Competing on the edge: strategy as structured chaos

592 Pages·1998·2.52 MB·English

by  Shona L. Brown

Competing On the Edge : Strategy As
title:
Structured Chaos
author: Brown, Shona L.; Eisenhardt, Kathleen M.
publisher: Harvard Business School Press
isbn10 | asin: 0875847544
print isbn13: 9780875847542
ebook isbn13: 9780585236698
language: English
Strategic planning, Organizational change,
subject
Competition.
publication date: 1998
lcc: HD30.28.B7822 1998eb
ddc: 658.4/012
Strategic planning, Organizational change,
subject:
Competition.
Page iii
Competing on the Edge
Strategy as Structured Chaos
Shona L. Brown and Kathleen M. Eisenhardt
Page iv
Copyright © 1998 by the President and Fellows of Harvard College
All rights reserved
Printed in the United States of America
02 01 00 99 11 109 8 7
Library of Congress Cataloging-in-Publication Data
Brown, Shona L.
Competing on the edge: strategy as structured chaos / Shona L.
Brown and Kathleen M. Eisenhardt.
p. cm.
Includes index.
ISBN 0-87584-754-4 (alk. paper)
1. Strategic planning. 2. Organizational change. 3. Competition.
I. Eisenhardt, Kathleen M. II. Title.
HD30.28.B7822 1998
658.4'012dc21 97-41459
CIP
The paper used in this publication meets the requirements of the
American National Standard for Permanence of Paper for Printed
Library Materials Z39.49-1984.
Page v
To our parents, Marilyn and Richard Brown
and Marie and William Kennedy,
with love and thanks.
Page vii
Contents
Preface ix
1 1
Strategic Challenge of Change
2 25
Playing the Improvisational Edge
3 57
Capturing Cross-Business Synergies
4 89
Gaining the Advantages of the Past
5 125
Winning Tomorrow Today
6 161
Setting the Pace
7 189
Growing the Strategy
8 217
Leading the Strategy
9 241
Rules of Competing on the Edge
Appendix: Methods 249
Notes 255
Bibliography 259
Index 287
About the Authors 299
Page ix
Preface
This book began because of our interest in what is probably the most
dynamic and fast-paced industry in the worldcomputing. This industry
brings to mind the Internet, multimedia, video games, and networking.
It has spawned a new vocabulary that includes terms like bandwidth
and Internet time, a new way to conduct commerce, and the concept
of the global village. When we started working together in the early
1990s, it was difficult not to be caught up in the energy and
excitement of the hi-tech scene. Articles in publications from the Wall
Street Journal and Business Week to The Economist, Forbes, and
Fortune all tracked the industry's progress. Would Sun succeed with
Java? What would Bill Gates do next? Could Netscape survive?
Would IBM and DEC see a resurgence in their businesses? The
players became larger than life and the wealth created was
phenomenal. But just as significant, the industry was the harbinger of
the tumultuous change that would affect many other industries as the
decade progressed. Computing was the prototypical industry for the
new reality of high-velocity, intensely competitive markets.
This book also began because of our interest in some of the most
exciting science, the confluence of complexity and evolutionary
theories. As we started working together, scholars from biologists to
physicists to paleontologists were exploring the fundamental nature of
change. These scientists were uncovering cracks in the fortress of
Darwinian evolutionary theory. How could breaks in the fossil record
be explained? Did creation reverse the second law of
thermodynamics? What explains the tremendous surge of life in the
Cambrian explosion? Why did the dinosaurs become extinct? On the
physics side, a vocabulary of change arose around non-linearities,
chaos, and strange attractors. It was difficult for us not to be excited
by the momentum and fervor about the new thinking around
evolution.
Our interest in the computer industry was pragmatic. To us, the
managerial problems were unprecedented. How could executives
manage in industries that were so fast-paced and highly competitive?
Planning was unrealistic because the marketplace was so volatile.
Reacting was not an option because managers were constantly playing
catch-up. So, how did managers cope in an industry with slogans like
"have lunch or be lunch," "snooze, you lose," and "only the paranoid
survive"? In contrast, our interest in science was intellectual. In some
ways, we were "science geeks'' and found the ideas simply intrigu-
Page x
ing. But, more importantly, we were searching for new models to
replace the mature paradigms that dominate strategy and
organizational thinking.
Business and science converged when we undertook the research that
forms the basis of this book. We gathered data on strategy and
organizing in twelve businesses in Europe, Asia, and North America.
Like true inductionists, we built the ideas in this book from the data,
which kept us pragmatic and close to the concerns of real managers.
But the data also made us better theorists. As any inductionist knows,
the data provide the intellectual honesty and the insights into truly
new thinking. An important event occurred when we realized that our
work was related to complexity and evolutionary theories. We realized
that researchers in these traditions were also struggling to understand
change, but in a way that was much different from our own approach.
Yet, the frameworks that we were finding in our research resembled
what they too were finding. "Have lunch or be lunch" turned out to
look a lot like the "edge of chaos."
The tension in this book is between these two worlds: the very
pragmatic and enormously challenging world of managing in rapidly
changing and highly competitive markets, and the scientific world of
complexity thinking, the nature of speed, and evolutionary theory. We
wanted to write a book that had value for managers who not only
create stock market miracles but also create companies and jobs. We
don't envy the pressure of their world to succeednot just for
themselves, but also for those who work with them. Yet, we also
wanted to write something for our academic colleagues that was
theoretically relevant and pushed their thinking in new ways.
Balancing these tensions has been the hardest part of the writingto say
something to the pragmatist, the scientist, and to people who, like us,
are intrigued by both. Ultimately balancing these tensions reflects our
view that research, especially in professional schools, is about rigor
and relevance, not as ends of a continuum, but rather as orthogonal
dimensions. The very best research is as at home in The Economist,
Harvard Business Review, and Business Week (with some jargon
translation) as it is in major academic journals. The risk is that we
satisfy neither audience.
For scientists, we have tried to illustrate the way in which ideas like
the edge of chaos, genetic algorithms, patching, semi-structures, self
organization, and dissipative equilibrium play out in real firms. We
wanted to show how these ideas are valuable and relevant to the
pragmatic world of business. After all, fundamental principles of
science may be universal, but they unfold in unique ways in each
academic discipline. We have added our own take on complexity and
evolutionary theories through, for example, definitions of complexity
and edge of chaos that emerged from our data. Blindly copying
someone else's theo-