Beyond Competitive Strategy

For 30 years competitive strategy (the five forces, portfolio analysis, learning, new market development, blue oceans) has determined how we think strategy. Competitive strategy was built on the 19th Century Prussian military understanding that business could be described through strategic interaction of rational players in environments that stay relatively stable over time (stasis in Heraclitian terms).

The world has changed. Today’s strategic environments are determined by complexity, post-human intelligence, networks, fuzzy boundaries, communicative rationality: flux, as Heraclitus would say. Web 2.0 is the shortcut for web-technologies (xml, self-publishing, collaboration platforms, social networking) that once intertwined transform economic production, society, and public governance. However, this change did not start in 2006. Over the last 30 years, we can observe a move from production (defining the value chain), to co-production (manging the supply chain), to peer production (enabling user-generated outputs). This means that strategy in business changes from competitive strategy to communicative strategy. This is big. The closest historical analogy, to this radical transformation of collective production is the emergence of print capitalism in the 16th and 17th Century.

What will post-competive strategy look like? What are the core strategic ideas of network society? What does strategy advice look like in such a world? Who will be the strategy gurus of tomorrow?

About Philipp

Philipp Müller works in the IT industry and is academic dean of the SMBS. Author of "Machiavelli.net". Proud father of three amazing children. The views expressed in this blog are his own.

31. May 2009 by Philipp
Categories: Blog | Tags: , , , , , , | 19 comments

Comments (19)

  1. sebastian.haselbeck@gmx.com'

    In an economy, what drives progress and efficiency if not competition though? If peer-production replaces the competitive nature of society, then isn’t the peer-production process assuming a quasi-monopolous position prone to unerachieving? We could think of ’90s Microsoft as a peer-production entity that produced horrible public value due to lack of competition…. or am I thinking too pessimistic?

    • This is where the distinction between “competitive strategy” and “communicative strategy” comes in: Communicative strategy means that to be successful (i.e. to compete on the meta-level), you need to be able to construct communities of like-minded people that are willing and able to collaborate. [there is a certain tension in the term “communicative strategy,” because in the literature communicative and strategic action are opposed to each other (think Habermas), but this tension is dissolved on the meta-level].

  2. sebastian.haselbeck@gmx.com'

    In an economy, what drives progress and efficiency if not competition though? If peer-production replaces the competitive nature of society, then isn’t the peer-production process assuming a quasi-monopolous position prone to unerachieving? We could think of ’90s Microsoft as a peer-production entity that produced horrible public value due to lack of competition…. or am I thinking too pessimistic?

    • This is where the distinction between “competitive strategy” and “communicative strategy” comes in: Communicative strategy means that to be successful (i.e. to compete on the meta-level), you need to be able to construct communities of like-minded people that are willing and able to collaborate. [there is a certain tension in the term “communicative strategy,” because in the literature communicative and strategic action are opposed to each other (think Habermas), but this tension is dissolved on the meta-level].

  3. cnelius@gmail.com'

    Do you think that this applies to each and every product/service? I can imagine the idea of communities and collaboration in the case of Bionade or Red Bull, but what about basic products like dish liquid or milk? Will there be collaboration instead of competition?

    • very good point! I would argue, it is equivalent to the move from farming to industry: we still do farming, but it does not capture too much of our mindspace (or GDP).

  4. cnelius@gmail.com'

    Do you think that this applies to each and every product/service? I can imagine the idea of communities and collaboration in the case of Bionade or Red Bull, but what about basic products like dish liquid or milk? Will there be collaboration instead of competition?

    • very good point! I would argue, it is equivalent to the move from farming to industry: we still do farming, but it does not capture too much of our mindspace (or GDP).

  5. tlangkabel@gmx.de'

    look behind any reason for competition: why do we compete in the end? why do animals/plants compete? why does the tiniest ameba compete? Competition is in the roots of absolutely EVERYTHING and it’s the driver of any progress. It’s all about surviving and reproduction. And it all comes down to one thing: energy. Food, water, sunlight… nothing but energy. So, in my opinion, as long as anybody has limited access energy (food etc) there will be competition – through every level of Maslows pyramid of needs. Maybe this comment is a bit trancendental… so what ;-)

    • Thanks for the great commen! I agree, however, the question is does this logic permeate all aspects of human life and where is value created for the contemporary “strategist?” What makes human life human is language, the ability of giving meaning to arbitrary signs (intersubjectivity), so a part of human life is not about competing for energy (zero-sum) but about about thinking together (positiv-sum). It seems that the exciting business strategy questions of today are not about competing, but about creating communities and positioning them (communicative strategy). Now the real question is how big this part of the business world can be (after all, even google is just a $ 20 Billion company)? How we can derive revenue streams of such communities (again a competition question)? So I would argue that beyond competitive strategy needs to be read as meta-competive strategy (positioning non-competitive communities in competitive environments). – did I beat you on transcendence? ;)

