Competing for the Future

Rating:
Summary: Not Only must the Future be dreamed of , It Must be Built.
Review: "Every company must move to the future with all due hast." The belief of waiting until some other company is successful mayl position the waiting company into a can't catch up scenerio. Its better to be a pioneer and lead from the front. The goal is to arrive with the stuff customers want, first.

"Competition for the future is competition to create and dominate emerging opportunities, to stake out new competitive space." Today's company's future depends, on its ability to achieve intellectual leadership, by identifying a solid view point of the future.

Next migration paths of developments must be managed transforming todays processes into tommorows processes.

Finally, by developing for the future the company position themselves among is peers, first in the market. By arriving first, the company has time to build infra-structure, to maintain dominance in the space. A high level blue print called a strategic plan allows the company define their view point of the future.

Here are three questions to help build the best assumptions necessary to build the future:
What type of customer benefits should the company seek in 5, 10, 15 years?
What competencies will we need to build or acquire in order to offer these benefits to the customer?
How will we need to reconfigure the customer interface over the next several years.

Each healthy company must have a commitment to the future. Senior management must actively review strategic projects and be involved in resource allocation. This means the best talent is assigned to solve the problems of tommorow. Senior manage must have a point view of what type of people will feel comfortable while designing and building the future company. The process of getting to the future is one of successive approximation. All the knowledge and experience learned of the team is used to understand the gained opportunity. The knowledge and experience is embodied in the successive approximation. One does not have to be a big risk taker to get to the future first. Talent must be capable of learning faster than the competition. The cost of learning must remain low. Additionally, as new opportunities are understood they must be gained. Company foresight and investment must remain equal. As new discoveries are understood investment is escalated, to seize the opportunity.

A company must learn by doing. Top management must be capable of creating a sense of direction, a sense of discovery, and a sense of destiny. A sense direction means giving company talent higher purposes for their work; an clear understanding of management intent; and the feeling of enthusiam, about building the future. A sense of discovery means having the heart of an explorer. "Every ounce of talent must be captured to build the future." A sense of destiny produces talent who demostrate passion and know the company mission. Talent is not only satisfied but excited by these three principles.

Rating:
Summary: Educational and Motivational Material
Review: Competing for the Future, by Gary Hamel and C. K. Prahalad focuses on new issues and techniques of strategic planning as discovered, articulated, and reported by the authors, both Professors of Business at the University of Michigan. The main message of the book reads as follows: in order for a company to be a success, the company must create its future instead of following other companies into the future.

By "creating the future" the authors understand defining and exploiting yet unknown future market opportunities. The opportunities do not have to be confined to the company's core competencies (although the book places significant emphasis on utilizing those). Instead, the company can choose to find alternate distribution channels, beneficial alliances, and other creative means of reinventing itself. The authors offer a wide array of management tools to successfully perform the corporate definition of future consumer needs.

The authors emphasize the corporate need for continuous innovation and reinvention. According to the book, many once-successful companies have failed because of their lack of regeneration and their erroneous belief in persistence of yesterday's business practices. Among the ways to successful corporate regeneration, the authors credit corporate diversity on the thinking level as successful means for breaking established corporate "myths" of the right way of doing business. The authors note that hiring personnel from outside industries can bring fresh and vital perspective on the present state of an enterprise.

In order to develop the future, a company must first define it. In defining the future today, Hamel and Prahalad suggest building "the best possible assumption base about the future." The "assumption base" is to indicate to management what changes in the company's products, competencies, and consumer interface are necessary in order to address future customer needs. The collective information about the changes of tomorrow comprises company's vision.

In order to create a successful vision of the future, a company needs dedicated senior management that "can escape the orthodoxies of the corporation's current 'concept of self'", and can enlarge the window of today's possibilities as projected into the future. The authors stress that a corporation should stretch the boundaries surrounding its competitive position of today in order to include tomorrow's competition and changes in customer needs. The book defines a successful corporate vision as the one that demands more of the corporation than the corporation is capable of providing today. Such a "stretch" between today's capacities and tomorrow's vision ensures that the company innovates in order to achieve the set goals, whereas "perfect fit [would guarantee corporate] atrophy and stagnation".

