Red Beads, Management Tools and the Elusive Quest for Strategic Advantage
Katrina Lamb | December 23rd, 2009Filed under: Managers View | Tags: Harvard Business Review, management tools, michael porter, performance measurement, price optimization, red beads experiment, statistical process control, strategic advantage, supply chain management, w. edwards deming | No Comments »
Management tools do not automatically confer strategic advantage. In principle any commercially available modern management tool from Total Quality Management to Lean Six Sigma, from Supply Chain Management to Price Optimization Models, is available to any and all paying customers on equal terms. Two competitors in the same industry space may employ the exact same suite of management tools, but it is a good bet that their relative performance will vary considerably over time. I don’t find this particularly surprising: generally speaking I subscribe to the view of competitive strategy vis a vis productivity enhancement tools eloquently expressed by Michael Porter in his 1996 Harvard Business Review article “What is Strategy?” To wit: “Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value”. That is to say, the act of hiring a Process Re-engineering implementation team or reinventing oneself overnight as a Learning Corporation will not automatically confer sustainable advantage. Rather it is how (and if) those tools are integrated into a portfolio of aligned, mutually reinforcing organizational activities distinctive from those of competitors that will most likely make the advantage difference.
This makes sense to me. Nonetheless I am often astonished by the frequent tendency among many corporate decision-makers to conflate the application of some management tool with a fabulous consultant-ese moniker into a “magic bullet” that will effortlessly change the organization overnight from a laggard to a market driving leader. Then, as egregiously as they confer magic powers on the tools, after a few fiscal quarters the decision-makers realize they are not getting sustainable performance improvement, decide in their infinite wisdom that the inherent inadequacy of the tools is at fault, and consign them to the trash heap of unrealized expectations. Read the rest of this entry »
” or “freeconomics” as provocatively described by Chris Anderson of Wired magazine in his recently published book “Free: The Future of a Radical Price.” “Free” in Anderson’s formulation is the notion that the near-zero cost of doing business online turns upside down the conventional notion of economics as the science of parsimonious choices under conditions of scarcity. The “economics of abundance” in Anderson’s phraseology may filter through the prism of our traditional understanding of markets as being good news for cash-strapped consumers (more stuff for which I don’t have to pay money) and bad news for suppliers of goods and services (“free” doesn’t sound like a price that will shore up my profit margins).