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The chain-linked activities should form an unusual grouping such that expertise in one does not easily carry over to expertise at the others.
talented leaders seek to create constellations of activities that are chain-linked.
to unstick a stuck chain-linked system, a strong leader must possess the insight and fortitude to make the necessary investments in each link of the chain.
three aspects of strategy
premeditation, the anticipation of others’ behavior, and the purposeful design of coordinated actions.
A fundamental ingredient in a strategy is a judgment or anticipation concerning the thoughts and/or behavior of others.
It is often said that a strategy is a choice or a decision.
The problem with this view,
is that you are rarely handed a clear set of alternatives.
many effective strategies are more designs than decisions—are more constructed than chosen.
master strategist is a designer.
I want to emphasize the issue of mutual adjustment.
there can be sharply peaked gains to getting combinations right and sharp costs to getting them wrong.
A good strategy coordinates policies acr...
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to get more performance out of a system you have integrate its components and subsystems more cleverly and more tightly. On the other hand, if capabilities (technologies) could be improved, the demand for tight, clever integration was lessened.
A design-type strategy is an adroit configuration of resources and actions that yields an advantage in a challenging situation.
These principles mean that resources and tight coordination are partial substitutes for each other.
Implicit in these principles is the notion that tight integration comes at some cost.
when the competitive challenge is very high, it may be necessary to accept these costs and design a tightly integrated response.
A high-quality strategic resource yielding a powerful competitive advantage makes for great strategic
simplicity.
It did not need much in the way of a design-type strategy because its resource position—its patent—insulated it from competition and because the product’s value to buyers was so much greater than the cost of making one.
the cleverest strategies, the ones we study down through the years, begin with very few strategic resources, obtaining their results through the adroit coordination of actions in time and across functions.
peril of a potent resource position is that success then arrives without careful ongoing strategy work.
Paccar’s strategy—its design—is its way of dealing with these three obstacles to being a quality leader.
Paccar views quality through the eyes of the owner-driver.
Paccar’s strategy is based on doing something well and consistently over a long period of time.
All of this works, in part, because it is not in a high-growth industry
Strategic design depends as much on coordinated action as it does on environment. That is, diagnosing the problem and determining a guiding policy should lead to coherent action with outcomes predicted based on internal and external factors. If the parts do not add up, the actions even if coherent will fail to yield positive results.
Paccar’s design is expressed in actions that are consistent with its positioning and that are consistent over time.
The product-buyer focus is maintained by its dealers, designers, and engineers.
The various elements of Paccar’s strategy are not general purpose—they are designed to fit together to make a specialized whole.
Good strategy is design, and design is about fitting various pieces together so they work as a coherent whole.
This defensive structure can probably be maintained as long as there are no significant structural changes in the industry’s economics or buyer behavior.
Strategy depends on the actions of others and response to environment. Paccars strategy will need to adapt when the market changes (i.e. How will paccar adapt to self driving fleets of heavy trucks?)
To begin identifying a company’s strategy, it is usually most helpful to examine the competitive
environment.
“If we are not going to automatically accept the opinions of others, how can we independently identify a company’s strategy?
We do this by looking at each policy of the company and noticing those that are different from the norm in the industry. We then try to figure out the common target of such distinctive policies—what they are coordinated on accomplishing.”
I have lectured on how to tackle seemingly formless questions like this. The first trick is to replace general nouns with specific examples.
The discipline of analysis is to not stop there, but to test that first insight against the evidence.
The technical assistance policy seems to have small companies as a target and the rapid response policy seems to target rush orders. These two targets are not quite the same thing. Let’s take a look at another policy.”
Smaller customers … rush orders … speed … less production per customer … higher prices?”
Guiding policies to address diagnosis
“Crown does short runs,” exclaims Julia, an entrepreneur. “The majors accept long runs of standard items to avoid costly changeovers. Crown does the opposite and has a focus on shorter runs.”
The phrase “Shorter runs” ties the company’s focus to the essential problem faced by producers in the industry—the very high costs of switching a can line from making one product to another,
Diagnosis of the industry problem
It’s time to figure out how all of this allows Crown to earn higher margins.”
Instead of one customer with several competing suppliers, Crown is a supplier with several customers per plant.
Going for long runs made the majors captive.
Crown hasn’t given up its bargaining power like th...
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attacking a segment of the market with a business system supplying more value
to that segment than the other players can—is called focus.
coordination of policies that produce...
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