Strategic Dynamics:
Conceptual Frameworks
ROBERT A. BURGELMAN
Stanford Graduate School of Business
Strategic Dynamics:
Two Conceptual Frameworks
Overview
I. Dynamic Forces Driving Firm Evolution
II. An Evolutionary Framework of the Strategy-Making Process in
Established Firms
III. Four Strategic Leadership Challenges in Established Firms
I. Dynamic Forces in Firm Evolution
Basis of
Competitive
Advantage
in the
Industry
Official
Corporate
Strategy
Internal
Selection
Environment
Distinctive
Competence
of the Firm
Robert A. Burgelman, Stanford Graduate School of Business
Strategic
Action
I. Dynamic Forces in Firm Evolution
What it Takes
to Win
Basis of
Competitive
Advantage
in the
Industry
What We SAY
Official
Corporate
Strategy
What We DO
Internal
Selection
Environment
Distinctive
Competence
of the Firm
What We’ve
Got
Robert A. Burgelman, Stanford Graduate School of Business
Strategic
Action
I. Dynamic Forces in Firm Evolution: “The Rubber Band Model”
INDUSTRY FORCES
• Market
• Non-Market
DRAM products become a commodity.
Winning requires low cost and high
quality which depends on manufacturing skills.
Official
Corporate
Strategy
Internal
Selection
Environment
Strategic
Action
NEW OPPORTUNITIES
INERTIA
Intel skills in circuit design
and process technology,
but not manufacturing
Basis of
Competitive
Advantage
in the
Industry
Distinctive
Competence
of the Firm
Robert A. Burgelman, Stanford Graduate School of Business
I. Dynamic Forces in Firm Evolution: “The Rubber Band Model”
Basis of
Competitive
Advantage
in the
Industry
Official
Corporate
Strategy
Official
STRATEGY
is ahead of
ACTION
Apple
“Newton”:
handheld
product
strategy
Robert A. Burgelman, Stanford Graduate School of Business
Internal
Selection
Environment
ACTION is
ahead of
STRATEGY
Fab
capacity
allocation
diverges
from
strategy
Strategic
Action
Distinctive
Competence
of the Firm
I. Diagnosis #1: Sources of Strategic Dissonance
Dissonance is Strategic if:
1. There is a divergence between Basis of Competitive
Advantage and Distinctive Competence
Example: Silver Bullet Target Test:
Who is your most dangerous competition? Is it still clear?
Robert A. Burgelman, Stanford Graduate School of Business
I. Diagnosis #1: Sources of Strategic Dissonance
Dissonance is Strategic if:
1. There is a divergence between Basis of Competitive
Advantage and Distinctive Competence
Example: Silver Bullet Target Test:
Who is your most dangerous competition? Is it still clear?
2. There is a divergence between Stated Strategy and
Strategic Action
Example: We say that we provide customer solutions but we only sell
them our own technology
Note: Initially the signals are usually weak
Robert A. Burgelman, Stanford Graduate School of Business
I. Dynamic Forces in Firm Evolution
What it Takes
to Win
Basis of
Competitive
Advantage
in the
Industry
What We SAY
Culture
What We DO
Official
Corporate
Strategy
Internal
Selection
Environment
Strategic
Action
Distinctive
Competence
of the Firm
What We’ve
Got
Robert A. Burgelman, Stanford Graduate School of Business
II. Diagnosis #2: Organizational Capability to Adapt
Characteristics of a Culture Ready for Strategic Change*:
1. Resource allocation reflects competitive reality
2. Strategic planning has forums for debating new opportunities
3. Capacity of top and senior managers for strategic recognition
4. Capacity for strategic leadership
* Note: Created by ourselves and/or by others
Robert A. Burgelman, Stanford Graduate School of Business
I. Dynamic Forces in Firm Evolution
Basis of
Competitive
Advantage
Corporate
Strategy
Internal
Selection
Environment
Distinctive
Competence
Robert A. Burgelman, Stanford Graduate School of Business
Strategic
Action
I. Dynamic Forces in Firm Evolution
Basis of
Competitive
Advantage
Corporate
Strategy
Internal
Selection
Environment
Distinctive
Competence
Robert A. Burgelman, Stanford Graduate School of Business
Strategic
Action
I. Dynamic Forces in Firm Evolution