The book underscores the importance of basing tomorrow's market vision on core competencies of the corporation rather than on acquisition of other businesses or "grass roots 'intrapreneurship'". According to Hamel and Prahalad, core competencies represent "competitive strength" of an enterprise, defined and agreed upon by the company's general management. Building on the core competencies gives the company an immediate advantage over competition that needs to assemble similar competencies prior to entering the competitive race.

The authors note that corporate vision by itself "does not guarantee competitive success". In order for a company to be profitable, the company's foresight should be accompanied by a sufficient executional capacity. Executional capacity refers to continuous leverage of core competencies accompanied by healthy risk mitigation practices. The authors list several tools that can be used to leverage corporate core competencies in order to take hold of future market opportunities. One of the aforementioned tools is the process of aligning corporate operations based on core competencies rather than products and/or business functions. Operations focused on products and services fragment core competencies, and can subsequently truncate corporate opportunities for growth by disallowing deployment of core competencies when the need arises. Another crucial tool in successful execution of corporate vision is a regular review of core competencies together with competencies benchmarking against existing and potential competition in order to assure the company's market position.

In addition to the ideas cited in this paper, the authors describe myriad of ways to enhance tomorrow's competitiveness of an enterprise. Overall, the book is written in a motivational and comprehensive style. Peppered with real-life examples, the book offers thorough guidance to advance in the future marketplace.

Rating:
Summary: A retrospective on a 1994 breakthrough management guide
Review: Corporate strategy texts are notorious for their short shelf lives, but it is instructive to revisit them during business downturns and understand what they contributed and also where they fell short.

Now that the future has happened - nine years after this book was published - what would the authors say about the dot.com bust and the collapse of erstswhile visionary corporate giants such as Enron and Global Crossing?

In 1994, the authors wrote that the goal of competition QUOTE is not to simply benchmark a competitor's products and processes and imitate its methods, but to develop an independent point of view about tommorow's opportunities and how to exploit them. UNQUOTE By this criterion, how exactly did the dot.com dwarfs or giants of the late 1990s, many of which were hailed as exactly the kind of visionary enterprises the authors encourage, fail to leave a lasting legacy?

Certainly, other breakthrough management guides have not been exempt from the harsh judgment which the benefit of hindsight might impose only a few years after these books come out. Such a fate befell one of the renowned predecessors to this book, In Search of Excellence, half of whose most admired corporations ran into serious difficulties within a few years of publicaiton of the book.

None of this undercuts some important contributions this book does continue to make about how organizations should anticipate, manage and thrive amidst rapid change. The single most important idea in this book is that of leveraging core competencies, so that a business continually focuses on what it can do best and most profitably, rather than on what it is currently doing. If nothing else, the authors have left a legacy of language which remains helpful as a common currency among business leaders who need to understand the importance of industry foresight and to shed obsolete competencies.

And the authors did rightly suggest that appropriate public policies are also needed, althought this prophetic message was unfortunately given only a fleeting mention prior to the dot.com bust QUOTE We are not arguing for a set of policy measures that in any way discriminates in favor of large companies. The goal is not to keep dinosaurs alive at any costs. However, society pays a heavy price when, through , managerial malfeasance,a company richly endowed with resources and talent self-destructs. The goal is not to embalm dinosaurs throguh subsidies, protectionism and preferential procurement policies - as European governments have too often done - but to ensure that large companies don't become dinosaurs in the first place UNQOUTE

