanding and patience, this book would not have seen the light of the day. So, Boni, Jishnu, Henrike, Jakob, Kolja and Alma—a big thank you to all of you. Contents 1 I ntroduction 1 2 The Business Landscape: Unpacking the Idea of ‘Domain Specificity’ 9 3 The Conventional Wisdom in Strategy 37 4 Strategic Optionality: Introducing the Idea 91 5 Optionality and Innovation: Two Sides of the Same Coin? 109 6 Competitive Success: Competing Across FRL Domains 135 7 O ptionality: The Method 169 8 C onclusion 183 I ndex 189 vii List of Figures Fig. 2.1 Global flows 14 Fig. 2.2 Physical and digital spaces 22 Fig. 2.3 FRL domains 28 Fig. 2.4 +2 (additive) vs multiplicative 32 Fig. 3.1 Porter’s diamond 47 Fig. 3.2 Triple Helix 50 Fig. 3.3 Porter’s five forces 59 Fig. 3.4 Industry life cycle 62 Fig. 3.5 Generic strategies by Michael E. Porter 69 Fig. 3.6 SWOT matrix 76 Fig. 3.7 BCG matrix (illustration is derived from original article published on the company website of the Boston Consulting Group) 84 Fig. 3.8 Ansoff Matrix 86 Fig. 4.1 Risk/uncertainty 93 Fig. 5.1 Diffusion of innovation 112 Fig. 5.2 4Ps of Innovation 115 Fig. 5.3 Nine dots 119 Fig. 5.4 Product life cycle 123 Fig. 5.5 The Innovation Process 128 Fig. 6.1 The 4RS of competitive success 136 ix x List of Figures Fig. 6.2 VRIO framework 138 Fig. 6.3 Determinants of competitive success for an MNC at a foreign location 148 Fig. 6.4 Multiplicity of roots 154 1 Introduction In 2016, Jeff Bezos, Amazon’s CEO, warned the company’s shareholders that ‘one common pitfall for large organizations—one that hurts speed and inventiveness—is “one-size-fits-all” decision making’. So, what did Bezos mean by ‘one-size-fits all decision-making’? Some decisions are consequential and irreversible or nearly irreversible— one-way doors—and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that—they are changeable, reversible—they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the conse- quences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgement individuals or small groups. In business schools we have traditionally taught Bezos’ ‘Type 1’ decision- making. Strategic decisions are arrived at methodically, and they are con- sidered irreversible. Bezos’ ‘Type 2’ decision-making constitutes an alien © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 1 S. Datta, T. Kutzewski, Strategic Optionality, https://doi.org/10.1007/978-3-031-17354-7_1
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