For many academics, the tenure process is something of a mystery even after you have gone through it. PhD students don’t hear much about it. Assistant professors are told what to prepare but they know little about the other elements in a tenure case. For example, they have no idea of the critical role that the department letter plays or how detailed it is — not to mention the same for the external letters. In my experience, department letters are in the 15-20 page range (single spaced). Helpful outside letters are usually 3-4 pages each and go into substantial detail on papers — this is a especially important indicator of impact since papers have typically not been out long enough to gather citations. It is in that context that I prepared this presentation for the STR doctoral consortium. I hope it is useful to some of you.
Rich Makadok‘s new “Strategy Researcher Virtual Proseminar” video channel provides “celebrity talk show” style interviews of some of the world’s leading academic researchers in the field of strategic management, discussing their career histories and sharing their experience and insights with doctoral students and junior faculty researchers.
Episode 1 is an interview of the legendary Professor Will Mitchell from the University of Toronto’s Rotman School of Management. New episodes will be posted about once per week, and you can watch them at this web link. Bookmark it, like it, subscribe, comment, share, and click the bell to be notified about new episodes. Here is a sample interview:
As many of us prepare to move our strategy courses online, we need video “shorts” that introduce core strategy principles to go along with key readings. By now, you may have already seen collections by David Kryscynski, Shad Morris, and others in the toolbox. Melissa Schilling has graciously made a new set of videos available that address core strategy principles not found in the other collections. See also her related collection focused around innovation strategy (note that there is some overlap). Below is her video introducing agency problems as a sample.
In addition, she covers the following topics that may be useful for a strategy course:
Firms often make errors in selecting governance forms and the scope of the firm. This is one common reason firms must undergo painful periodic restructuring programs. If only managers could frame these problems more effectively and identify the key factors to make more informed decisions — in short, a primer on Transaction Cost Economics (TCE). Brian Silverman provides just that tool in a sequence of three short videos. This is especially useful in today’s online teaching environment since transaction cost economics readings may not be the most user-friendly. I might add that this overview provides an excellent introduction for PhD students prior to diving into academic readings on the topic. Here is the second of the videos explaining the predictions of transaction cost economics.
Alliances are temporary by their very nature. A key component of an alliance capability is the ability to manage the exit strategy. However, managers in operating units may not recognize the temporary nature and plan for its termination. This short video illustrates. How long will the alliance last?
In conducting internal analysis, managers often point to things they do well as critical strengths. However, for it to be an important strength, it would be important to know: 1) How it relates to value creation (e.g., does it lower costs or increase willingness to pay), and 2) Do rivals have similar or substitute capabilities. In the end, many things that managers report as strengths may not be relevant in determining whether the firm has a competitive advantage. Take this video on extreme ironing, for example. One might ask their class if it depicts valuable capabilities? It might if you consider promotional expertise (video has over a million views)…
Class participation is typically a major component of grades in strategy courses. Some students are quite comfortable participating. Others not so much. This video from Rich Makadok offers some advice and instruction for students on how to do well on this portion of the class (you can find the script for the video here). This is designed especially to help those who have language barriers or who are otherwise uncomfortable speaking in class. Students learn how they can contribute to making the class better for everyone — including themselves. You may want to use the video in conjunction with class discussion voting arrows to help bring different perspectives to the forefront.
Some fear that eventually and robots will be able to do anything that humans can — better. Many have hailed the dangers of artificial intelligence to society (see Stephan Hawking, Elon Musk, Bill Gates, etc.). Hundreds of millions of jobs would be affected. Trillions of dollars of wealth created (and captured by whom?). These are the potential impacts of a coming wave of automation. In this episode of Moving Upstream (below), the Wall Street Journal traveled to Asia to see the next generation of industrial robots, what they’re capable of, and whether they’re friend or foe to low-skilled workers. Interestingly, new innovations in robotics allow robots to work safely side-by-side with humans and this achieves higher levels of productivity than either humans alone or robots alone. This is because most processes are not 100% programmable and working side-by-side allows for greater flexibility in handling exceptions to programmed routines. This is a great video to discuss topics like technological innovation, substitution of capital for labor, and interfaces between humans and technology.