Rating:
Summary: An important book to read
Review: Few companies that began the 1980s as industry leaders ended the decade with their leadership in tact and undiminished. Many household name companies saw their success eroded or destroyed by tides of technological, demographic and regulatory change and order-of-magnitude productivity gains made by nontraditional competitors. "Do you really have a global strategy", the first HBR article by Hamel and Prahalad, developed the theme that small companies could prevail against larger, richer companies by inventing new ways of doing more with less. Differences in resource effectiveness could not be explained by efficiency, labor or capital, but by amazingly ambitious goals that stretched beyond typical strategic plans, raising the question how such incredible goals could get past the credibility test and be made tangible and real to employees? Frequently the small challengers rewrote the rules of engagement; flexibility and speed were built atop supplier-management advantage, built atop quality advantages. Companies made commitments to particular skill areas a decade in advance of specific end-product markets. How did executives select which capabilities to build for the future? Some managers were foresightful, others imagined and gave birth to entirely new products and services. These managers created new competitive space while laggard companies protected the past rather than creating the future. Existing theory throws little light on what it takes to fundamentally reshape an industry and the gap provoked this book in which the goal is to enlarge the concept of the industry and not just the organization. Being incrementally better is not enough because a company that cannot imagine the future won't be around to enjoy it. This book is about strategy and how to think by drawing on the experience of companies that have overcome resource disadvantages to build positions of global leadership. It is about companies that escaped the curse of success to rebuild industry leadership a second or third time. It has been written for companies that believe that the best way to win is to rewrite the rules; it is for those who are not afraid to challenge orthodoxy, for those who prefer to build rather than cut, for those committed to making a difference and staking out the future first.

We need to ask ourselves eight questions:
- does senior management have a clear and broadly shared understanding of how the industry may be different in ten years time? Is management's view of the future clearly reflected in short-term priorities?
- How influential is my company in setting the new rules of competition within the industry? Is it regularly defining new ways of doing business and setting new standards of customer satisfaction?
- Is senior management fully alert to the dangers posed by new, unconventional rivals? Are potential threats to the current business model widely understood? Do senior executives possess a keen sense of urgency about the need to reinvent the current business model?
- Is my company pursuing growth and new business development with as much passion as it is pursuing operational efficiency and downsizing? Do we have a clear view of where the next revenue growth will come from?
- What percentage of our improvement efforts focuses on creating advantages new to the industry, and what percentage focuses on merely catching up to our competitors? Are competitors as eager to benchmark us, as we are to benchmark them?
- What is driving our improvement and transformation agenda - our own view of future opportunities or the actions of our competitors? Is our transformation agenda mostly offensive or defensive?
- Am I more of a maintenance engineer keeping today's business humming along or an architect imagining tomorrow's businesses? Do I devote more energy to prolonging the past than I do to creating the future?
- What is the balance between hope and anxiety in my company; between confidence in our ability to find and exploit opportunities for growth and new business development and concern about our ability to maintain competitiveness in our traditional businesses; between a sense of opportunity and a sense of vulnerability, both corporate and personal?

These are not rhetorical questions. We are told to get a pencil and rate our company because these questions go unanswered in many cases. Such questions challenge the assumption that top management is in control or even that their knowledge and experience may be irrelevant or wrong-headed for the future. The urgent drives out the important and the future goes largely unexplored; the capacity to act is considered to be more important than the capacity to imagine. A capacity to invent new industries and to reinvent old ones is a prerequisite for getting to the future first and a precondition for staying out in front. Gaining an understanding of how to accomplish this most difficult task is the central mission of this book.

What must we do to ensure that the industry evolves in a way that is maximally advantageous for us? What skills and capabilities must we begin building now if we are to occupy the industry high ground in the future? How should we organize for opportunities that may not fit neatly within the boundaries of current business units and divisions? The answers are to be found in this book. Armed with this information, a company can create a pro-active agenda for organizational transformation and can control its own destiny by controlling the destiny of its own industry. No company can escape the need to reskill its people, reshape its product portfolio, redesign its processes, and redirect its resources. There is not one future but hundreds; there can be as many prizes as runners; imagination is the only limiting factor. In no way does the success of one preordain the failure of another. What distinguishes leaders from laggards, and greatness form mediocrity is the ability to imagine what could be. If your senior management did not do well on the eight questions, then your company may not be around a decade from now. There are few who would not profit from reading this book.

Rating:
Summary: Resource-based Theory of the Firm
Review: Gary Hamel, an advocate of the Resource-based Theory of Firm, has created an impotant source together with Prahalad. If you know resouce-based firm theory well enough, you will not be surprised when you read this book. I think, it is a classical work for this theory.

