What Is the Theory of Your Firm? Walt Disney’s Theory of Value Creation in Entertainment (1957 Illustration)

What Is the Theory of Your Firm?

by Todd Zenger

Illustration: © 1957 Disney

If asked to define strategy, most executives would probably come up with something like this: Strategy involves discovering and targeting attractive markets and then crafting positions that deliver sustained competitive advantage in them. Companies achieve these positions by configuring and arranging resources and activities to provide either unique value to customers or common value at a uniquely low cost. This view of strategy as position remains central in business school curricula around the globe: Valuable positions, protected from imitation and appropriation, provide sustained profit streams.

Unfortunately, investors don’t reward senior managers for simply occupying and defending positions. Equity markets are full of companies with powerful positions and sluggish stock prices. The retail giant Walmart is a case in point. Few people would dispute that it remains a remarkable firm. Its early focus on building a regionally dense network of stores in small towns delivered a strong positional advantage. Complementary choices regarding advertising, pricing, and information technology all continue to support its low-cost and flexibly merchandised stores. Read more of this post

The Wave of Transient Advantage

Transient Advantage

by Rita Gunther McGrath

Strategy is stuck. For too long the business world has been obsessed with the notion of building a sustainable competitive advantage. That idea is at the core of most strategy textbooks; it forms the basis of Warren Buffett’s investment strategy; it’s central to the success of companies on the “most admired” lists. I’m not arguing that it’s a bad idea—obviously, it’s marvelous to compete in a way that others can’t imitate. And even today there are companies that create a strong position and defend it for extended periods of time—firms such as GE, IKEA, Unilever, Tsingtao Brewery, and Swiss Re. But it’s now rare for a company to maintain a truly lasting advantage. Competitors and customers have become too unpredictable, and industries too amorphous. The forces at work here are familiar: the digital revolution, a “flat” world, fewer barriers to entry, globalization.

Strategy is still useful in turbulent industries like consumer electronics, fast-moving consumer goods, television, publishing, photography, and…well, you get the idea. Leaders in these businesses can compete effectively—but not by sticking to the same old playbook. In a world where a competitive advantage often evaporates in less than a year, companies can’t afford to spend months at a time crafting a single long-term strategy. To stay ahead, they need to constantly start new strategic initiatives, building and exploiting many transient competitive advantages at once. Though individually temporary, these advantages, as a portfolio, can keep companies in the lead over the long run. Firms that have figured this out—such as Milliken & Company, a U.S.-based textiles and chemicals company; Cognizant, a global IT services company; and Brambles, a logistics company based in Australia—have abandoned the assumption that stability in business is the norm. They don’t even think it should be a goal. Instead, they work to spark continuous change, avoiding dangerous rigidity. They view strategy differently—as more fluid, more customer-centric, less industry-bound. And the ways they formulate it—the lens they use to define the competitive playing field, their methods for evaluating new business opportunities, their approach to innovation—are different as well. Read more of this post

You Make Better Decisions If You “See” Your Senior Self

You Make Better Decisions If You “See” Your Senior Self

by Hal Hershfield

The finding: Many people feel disconnected from the individuals they’ll be in the future and, as a result, discount rewards that would later benefit them. But brief exposure to aged images of the self can change that behavior. 

The research: Hal Hershfield ran fMRI scans on subjects and found that the neural patterns seen when they described themselves 10 years in the future were markedly different from those seen when they described their current selves (but similar to those seen when they talked about actors). In a later asset allocation task, people whose brain activity changed the most when they began discussing their future selves were the least likely to favor large long-term gains over small immediate ones. However, in follow-up experiments, when subjects were shown aged images of themselves, that tendency disappeared. Read more of this post

The Fractalist: Memoir of a Scientific Maverick

He Conceived the Mathematics of Roughness

MAY 23, 2013 Jim Holt

The Fractalist: Memoir of a Scientific Maverick
by Benoit B. Mandelbrot
Pantheon, 324 pp., $30.00

Benoit Mandelbrot, the brilliant Polish-French-American mathematician who died in 2010, had a poet’s taste for complexity and strangeness. His genius for noticing deep links among far-flung phenomena led him to create a new branch of geometry, one that has deepened our understanding of both natural forms and patterns of human behavior. The key to it is a simple yet elusive idea, that of self-similarity.

