Is strategy back?

You may not be interested in strategy, but strategy is interested in you.

Attributed to Leon Trotsky

Strategy in real life has never been far away, however in academics it seemed to be a period in time that strategic thinking was out of fashion. Or as a former dean of our faculty said: Strategy is about everything, so it has to say something about everything. Strategy became an adjective, in the sense of strategic human resources, strategic management or strategic operational decision-making. Since the introduction of the business model, the business canvas and open innovation, strategy has again become a serious topic. Comparing the different approaches in strategy, you can see a common point. All modern approaches put the customer central, moving to a more service oriented theory of the customer (the so-called Service Dominant Logic). On the input side of the business model, there is a certain distinction between approaches. For example, the Osterwalder canvas lists cooperation as one of the fields of importance in determining your business model; the Prahalad approach and Open Innovation of Chesbrough and van Haverbeke are even more explicit in setting cooperation as one of the essential competences to develop unique competitive advantages. As Prahalad put it in “The Age of Innovation”, it is not ownership of resources, but access to resources even if they are owned by other firms.

In another context I have shown that this is the reason why open innovation is counted as part of the so-called Open Movement. The Open Movement consists of Open Source, the development and implementation of free software by a massive group of volunteers; Open Access, the movement against expensive publishers and for opening up all kind of resources; Open Education, a mix of different kind of educational resources for teachers and learners, total free courses and programs provided by volunteers but also by top universities and Open Innovation, the realization that collaboration of firms is necessary if innovation has to be successful in the present complex world. These initiatives range from a completely free towards a copyright protected exchange of ideas. As Open Business Models are a part of the Open Movement, the success of open activities requires new business models. For example, it is now possible to use your computer with a free Linux Operating System, using FreeOffice, (replacing Microsoft Office) and other kinds of free software, including web development software as Moodle. This calls for new business models on the part of commercial software: what are the features people are prepared to pay money for, as there is a free alternative? Open Access caused a major discussion between the UK government, academics and the publishers. .The UK government has taken the decision that work, paid for by the British taxpayer will be free available online for universities, companies and individuals, to use for any purpose, wherever they are in the world (The Guardian, 15 July 2012 ). To make this possible, the government changes the business model of scientific publishers from being paid by the subscribers of their journals to making the authors pay an ‘Article Processing Charge’ (APC) around £2,000 per article. This APC is financed by the research funds of universities and research institutions (the so-called Golden approach, commission Finch; contrasting the Green approach). Open Access will change the business models in publishing, but possible also in other artistic business as movies, music ect. Open Education is about individuals and organizations offering different kinds of education and educational resources. Sometimes for free, sometimes for a small fee. New technological developments allow a larger access, a broader participation in education. Partly this will make good education available in places where it was not available before, Secondly; it sets the standard for other teachers as students can compare the free course with the courses at their university. However, it can also influence the business model of traditional and distance teaching universities. What do these institutions offer to make up for the fees as compared to the free courses? Of course, Open Innovation is less about getting things for free but more about the must to cooperate, opening up a traditional very closed activity. Surely, research and development departments were heavily guarded places, whereas now, openness and interaction are propagated in by the open innovation and open business model approaches, Yet, there are still approaches which stress the importance of the closed enterprise. For example the blue ocean – red ocean approach of Kim and Mauborgne assumes that the firm has to move towards a position of relative loneliness, to survive. In these approaches strategic decisions have to do with the distinction between the firm and its competitors. If the resources you use are available for everyone, there is no distinguishing competitive advantage!

The more co-creation and non-price factors determine the competitive position of an organization, the more important collaboration with other firms. The more price competition determines the success and survival of the organization, the more important specific individual competences become. Strategy is about recognizing your own position in relation with the outside world, the industrial relationships, the customers, competitors and others. Copying the behavior of others will not lead to an unique position, collaboration can result in a competitive advantage when combined with special internal competences. The same applies for the motto attributed to Leon Trotsky at the beginning of this blog. Searching the internet, this quote can be found at hundreds of websites. However, at the more serious websites pointing towards publications in which the quotes can be found, this quote is not found; the only quote looking like it is: “You may not be interested in the dialectic, but the dialectic is interested in you”.

Copying the “free content” provided at many websites might not always be the best policy to get the best results 😎


2 thoughts on “Is strategy back?

  1. Frank – great post – thanks for sharing. Though there is a lot in the blog that excite me and that I agree with, I am concerned about the closedness of this openness. In the images used by Chesbrough in his video (embedded in your blog), both slides have a funnel ending in the market (albeit different forms/layers of the market). It loos like >- If it is really open, should we not think about a model that looks like this >-<, where the funnel also opens at the end and where the market is but one possible end or beneficiary of the innovation process? Surely there are more possible beneficiaries from innovation than just the market (in whatever form)? Is there a way to think about innovation outside of the competitiveness of the market, and uncontested market spaces? Or did I miss something?

    Thanks again for your blog. Paul

    • Hi Paul, without going into a lesson growth theory, that is one of the differences between private innovation, in which economist can show that if the property rights are not protected (eq. the result of the innovation can be sold in a market), innovation and growth will be below their maximum as firms are not able to earn the initial investment in R&D.
      Education has a similar problem;knowledge shared does multiply, so you can only protect your knowledge by not sharing, which means not being involved with education. If we all protect our knowledge in that way, the total level of knowledge in the economy will be too low, so there is an incentive for the government to intervene and make us share our knowledge: fund education.
      I agree with your implicit assumption: it would be a better world if this was not necessary!!
      That is why it is important that you keep up your social optimistic blog 😎

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s