This book was developed clearly and supported with cases strongly. Basically, this work was based on distinctive competences of firms and on how to develop these. From this perspective, firms are thought as active entities, not only working to adapt to environment in a passive way, but also creating an environment conducive to the company in a proactive way. The spiritual aspect of Strategy is clearly stressed in this book.

A good source in Firm-based theory, but needs more research.. Highly reccommended...

Rating:
Summary: Getting to the future first
Review: Great book by Gary Hamel (ex-professor at London Business School) and CK Prahalad (professor at University of Michigan). This book is based on several articles both have written for the Harvard Business Review. Although the goal of the book is "to help managers imagine the future, and having imagined it, create it" the book does not provide a great framework, but discusses the changes from the traditional strategic insights on a chapter-by-chapter way. The message of the book is to start thinking differently about strategy: "Our starting premise is simple: Competition for the future is competition to create and dominate emerging opportunities - to stake out new competitive space."

In Chapter 1 - Getting Off the Treadmill - the authors use an table to lay out the framework for all the chapters to follow. The chapter is monumental (read this chapter and the final chapter if you are really short of time). Chapter 2 - How Competition for the Future is Different - discusses the changes in the competitive challenges and how these changes affect organizations. The authors use a pregnancy (?) as an example to explain these changes: "like competition for the future, pregnancy has three stages - conception, gestation, and labor and delivery. ...The question for managers is to ask themselves at this stage is which stage requires the bulk of time and attention." Chapter 3 - Learning to Forget - discusses the fact that companies need to cope with altered environments. "But to create the future, a company must be able to forget some of its past." The goal is to produce a sense of urgency - not a sense of anxiety - and a sense of possibility. "The future must become just as vivid and real as the present and the past." Chapter 4 - Competing for Industry Foresight - discusses the goal of competition for industry foresight: "to build the best possible assumption base about the future and thereby develop the prescience needed to proactively shape industry evolution." The authors discuss the need, the development, and the foundations (escape the existing myopia, build curiosity, speculate, search, be contrary, customer-led, empathy for human needs) of foresight.

In Chapter 5 - Crafting Strategic Architecture - the authors explain that companies need a blue-print for turning the dream into reality. The strategic architecture is an ongoing process, since the future will one day become "today". The authors see this process as the map, but discuss the fuel in their next two chapters - Strategy as Stretch and Strategy as Leverage. While strategy as stretch is the engine and fuel for corporate growth and vitality, strategy as leverage ensures that the maximum distance is reached using the least possible amount of fuel. (Strategy as Stretch is in fact my favorite chapter in this book.)

In Chapter 8 - Competing to Shape the Future - and Chapter 9 - Building Gateways to the Future - the authors discuss what must be done to turn foresight into reality and outpace competitors on the road to the future. These chapters discuss the risks and possible roads and tools. Chapter 9 provides some more explanation into the now world-famous term "(core) compentencies". Chapter 10 - Embedding the Core Competence Perspective - builds on this chapter and provides insights into how to build a core competence perspective into a company and their products/services. Once all above tasks are achieved, the organization can move on to the final tasks in managing to Securing the Future (Chapter 11). The main task is to learn faster about future demand than competitors, whereby organizations should use "expenditionary marketing" (prospecting) and global preemption to do this. The final chapter of the book - Thinking Differently - is a conclusion of this excellent book, just as Chapter 1 was an introduction.

'Competing for the Future' is probably one of the greatest management books of the 1990s (Business Week's Management Book of 1994), is good to read (simple US-English), and never boring due to its challenging nature. It is perhaps not the greatest introduction into management/business administration, but it should give great inspiration to the more experienced workers/managers.

Rating:
Summary: 1990s thought leadership
Review: Hamel and Prahalad brought two ideas to the forefront of management in the 1990s: Creating a strategic intent that dominates corporate thinking, and then understanding the core competencies that the organization requires to get there. Rather than create numerous 5 year plans, communicate the direction and insure you have the skills to get there.