  6. tlangkabel@gmx.de'

    look behind any reason for competition: why do we compete in the end? why do animals/plants compete? why does the tiniest ameba compete? Competition is in the roots of absolutely EVERYTHING and it’s the driver of any progress. It’s all about surviving and reproduction. And it all comes down to one thing: energy. Food, water, sunlight… nothing but energy. So, in my opinion, as long as anybody has limited access energy (food etc) there will be competition – through every level of Maslows pyramid of needs. Maybe this comment is a bit trancendental… so what ;-)

    • Thanks for the great commen! I agree, however, the question is does this logic permeate all aspects of human life and where is value created for the contemporary “strategist?” What makes human life human is language, the ability of giving meaning to arbitrary signs (intersubjectivity), so a part of human life is not about competing for energy (zero-sum) but about about thinking together (positiv-sum). It seems that the exciting business strategy questions of today are not about competing, but about creating communities and positioning them (communicative strategy). Now the real question is how big this part of the business world can be (after all, even google is just a $ 20 Billion company)? How we can derive revenue streams of such communities (again a competition question)? So I would argue that beyond competitive strategy needs to be read as meta-competive strategy (positioning non-competitive communities in competitive environments). – did I beat you on transcendence? ;)

  7. schellong@gmail.com'

    @Christel
    Neither Red Bull nor Bionade collaborated with end-consumers to develop their product. Of course, both products benefited from the early adopters in the club scene. Furthermore, they exist in markets which have become highly competitive. Of course, both products popularity helped to establish new markets “organic lifestyle drink” and “energy drink” around the globe. However, in Japan energy drinks were established in the 60s. Red Bull was inspired by an energy drink from Asia. For more info on Bionade read: http://database.designmanagementeurope.com/uploads/case/7/231.pdf

    Companies tend to allow collaboration where they want it to and where they see a potential ROI.

  8. schellong@gmail.com'

    @Christel
    Neither Red Bull nor Bionade collaborated with end-consumers to develop their product. Of course, both products benefited from the early adopters in the club scene. Furthermore, they exist in markets which have become highly competitive. Of course, both products popularity helped to establish new markets “organic lifestyle drink” and “energy drink” around the globe. However, in Japan energy drinks were established in the 60s. Red Bull was inspired by an energy drink from Asia. For more info on Bionade read: http://database.designmanagementeurope.com/uploads/case/7/231.pdf

    Companies tend to allow collaboration where they want it to and where they see a potential ROI.

  9. sebastian.haselbeck@gmx.com'

    at some point the peer-contributing “customers” should also ask themselves what their ROI is. I’m thinking of a different example: self-check outs in supermarkets, or Amazon’s recommendation system. In both examples I’m making it easier for the company to make money, but where’s my discount? If I check out myself, no cashier is getting paid, so it would only make sense to offer a discount for those who check out themselves. Similarly, I’m helping Amazon being more customer-centric, my input helps their marketing, so why don’t they give me a discount? :)

  10. sebastian.haselbeck@gmx.com'

    at some point the peer-contributing “customers” should also ask themselves what their ROI is. I’m thinking of a different example: self-check outs in supermarkets, or Amazon’s recommendation system. In both examples I’m making it easier for the company to make money, but where’s my discount? If I check out myself, no cashier is getting paid, so it would only make sense to offer a discount for those who check out themselves. Similarly, I’m helping Amazon being more customer-centric, my input helps their marketing, so why don’t they give me a discount? :)

  11. cnelius@gmail.com'

    @ Alexander
    Thanks for the Bionade case.
    I agree that right now, companies tend to allow collaboration just where they want it(utopia.de/vertrauensbarometer).
    You are also right, writing that there was no collaboration with end-consumers when Bionade was developed. Nevertheless, Bionade has profited from on-/offline word of mouth recommendation. Consumers believe in Bionade as authentic,trustworthy product and create communities around it. I would say, the initiative “Stille Taten” (2007) fits to that. Users were invited to do others a favor anonymously, thus improving the world a tiny little bit.
    http://web.archive.org/web/20071007211745/www.stille-taten.de/

  12. cnelius@gmail.com'

    @ Alexander
    Thanks for the Bionade case.
    I agree that right now, companies tend to allow collaboration just where they want it(utopia.de/vertrauensbarometer).
    You are also right, writing that there was no collaboration with end-consumers when Bionade was developed. Nevertheless, Bionade has profited from on-/offline word of mouth recommendation. Consumers believe in Bionade as authentic,trustworthy product and create communities around it. I would say, the initiative “Stille Taten” (2007) fits to that. Users were invited to do others a favor anonymously, thus improving the world a tiny little bit.
    http://web.archive.org/web/20071007211745/www.stille-taten.de/

  13. azhcba@yahoo.com'

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