As the container shipping industry continues to boom, companies are adopting new technologies to move cargo faster and shifting to crewless ships. But it’s not all been smooth sailing and the future will see fewer players stay above water. This WSJ video takes students through the history and shows how the industry structure has changed with new innovations. Excellent for teaching industry analysis and innovation (architectural/systemic innovation).
Often in a strategy course, one hits the topic of diversification toward the end of the semester — right when people are most focused on expansion. Diversification may reflect a recognition of opportunities that arise from problems or challenges that the firm’s core customers face. Then the firm can serve the same customers in multiple ways by entering new business segments. In this way, Stovetop Stuffing recognizes that their customers have common needs (for expansion) around the time of Thanksgiving and this video shows how diversification can help them meet those needs. Note the synergies in that customers are able to consume more of the firm’s core product…
Strategic Alliances don’t make the news the way M&A do so some may struggle for examples. It is especially helpful to make students aware that, while Alliances may be less risky than M&A, there are still risks that need to be analyzed. Tom Petty provided a useful example to apply the “Four C” alliance framework. Like many musicians, he signed a contract with a record label before he made it. He and ABC had Complementary capabilities needed to develop and promote hits. Initially, they had Congruent Goals in that their interests were aligned to make the band a hit. Organizationally, they were Compatible in that they were able to coordinate effectively. What Petty failed to anticipate was how things would Change over the course of their agreement. By their 3rd album, he felt that the arrangement was so unfair that he tried to back out of the agreement claiming that ABC had no right to sell the contract to MCA. Ultimately, he only got out of it by declaring bankruptcy. The song, Refugee captures the anger he felt over how he was treated by the record companies and offers a nice lead in to the discussion. This also brings out a discussion of bargaining power and how it may change over time.
This is another in our series of explorations in learning from failure (and learning from success). The Swedish Museum of Failures reminds us of some of the most spectacular product failures. Interestingly, most of them can be closely linked to some spectacular product successes. A complete failure may be a near miss. Perhaps a slight pivot away from extreme success. This video offers a window into some of the more interesting exhibits in the museum. One might ask students to review the video and imagine how a well-placed pivot might have helped each failure turn the corner. This might also fit with some of the toolbox posts on pivoting.
How do firms modify their products so they will be well-received in the most promising global markets? Case in point: Hollywood’s biggest movies are being subtly reworked to appeal to Chinese audiences. Since, that market may soon outstrip the U.S. to become the most lucrative movie audience in the world (see chart). Movies like Warcraft and Now You See Me 2 have been huge successes in China even though their domestic performance has lagged. Why? The Warcraft cast features Daniel Wu, a very bright star in China, who may have been unrecognizable as the orc Gul’dan, but his promotional efforts were important to the film’s success. Similarly, Now You See Me director, Jon M. Chu, cast star Jay Chou and filmed a portion of the movie in the Chinese region of Macau. The movie industry is a great example of product design for market entry. The following video frames it nicely for students interested in addressing barriers to market entry.
Strategies rarely come together as the plan would have suggested. The unexpected could come externally, from shifts in the marketplace, or internally, as the pieces don’t come together as intended. This video depicts the unexpected — a massive falling boulder crashing down on the road in front of a car (and almost hitting the car in front). This may trigger a discussion of sources of uncertainty and how to address them in a planning process. It might also be used to set the stage for the Tinkertoy exercise or other scenario planning materials. The first 30 seconds should do the trick…
Why isn’t the BCG matrix dead as a framework? I still consistently find that my students have been exposed to it (generally in Marketing). They don’t even understand that it is a framework for internal capital markets (where firms add value by serving as a source of funding) or that it is hopelessly flawed. It’s a dog, divest right away. If the sale generates cash, funnel it to any other management framework (even SWOT) and I’m sure it will create value.
