To be successful in today’s disrupted business reality, managers must learn to break free from the restraints of textbook strategies and look beyond the blinders of products, competition and company boundaries. By Suvi Nenonen and Kaj Storbacka.
All of us have blind spots in our ability to see what goes on around us.
There is a whole science about the cognitive biases that impede good judgment and cause us to make questionable decisions. Examples of these are confirmation bias – the tendency to only accept ideas and perspectives that support our existing views – and frequency illusion – you buy a red car and suddenly you notice red cars everywhere.
Our commonly used strategy frameworks can also generate cognitive biases: a framework by definition ‘frames’ what you see.
Even though these frameworks are helpful in structuring our thinking, their flip side is that they easily turn to blinders, making it difficult to recognise new opportunities and risks.
To be successful in today’s disrupted business reality, managers must learn to break free from the restraints of textbook strategies and look beyond the blinders of products, competition and company boundaries.
Look beyond the product
Companies commonly define themselves around products, claiming to operate in the “whiteware” or in the “insurance” market.
Using the product frame is immediate, intuitive – and tangible. Products are also nicely quantifiable. Providers of market statistics oblige with abundant measurements.
However, product-based thinking has its pitfalls too. Since nearly all firms define their businesses and markets around the product, they also look through identical strategic lenses.
As a result they spot the same opportunities, slipping inadvertently into strategies that are unoriginal and “me too” at a fundamental level, even while striving to differentiate at the day-to-day level.
To find new, innovative strategies firms must look beyond their current products and focus on what their products make possible for their customers.
Look beyond competition
A focus on products leads to a focus on product market share and competition.
As most firms subscribe to that readily-quantified product market definition, they tend to resign themselves to fighting over the same pie, instead of baking a bigger one.
This leads them to think in terms of competitive strategy and zero-sum games: For me to win, someone else has to lose.
Even more sadly, they get distracted from the ultimate strategic task that protects against oblivion: Creating more value for their customers.
Successful firms understand that they cannot prosper long term unless they are able to bake bigger, or completely new, pies that they can share – not with their competitors – but with their customers.
This insight is the cornerstone of their strategising, making competitors a secondary priority.
Look beyond your firm
Overemphasising the competitive aspects of strategy also can also make you blind to collaboration opportunities.
Company boundaries are becoming increasingly fleeting and, consequently, making strategy for just one company is becoming obsolete.
Increasingly it seems that the origin of success is not having an excellent strategy for your company, but the ability to orchestrate several companies around a common goal. And no, we are not advocating price-fixing or other forms of nastiness.
But in the increasingly connected world companies stand or fall as groups, requiring the ability to think strategically about wider networks or clusters, and engaging as many people as possible to make these network-level strategies work.
Associate Professor Suvi Nenonen and Professor Kaj Storbacka work at the University of Auckland Business School’s Graduate School of Management. They teach in the MBA programmes, their research focuses on business model innovation and market innovation and they are passionate about building bridges over the academia-practice gap.
