Strategy on the High Road

The recent legalization of marijuana in Colorado and Washington State offer an unusual view of industry emergence. In anticipation of pent up demand, entrepreneurs scramble to assemble resources. Scarce resources get bid up — one example in Washington is licenses to grow and sell. The second video in the sequence below features an entrepreneur seeking to sell his business to cash in on the license he has. Markets for complementary products and services are booming as well (from tourism to private security and ways to store cash that cannot be deposited into federally regulated banks). Who will win out in the scramble to exploit the opportunity? The results so far in Colorado suggest that many in the state will benefit from the boom — $11M in taxes were raised in just the first 4 months of business. The setting is bound to get students’ attention and it is a nice context to examine entrepreneurship, resource scarcity, ethics, and industry structure (among other things).

Contributed by Russ Coff

Money Tree Strategy?

These two quick Zack King videos might be a nice introduction to competitive advantage. It is sort of in the spirit of Dick Rumelt’s Silver Doodle example. Would a firm have a competitive advantage if it could copy and paste money? If it owned a money tree? Consider the opportunity cost and watch heads spin… Here are more Zack King videos.

Contributed by Russ Coff

Putin Game Theory in it’s Place

A recent Slate article notes that Vladimir Putin may be trying to create the impression that he is crazythat it may all be part of a game theoretic ploy. This seems like a great opportunity to discuss game theory on a much larger stage. The article notes, “Consider strategic theorist Thomas Schelling’s concept of the “rationality of irrationality.” This can be illustrated through the game of chicken, in which two drivers are heading for each other at full speed, and the first to swerve is the chicken. A driver who appears crazy enough to prefer dying over chickening out will always have the advantage. It is therefore rational for a player to convince his opponent that he is actually irrational.” Game theory can seem inaccessible when it is only presented using abstract examples (though Dilbert can help there), this offers a concrete example that may bring it to life for the students.

Contributed by (“heard through”) Nicolai Foss

Marshmallow Challenge

This TED talk describes the marshmallow challenge exercise. This discussion has a nice twist to focus on team dynamics and the decision process. Interestingly, kindergarten students tend to do best on the exercise because they are more likely to iterate and prototype rather than separate planning and execution (as MBA students tend to do). Of course, this is similar to the Tinkertoy exercise but the team dynamics and decision-making message is quite distinct. You may also recognize this as a slightly altered version of the spaghetti challenge exercise that has been around for quite some time.

Contributed by Darren Dahl and Joann Peck

Ford Reintroduces the ’93 Taurus

Going after the market niche of people who don’t want the glamour of a new car, this ONN feature describes Ford’s decision to reintroduce the 1993 Taurus (including a new Superbowl ad). This is simple & silly but it does get at the notion of a cost-based strategy…

Contributed by Russ Coff

Netflix “Browse Endlessly” Service

Ok, here is another silly ONN segment on a Netflix “browse endlessly” service. It is only funny to the extent that many of us have experienced extreme indecision when faced with the many alternatives that are available to us. In class, this clip might trigger a nice discussion of bounded rationality – the very root of competitive advantage and almost every other aspect of strategy (see Simon, Models of Bounded Rationality).

Contributed by Russ Coff

Do MBAs destroy value?

MBA programs help students gain general human capital which may give them a feeling that they can solve problems in a broad range of contexts. Some have lamented how this can result in arrogant behaviors that make them hard to work with. Scott Adam captures this problem admirably below. It might make sense to use this to imbue students with a sense of caution as they enter the workforce.

Contributed by Russ Coff

Paper Fight Exercise

Having a paper fight in class can really shake things up. It also allows you to demonstrate some simple competitive dynamics principles in a very short exercise. I use this with evening, executive and BBA students — generally on the first day of class to shake things up and introduce the topic.

Learning Objectives:

  • Industry evolution and performance targets.
  • Strategic resources & competitive advantage
  • Dynamic capabilities and hyper-competition
  • Competitive dynamics and game theory
  • Improvisation and strategy
  • Shake things up!

