The Essential Advantage: How to Win with a Capabilities-Driven Strategy

209 Pages·2010·1.89 MB·English

by  Paul Leinwand

Praise for The Essential Advantage
“Here, at last, is a book that helps a CEO sort through the many conflicting
demands on him. Strategic opportunities and distracting temptation often look a
lot alike. The framework that intrinsically links capabilities to strategy is clear; it
makes sense; it’s practical; and, I know from experience; it works.”
—Al Daweesh, Group CEO of Saudi Telecom
“Companies have many strategic options, especially in fast-growing markets and
industries. The Essential Advantage is a powerful reminder that capabilities
should play the central role in sorting through them. Strategy should start with
understanding what your company does really well—and using that knowledge
to generate a corporate direction where you can be confident of winning.”
—Ahmad Abdulkarim Julfar, Group Chief
Operating Officer, Etisalat Group
“This is a powerful book about strategy as choice. It demonstrates that coherence
—treating your internal practices and your external business environment as
interrelated and mutually focused—leads to competitive advantage. This path is
not always easy to follow, but it will resonate at any company that is serious
about its future.”
—Ram Charan, coauthor of The Game Changer
(with A. G. Lafley) and author of
Boards That Deliver
“The Essential Advantage provides a pragmatic, holistic, and useful framework
for understanding how to deliver performance. This straightforward read
provides credible examples and a culmination of considerable thought and
experience. There is no reason for competitive disadvantage, other than failing to
deliver coherence.”
—John Hofmeister, former President of
Shell Oil, CEO of Citizens for Affordable Energy, and author of
Why We Hate the Oil Companies
“The Essential Advantage picks up where most business books end. Rather than
presenting an abstract treatise on capabilities-based strategy, the authors provide
deep insights into what a capability is, the value of coherence among activities,
and most importantly how executives can earn the right to win in their markets.”
—Don Sull, Professor of Management Practice in
Strategic and International Management and
Faculty Director of Executive Education at
the London Business School
“The Essential Advantage sizzles. It is instantly useful in determining your
organization’s capabilities and how to make the most of them. Leinward and
Mainardi use elegant, easy-to-follow models and compelling company stories to
show what works and what doesn’t in strategy. Using their exercises and
terminology will give your organization a common footing and source of
leverage.”
—Karen Otazo, President, Global Leadership
Network, and author of The Truth
About Being a Leader
Also by Paul Leinwand and Cesare Mainardi
Cut Costs and Grow Stronger: A Strategic Approach to
What to Cut and What to Keep, an e-book
Copyright
Copyright 2011 Booz & Company Inc.
All rights reserved
No part of this publication may be reproduced, stored in or introduced into a
retrieval system, or transmitted, in any form, or by any means (electronic,
mechanical, photocopying, recording, or otherwise), without the prior
permission of the publisher. Requests for permission should be directed to
[email protected], or mailed to Permissions, Harvard Business
School Publishing, 60 Harvard Way, Boston, Massachusetts 02163.
First eBook Edition: December 2010
ISBN: 978-1-4221-3651-5
To those who taught us what is essential in life.
CONTENTS
Copyright
Acknowledgments
PART I:
STRATEGIC COHERENCE
1. The Essence of Advantage
2. The Coherence Premium
3. The Capabilities-Driven Strategy
PART II:
ELEMENTS OF A CAPABILITIES-DRIVEN STRATEGY
4. The Way to Play
5. The Capabilities System
6. Product and Service Fit
PART III:
CREATING VALUE
7. Unlocking Growth
8. Mergers and acquisitions
9. Cut Costs and Grow Stronger
PART IV:
LIVING COHERENCE EVERY DAY
10. The Essential Advantage Road map
11. Organizing for Coherence
12. The Capable Leader
Notes
Bibliography
About the Authors
ACKNOWLEDGMENTS
To some extent, expressing appreciation to a few individuals who helped with
this book misses the point: our perspective on value creation and strategy is
derived from at least two generations of Booz & Company consultants who, over
time, formed the fundamental ideas behind the capabilities-driven strategy. We
especially thank our clients who collaborated with us to discover the essence of
advantage. We admire them for their courage in embracing capabilities-driven
strategies to boldly transform their companies.
But translating those ideas into this book took great focus and effort, and we
must acknowledge those individuals who made it all happen.
Our firm’s editor-in-chief, Art Kleiner—an amazing combination of leading
business thinker and gifted storyteller—was our close partner throughout the
process. It is difficult to properly express our gratitude to him for his vast
contributions to this book; we know it certainly would not exist without him.
Our knowledge team at Booz & Company is world-class, and it is this group
that energetically brings these concepts to life. Kate Pinkerton, the project’s
director, identified significant content while managing to organize the entire
team to produce two books and a Harvard Business Review article within a year.
Tom Stewart, our firm’s chief knowledge and marketing officer, had insight into
how these ideas would make a significant difference in the world of strategic
thinking, and we thank him for encouraging and facilitating us. We had a first-
class editing team supporting this project: Rob Hertzberg and Tara Owen
enhanced the clarity of our ideas and helped us push further with their energy
and enthusiasm.
There are so many colleagues at Booz & Company who have contributed to
this book. Many of these individuals are highly regarded in their field, and their
insights on the topic of strategy have been incredibly helpful. Thank you in
particular to Gerald Adolph, DeAnne Aguirre, Jin Ahmed, Shumeet Banerji,
Marty Bollinger, Niko Canner, Dave Coleman, Ivan de Souza, Niklas Eidmann,