Internal capital markets only create value when they perform better than external capital markets. Generally, this is because the parent company has better information than external markets about the business. I often describe how Big Pharma companies fund biotech startups — their inside knowledge of the science and downstream capabilities help them understand the potential. As such, their expertise and private information allows them to invest much more efficiently than external capital markets.
Will presents his 5 forces plus 3 more framework. In the video, he discussed the standard 5 forces framework but adds the following 3 critical elements that are left out of the five forces: Complementors, Social forces, and new strategies. Complementors are organizations that provide complementary products or services to an industry (e.g., cases for iPhones). New strategies refer mostly to rivals who are pursuing distinct strategies that may alter the fundamental way that firms compete in the industry. Social forces refer to the customer values and norms that may affect their preferences and thus, their willingness to pay. In short, these additions may serve to unpack factors that drive change in the five forces over time in an industry. Here is the video:
The augmented reality (AR) game, Pokémon Go, has taken the world by storm as players roam the real world catching Pokémon and battling in Pokémon gyms. The game has set 5 records since its launch in July 2016 — including the most revenue by a mobile game in its first month ($206.5 million). Nintendo’s stock doubled 15 days into the release, adding $7.5B in value, but then settled back into a mere 50% increase when it became clear that Nintendo was a partner with limited ownership in the company that developed the game (Niantic, a Google spinoff). Although the game is free, users can make purchases in the app store to support their Pokémon ‘hunting’. The bewildering success must clearly be keeping Niantic’s CEO, John Hanke, and his crew awake at night. Besides the operational issues related to scaling up, intellectual property (IP) had become a big issue. A slew of imitators were emerging as well as a number of companies trying to steal the game’s data content and algorithm. In addition, the formidable international expansion faces roadblocks in the most populous Asian countries while potential users were impatient. There were many additional potential revenue sources to be tapped and explored such as the recent win-win partnership with McDonalds Japan. Moreover, while getting gamers out and about was good, there were a number of unintended consequences. On the plus side, many entrepreneurs were finding ways to make money from the game — for example restaurants could lure in customers if there was a Pokestop nearby. At the same time, users and non-users worried about possible injuries, trespassing, and invasion of privacy among other things. Naturally, this makes an outstanding ripped-from-the-headlines case for strategy courses. It is a great vehicle to cover key topics such as entrepreneurship, strategic alliances, internal analysis/capabilities, and external analysis. The following are some materials that are useful for the case:
Students might be confused about time compression diseconomies as a foundational component of a resource-based advantage. However, Dierickx and Cool’s (1989) idea here is quite simple: It may take time to build a resource or capability and even if rivals know the source of an advantage, they may not be able to recreate the resource in a timely fashion. Of course, Barney (1991) captures this as history or path dependence being the barrier to imitation. This simple video illustrates the principle (in a darkly humorous way). Of course, in this case, our protagonist merely needs to incur some search costs to find a fully grown tree. There is no practical way to rush the process to get the tree to grow substantially faster.
Aldi has been crushing the competition for years and makes an excellent case of how organizational alignment can deliver a strategic advantage (cost in this case). Here is the version of the case for Madison Wisconsin but it would be easy to customize to almost any location since Aldi has spread far and wide. I divide the students into groups reflecting segments of the market (Whole Foods/Kroger/Wal-Mart/Stop-n-go, etc.) and have them assess the competitive threat as Aldi expands in their market. The Whole Foods group typically concludes that there is no threat. However, the threat becomes more apparent once the other rivals decide to add services since they can’t compete with Aldi’s prices. This Bloomberg article shows that Aldi has been a much more direct threat to Whole foods. Ultimately, none of the rivals can duplicate Aldi’s cost structure because their assets are not aligned toward that strategy. Here are a few very funny ads demonstrating the simple principle — why pay more than you have to?