Process/Setup (<5 min): Continue reading

Paperscape: Building on the RBV

This exercise from Norman Sheehan is based loosely on the Tinkertoy exercise (on this site). The main difference is that groups get unequal resource endowments (one group gets tape and paper, while the rest get paper clips, elastic bands and paper) and are asked to build the highest paper tower. The results lead to a discussion of how superior resources (tape) can lead to better performance if they are organized properly. The takeaway is that students need to see if their focal firm has a tape-like resource. If so, they need to make it the cornerstone of their strategy. If the focal case firm lacks a tape-like resource, then it needs to be excellent at execution if it is to have any chance at having above average performance. Students love the exercise and it is a great way to teach students why they should look for VRIO resources when doing a case analysis. A related exercise, the Egg Drop Auction, explores strategic factor markets and the accumulation of heterogeneous resources. Here is the Paperscape Teaching Note (published in JME) and here are Discussion Questions to assist in the debriefing.

Contributed by Norman Sheehan

Facebook Discussion Bonanza

A number of faculty now use Facebook groups to encourage discussion of current events and strategy theory among students and academics. These are typically closed groups but you may be able to join if you ask the moderator nicely. If you have a page like this, please send me the URL and I am happy to add it to this post. Here are a couple of pages you might check out:

Contributed by Russ Coff

Social Network Bingo

social20networkWe often try to convey to students how value can be created in social networks as actors gain access to more resources and knowledge. This exercise is a simple game of bingo where players have a list of resources they need to find to win the game (4 boxes in a row). To play, they simply find people in the room with specific attributes or knowledge and have them sign their card. I have added a simple twist that they can complete one box using an indirect tie (e.g., a friend of a friend). This teaches the very basics of social networks and serves as a nice ice breaker as well. Here are two Bingo card created for: 1) an exec ed program and 2) for a PhD Student Orientation. This gives you an idea of how to customize the exercise for the group. This can be useful to explore alliance networks at the organizational level or the role of individual networks in strategy formulation and implementation.

Contributed by Michael Sacks

CATME Teamwork System

Many strategy faculty use teams in their classes. The website has multiple tools to support the effective use of teams in higher education. Team-Maker is a tool for assigning students to teams based on instructor-specified criteria. Instructors can choose from a library of questions, such as students’ schedules or majors, or write their own questions. Team-Maker collects the information from students and allows the instructor to assign use that information to assign students to teams based on the criteria and weighting that they choose. CATME Peer Evaluation is a tool for self- and peer evaluations of students’ contributions to their teams that is based on research. The system automates the data collection and analysis and allows instructors to release feedback to students. There are many optional follow-up questions about team processes that are taken from published research. CATME Rater Calibration allows instructors to assign students to practice using the CATME behaviorally anchored rating scale by rating fictitious team members. CATME Meeting Support provides templates for team charters, meeting agendas and minutes. Teamwork training modules are in development. The website shows research and other information about these tools.

Contributed by Misty Loughry

Bullets Recalled for Being too Safe

The Onion offers a news analysis of a recall of defective bullets that fail to kill effectively. Of course, the discussion is a bit silly but this can be used to highlight how blame is assigned in organizations as well as how managers operate under conditions of causal ambiguity

Contributed by Russ Coff

Team Capability Inventory

You can take internal analysis down to the team level with a quick introductory exercise. The object is to find some commoFantastic4n capabilities across the team (beyond the obvious) and to find some unique capabilities that each person brings to the table. Then the team must describe how some of the unique capabilities could be leveraged in a team project.

  1. Objective: Find Capabilities. Uncover 3 abilities all members of this small group have in common (other than the obvious things such as you have taken the same classes). For example, all may have strong spreadsheet skills or all are good at interviewing. Then identify 1 capability that is unique to each person in the group. For example, only one is an accomplished musician or has contacts in the insurance industry. Continue reading

Jay’s Coinflip: Innovation as luck

coinflipJay 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

Discussion focuses on several key points (Russ Coff’s slides emphasize real options):

  • 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

Alaska Gold Mine Exercise

The Alaska Gold Mine case is my (Mason’s) favorite starter case for undergraduate, MBA, and executive MBA strategy courses. Reprinted here with permission of author Jeffrey Barach along with my PointPoint slides I use to administer the case.

Click to get the:

The video below provides a lot of good fodder to reference back to when doing the exercise. Start the class session by showing the video before doing anything else. Continue reading