Sometimes no matter how strong your resources are, you still can’t win. In those cases, it’s critical to avoid conflict so you can fight another day. This classic video depicts a battleship demanding that a rival change course to avoid collision. This might be useful for competitive dynamics (game theory), entrepreneurship (failure to pivot) or strategy process (cognition & stubbornness) where it may be critical to know when to change course. Guoli Chen, Crossland, & Luo’s recent SMJ article on CEO overconfidence is a nice academic complement to this. Of course there is a large literature on escalation of commitment that is also relevant.
Contributed by Russ Coff
Quirky is a company that collects ideas on innovative products from it’s “community members.” It is governed somewhere between crowdsourcing and a holacracy (see the posts on Zappos and Valve). They have formed an alliance with the much more established and traditional, General Electric (GE). The two companies have very different strengths which can be the basis of complementarities that drive value creation in alliances. Together, they have produced Aros, a connected air conditioner that, for example, uses one’s Phone location to tell the system when to turn on and cool one’s house. This is a nice opportunity to apply the frameworks for achieving a network advantage (see Greve, Rowley, & Shipilov’s new book). For example, Shipilov describes the Alliance Radar framework which allows you to see if an alliance portfolio is balanced and identify what kinds of alliances will create the most value. Below is a video review of the resulting product. See also Henrich Greve’s blog post on the alliance for a discussion of how it has worked. While GE handled the product design, manufacturing and sales, the core idea came from Quirky.
Contributed by Aya Chacar
Stanford’s Tina Seelig describes a classroom experiment (below) where students were given $5 of “seed” funding and 2 hours to make as much money as possible. The best teams made money by working outside of the stated constraints (e.g., ignoring the seed funding & timeframe). Understanding their human capital and unique resources was critical. This really simple exercise gets at the crux of entrepreneurial opportunity.
Contributed by Russ Coff
“Network Advantage: How to Unlock Value from Your Alliances and Partnerships” is written for MBA, Masters of management, and Executive Education programs. It can be used in core strategy courses or electives on corporate strategy innovation, or strategic alliances. The book offers a step-by-step guide for how to build network advantages.
- The impact of individual alliances, partnerships and their portfolios on the firms’ competitive advantage (Introduction, Chapters 1 & 2).
- The role of complementarity and compatibility between partners for the formation of successful alliances and partnerships (Chapter 3)
- Differential impact of the “hub and spoke” alliance portfolios and “integrated” portfolios on competitive advantage. These represent inter-organizational networks rich in structural holes and dense ties, respectively (Chapters 4 & 5).
- The role of organizational status in competitive advantage (Chapters 6 & 7)
- Should the firm build its own alliance portfolio or join another firm’s network (Chapter 8)
- How to improve information flows inside the firm to attain competitive advantage from alliances and partnerships (Chapter 10).
Most chapters introduce tools for how to develop a collaboration strategy. These are compiled at the end of the book. A short introductory video is available on youtube:
Contributed by Andrew Shipilov
Competitive advantage is not visible to all stakeholders at the same time. This is why entrepreneurs can have an advantage in negotiating with stakeholders who come late to the game. The bank robbery below illustrates how even a small advantage in awareness can change the game.
Contributed by Karl Wennberg
Valve Corporation is a game developer that has 400 employees, no bosses, and is very successful. How can you have a structure that flat? The company, a spawn from Microsoft, seems to be doing just fine thank you. The information at the following seven web links (including a podcast and the employee handbook) contain all of the raw material required for a live case:
I think you could probably just give these seven web links to students, say “discuss,” and get out of the way.
Contributed by Rich Makadok
Jay Barney describes a coin flip exercise to make the point that innovation might be modeled as an outcome of pure luck. If so, how can firms manage such processes? The exercise is simple:
- Distribute coins to the class and have them flip.
- Those who flip “heads” remain standing, “tails” sit down (unless everyone gets a tail – then they remain standing)
- Repeat until one person is standing & pass all coins to him/her
- What capabilities/skills did the winner have? Make a big show of trying to find out how the winner did it (it’s all in the wrist, etc.). Often the winner will have flipped 5 in a row or more (a 3% probability?). People will laugh since they know it’s luck.
- Is it possible that innovative companies are just lucky? We don’t see a lot of repeat innovators and, if it is luck, even these might be explained.
- Selection bias is a problem if we try and draw conclusions by only looking at winners. In a population (like the class), the probability that someone will flip 5 in a row is rather high. We can only identify causality if we study the whole population.
- If it is luck, how should one manage investment? This is a nice lead in for portfolios of strategic investments/real options or superior expectations/forecasting.
Contributed by Jay Barney