I've been thinking a lot about corporate strategy lately, and how poor most of it is. I mean the linear nature of it in a non-linear world, and the similarity of it all when difference is what the market demands for success. Most strategy is just not fit for purpose. Here's an alternative way of thinking:
The Swedish economist Kjell Nordstrom says corporate leaders need to learn to be chefs. It is not the raw ingredients of your business – physical things – that will decide if you beat the competition. Raw ingredients are commodities. It’s how you put them together – your unique recipe – that will decide if customers want to buy from you or the competition. Here's Nordstrom on recipe-based competition:
"…no person or firm can any longer base their sustainable competitive advantage on the access to abundant resources (because this is the surplus society and your competitors have access to the same resources). Instead, as Stanford's Paul Romer puts it, the one with the best recipe will win. We all need a recipe that is unique enough to capture the attention…a recipe that adds value and is difficult for the others to copy."
Where's the money: Selling tangible cars or intangible finance packages?* "Atoms and bits co-exist in most modern customer offerings. Think of the finance deals accompanying most capital goods we buy (or lease). Think of the pre-packaged 'products' we are offered from financial institutions."**
Source: Kjell Nordstrom and Jonas Ridderstrale, co-authors of Funky Business
* Since the finance arms of the major US carmakers have been hit by the credit crunch, probably the money is in neither the atoms nor the bits at the moment, but that's a temporary situation.
**(Phil's Note: Edward De Bono spotted this decades ago when he famously said ‘Ford is a bank that uses its cars to sell finance packages [loans] to its customers’).
by Jim Taggart
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