To see what self-similarity means, consider a homely example: the cauliflower. Take a head of this vegetable and observe its form—the way it is composed of florets. Pull off one of those florets. What does it look like? It looks like a little head of cauliflower, with its own subflorets. Now pull off one of those subflorets. What does that look like? A still tinier cauliflower. If you continue this process—and you may soon need a magnifying glass—you’ll find that the smaller and smaller pieces all resemble the head you started with. The cauliflower is thus said to be self-similar. Each of its parts echoes the whole. Read more of this post

TED curator Chris Anderson: How to Give a Killer Presentation

How to Give a Killer Presentation

by Chris Anderson

A little more than a year ago, on a trip to Nairobi, Kenya, some colleagues and I met a 12-year-old Masai boy named Richard Turere, who told us a fascinating story. His family raises livestock on the edge of a vast national park, and one of the biggest challenges is protecting the animals from lions—especially at night. Richard had noticed that placing lamps in a field didn’t deter lion attacks, but when he walked the field with a torch, the lions stayed away. From a young age, he’d been interested in electronics, teaching himself by, for example, taking apart his parents’ radio. He used that experience to devise a system of lights that would turn on and off in sequence—using solar panels, a car battery, and a motorcycle indicator box—and thereby create a sense of movement that he hoped would scare off the lions. He installed the lights, and the lions stopped attacking. Soon villages elsewhere in Kenya began installing Richard’s “lion lights.”

The story was inspiring and worthy of the broader audience that our TED conference could offer, but on the surface, Richard seemed an unlikely candidate to give a TED Talk. He was painfully shy. His English was halting. When he tried to describe his invention, the sentences tumbled out incoherently. And frankly, it was hard to imagine a preteenager standing on a stage in front of 1,400 people accustomed to hearing from polished speakers such as Bill Gates, Sir Ken Robinson, and Jill Bolte Taylor. Read more of this post

What Eisenhower Taught Me About Decision-Making; Bill Marriott Jr. says a 1954 chat with President Eisenhower taught him that when it comes to making decisions, it’s always important to be inclusive of others

May 25, 2013

What Eisenhower Taught Me About Decision-Making

By ADAM BRYANT

This interview with J.W. Marriott Jr., known as Bill, executive chairman and former C.E.O. of Marriott International, was conducted and condensed by Adam Bryant.

J.W. Marriott Jr., known as Bill, is executive chairman and former C.E.O. of Marriott International, says a brief chat with President Eisenhower in 1954 taught him the importance of always asking others, “What do you think we should do?

Q. Do you remember the first time you were somebody’s boss?

A. I guess it was in the Navy. I was in the Navy Supply Corps on an aircraft carrier. I eventually took over the officers’ mess. I had worked in my dad’s restaurant when I was in college, and I had all the recipe cards sent to me because I didn’t like the food they were serving on board. I went to these Navy stewards and said, “I want you guys to follow the recipes.” And they looked at me, they didn’t say much, and they didn’t follow the recipes. I came back a few weeks later and said, “You’ve got to start following these recipes.” And they didn’t follow the recipes. They were all World War II veterans, they’d been everywhere and they had learned not to pay attention to all these green, young ensigns. In later years, I realized I’d failed to get them on the team. I had walked in and said: “Here, do it. I’m an officer. Salute and do it.” They ignored me and didn’t do it, and we still had lousy food when I left the ship. I realized that I should have sat down with them and said, “What do you think we can do to improve the food?” Read more of this post

Intuition Pumps And Other Tools for Thinking

Intuition Pumps And Other Tools for Thinking [Kindle Edition]

Daniel C. Dennett (Author)

Publication Date: May 6, 2013

One of the world’s leading philosophers offers aspiring thinkers his personal trove of mind-stretching thought experiments. Over a storied career, Daniel C. Dennett has engaged questions about science and the workings of the mind. His answers have combined rigorous argument with strong empirical grounding. And a lot of fun.

Intuition Pumps and Other Tools for Thinking offers seventy-seven of Dennett’s most successful “imagination-extenders and focus-holders” meant to guide you through some of life’s most treacherous subject matter: evolution, meaning, mind, and free will. With patience and wit, Dennett deftly deploys his thinking tools to gain traction on these thorny issues while offering readers insight into how and why each tool was built.

Alongside well-known favorites like Occam’s Razor and reductio ad absurdum lie thrilling descriptions of Dennett’s own creations: Trapped in the Robot Control Room, Beware of the Prime Mammal, and The Wandering Two-Bitser. Ranging across disciplines as diverse as psychology, biology, computer science, and physics, Dennett’s tools embrace in equal measure light-heartedness and accessibility as they welcome uninitiated and seasoned readers alike. As always, his goal remains to teach you how to “think reliably and even gracefully about really hard questions.”