The impact of this was felt across corporate Americas. As companies struggled in reacting to changing times, they would talk more of core competencies instead of certainy of the future. Well run companies could also articulate their vision and what they're good at. (Example GE: "We are #1 or #2 in every business we run. We get there by rigorous management and continuous improvement.") These ideas are here to stay.

Is it all so simple? In Consulting Demons, Lewis Pinault takes issue with Prahalad and his consulting practice at Gemini. He asserts that the ideas can be misapplied to fuel a consulting boom, and that Prahalad's missionary zeal was better for generating consulting fees than for corporate bottom lines.

Bottom line - the book is a good introduction to some important strategic concepts. Although it is no longer required reading at top consulting firms, it is still relevant and important. Just take the ideas (like all pop management ideas) with a grain of salt.

Rating:
Summary: 1990s thought leadership
Review: Hamel and Prahalad brought two ideas to the forefront of management in the 1990s: Creating a strategic intent that dominates corporate thinking, and then understanding the core competencies that the organization requires to get there. Rather than create numerous 5 year plans, communicate the direction and insure you have the skills to get there.

The impact of this was felt across corporate Americas. As companies struggled in reacting to changing times, they would talk more of core competencies instead of certainy of the future. Well run companies could also articulate their vision and what they're good at. (Example GE: "We are #1 or #2 in every business we run. We get there by rigorous management and continuous improvement.") These ideas are here to stay.

Is it all so simple? In Consulting Demons, Lewis Pinault takes issue with Prahalad and his consulting practice at Gemini. He asserts that the ideas can be misapplied to fuel a consulting boom, and that Prahalad's missionary zeal was better for generating consulting fees than for corporate bottom lines.

Bottom line - the book is a good introduction to some important strategic concepts. Although it is no longer required reading at top consulting firms, it is still relevant and important. Just take the ideas (like all pop management ideas) with a grain of salt.

Rating:
Summary: Great Up-Date on the Peter Drucker Strategy Model
Review: I am a corporate strategy consultant who works mostly with FORTUNE 200 companies, and I also write books and articles about strategy. Strategic thinking has gone in and out of fashion in such companies several times in the last 40 years. With this book, Hamel and Prahalad have raised the value of strategic thinking in the current context in an effective way. This book is clearly designed with the large company in mind, where the need to envision, communicate about, and organize for the future is most difficult. By breaking down strategic thinking into the elements described here, the authors make strategic thinking easier for those who have little experience. Interestingly enough, many companies have "banned" strategic thinking in favor of more tactically-oriented programs that produce near-term cost reductions. Our firm recently did a survey of the most successful CEOs, and they reported that they felt that better strategies had the most potential to most improve their companies. These same CEOs also reported that they understood little about how to create better strategies. In such companies, COMPETING FOR THE FUTURE can provide an excellent balance. A good book to read in conjunction with this one is Peter Drucker's, MANAGEMENT, which provides the intellectual heritage for many of these ideas. For people who need more detail than Drucker normally provides, COMPETING FOR THE FUTURE will be the more helpful book.

Rating:
Summary: Largely an academic waste of time
Review: If your really want to understand how to compete for the future, read Crossing the Chasm, following by Inside the Tornado (Geoffrey Moore). Competing for the Future will largely waste your time. It is a 100 page book crammed into 300+ pages. The authors spend lots of time repeating fuzzy feel good ideas, and criticizing current managers, but say little that would actually help you compete for the future. They continually cite Apple as the poster child for Competing for the Future (ignoring the fact that the Mac was created in a skunkworks -- a concept they poo-poo.) Yet you can see from Apple's plight today that Hamel and Prahalad have certainly not found the most important thing for long term success. Companies that spend too much time looking 20 years out will never see it, as Apple will not. The truth is that top management can certainly ask themselves "What will competition mean in 20 years?", but they will most certainly be wrong. We live in chaotic times, and the best companies know how to turn on a dime and exploit current emerging markets (Microsoft is great at this). Hamel and Prahalad's books is destined to sit on many shelves, looking very impressive but doing nothing for its readers.