Basis of
Competitive
Advantage
Corporate
Strategy
Internal
Selection
Environment
Strategic
Action
Distinctive
Competence
II. An Evolutionary Framework of the
Strategy-Making Process in Established Firms
Robert A. Burgelman, Stanford Graduate School of Business
I. Dynamic Forces in Firm Evolution
Basis of
Competitive
Advantage
Corporate
Strategy
Internal
Selection
Environment
Strategic
Action
Distinctive
Competence
II. An Evolutionary Framework of the
Strategy-Making Process in Established Firms
Concept of
Corporate
Strategy
Robert A. Burgelman, Stanford Graduate School of Business
I. Dynamic Forces in Firm Evolution
Basis of
Competitive
Advantage
Corporate
Strategy
Internal
Selection
Environment
Strategic
Action
Distinctive
Competence
II. An Evolutionary Framework of the
Strategy-Making Process in Established Firms
Induced
Strategic
Action
Robert A. Burgelman, Stanford Graduate School of Business
Concept of
Corporate
Strategy
I. Dynamic Forces in Firm Evolution
Basis of
Competitive
Advantage
Corporate
Strategy
Internal
Selection
Environment
Strategic
Action
Distinctive
Competence
II. An Evolutionary Framework of the
Strategy-Making Process in Established Firms
Induced
Strategic
Action
Robert A. Burgelman, Stanford Graduate School of Business
Structural
Context
Concept of
Corporate
Strategy
I. Dynamic Forces in Firm Evolution
Basis of
Competitive
Advantage
Corporate
Strategy
Internal
Selection
Environment
Strategic
Action
Distinctive
Competence
II. An Evolutionary Framework of the
Strategy-Making Process in Established Firms
Autonomous
Strategic
Action
Induced
Strategic
Action
Robert A. Burgelman, Stanford Graduate School of Business
Structural
Context
Concept of
Corporate
Strategy
I. Dynamic Forces in Firm Evolution
Basis of
Competitive
Advantage
Corporate
Strategy
Internal
Selection
Environment
Strategic
Action
Distinctive
Competence
II. An Evolutionary Framework of the
Strategy-Making Process in Established Firms
Autonomous
Strategic
Action
Strategic
Context
Induced
Strategic
Action
Structural
Context
Robert A. Burgelman, Stanford Graduate School of Business
Concept of
Corporate
Strategy
I. Dynamic Forces in Firm Evolution
Basis of
Competitive
Advantage
Corporate
Strategy
Internal
Selection
Environment
Strategic
Action
Distinctive
Competence
II. An Evolutionary Framework of the
Strategy-Making Process in Established Firms
Autonomous
Strategic
Action
Strategic
Context
Induced
Strategic
Action
Structural
Context
Variation
Selection
Robert A. Burgelman, Stanford Graduate School of Business
Concept of
Corporate
Strategy
Retention
II. An Evolutionary Framework of the
Strategy-Making Process in Established Firms
CREATE LINKAGE
Radical Innovation
(initially not necessarily large)
But: Complement or Substitute?
Autonomous
Strategic
Action
emerging
4
environments
e
Induced
Strategic
Action
Middle/Senior Mgt : Increase Scale
1. Conceptual Skills
2. Political Skills
amend
Strategic
Context
5
Concept of
Corporate
Strategy
E
the existing
environment
Structural
Context
2
Incremental Innovation
(not necessarily small)
3
1. Organizational Structure
2. Planning & Control Systems
3. Resource Allocation Rules
4. Measurement & Reward Systems
. . . Principles of Behavior
ACHIEVE ALIGNMENT
Robert A. Burgelman, Stanford Graduate School of Business
1
Top Management Beliefs about:
1. Distinctive
Competence
2. Product Market
Organizational
Domain
Learning
3. Core Values
4. Objectives
III. Four Strategic Leadership Challenges
in Established Firms
1. Exploiting the opportunities associated with the current
strategy: DISCIPLINE #1
2. Exploiting new opportunities spontaneously generated
from within: DISCIPLINE #2
3. Creating the adaptive organization: balancing the
emphasis on existing and new opportunities
4. Stimulating strategic renewal (when new opportunities are
no longer spontaneously generated)
Robert A. Burgelman, Stanford Graduate School of Business