A sweeping work of intellectual seriousness that’s also studded with impish delights, Intuition Pumps offers intrepid thinkers—in all walks of life—delicious opportunities to explore their pet ideas with new powers. Read more of this post

Philosopher Daniel Dennett Presents Seven Tools For Critical Thinking

Philosopher Daniel Dennett Presents Seven Tools For Critical Thinking

in Philosophy | May 21st, 2013 7 Comments

Love him or hate him, many of our readers may know enough about Daniel C. Dennett to have formed some opinion of his work. While Dennett can be a soft-spoken, jovial presence, he doesn’t suffer fuzzy thinking or banal platitudes— what he calls “deepities”—lightly. Whether he’s explaining (or explaining away) consciousness, religion, or free will, Dennett’s materialist philosophy leaves little-to-no room for mystical speculation or sentimentalism. So it should come as no surprise that his latest book,Intuition Pumps And Other Tools for Thinking, is a hard-headed how-to for cutting through common cognitive biases and logical fallacies. In a recent Guardian article, Dennett excerpts seven tools for thinking from the new book. Having taught critical thinking and argumentation to undergraduates for years, I can say that his advice is pretty much standard fare of critical reasoning. But Dennett’s formulations are uniquely—and bluntly—his own. Below is a brief summary of his seven tools.

1. Use Your Mistakes

Dennett’s first tool recommends rigorous intellectual honesty, self-scrutiny, and trial and error. In typical fashion, he puts it this way: “when you make a mistake, you should learn to take a deep breath, grit your teeth and then examine your own recollections of the mistake as ruthlessly and as dispassionately as you can manage.” This tool is a close relative of the scientific method, in which every error offers an opportunity to learn, rather than a chance to mope and grumble. Read more of this post

What Gets You Up in the Morning? Purpose is a uniquely powerful source of fuel – and satisfaction. That’s why we resonate so strongly with exhortations that speak to it

MAY 24, 2013, 11:41 AM

What Gets You Up in the Morning?

By TONY SCHWARTZ

In the last several weeks, I had two radically different experiences spending extended time with leaders at two large, global companies. A long, alcohol-fueled dinner with the first group was a pure downer: dull, rote and devoid of positive energy.

The day with the second — a group of young managers at Google — was utterly exhilarating. After eight hours together, discussing what it takes to be an inspiring leader, the conversation was still going strong.

What accounts for the difference?

The Google leaders were considerably younger than their counterparts in the first group, who worked for a financial services company. Also, Google is regularly recognized as a great place to work. But the most powerful difference, I’m convinced, is that the Googlers – hundreds of whom I’ve worked with over the years – feel they’re contributing to something meaningful and larger than themselves, and the other executives evinced no passion whatsoever for their work. Read more of this post

Hone the Job You Have Into One You Love

May 25, 2013

Hone the Job You Have Into One You Love

By SHANE J. LOPEZ

OVER the past few months, American workers have been suffering from a major case of spring fever. Many of them, for the first time in years, are thinking about testing the waters of the slowly improving economy. They are looking for better jobs than those they’ve been clinging to throughout the recession. Maybe, they think, they can even find a job they love. Read more of this post

Amma’s Multifaceted Empire, Built on Hugs; Amma is best known for literally embracing the masses; she has hugged millions of people around the world, a feat that has earned her the nickname “the hugging saint.”

May 25, 2013

Amma’s Multifaceted Empire, Built on Hugs

By JAKE HALPERN

THERE are entourages — and then there is the retinue of Mata Amritanandamayi, a 59-year-old Indian guru known simply as Amma, or “mother.” On Friday, she began a two-month North American tour during which she will be accompanied by 275 volunteers. They plan to ride in four buses across the continent from Bellevue, Wash., to Marlborough, Mass., visiting 11 cities, including New York. And at each stop along the way, Amma will sit on stage for 15 hours at a stretch, greeting her thousands of devotees.

Amma is best known for literally embracing the masses; she has hugged millions of people around the world, a feat that has earned her the nickname “the hugging saint.” Her status as a spiritual therapist has attracted a large following in the United States. In India, however, what Amma offers is far more significant and complex. She has built a vast organization that is the envy of both India’s public and private sectors. As Oommen Chandy, the chief minister of the state of Kerala, told me: “From nothing, she has built an empire.” Read more of this post