Competing for the Future

1. Competition for the future requires foresight and strategic architecture

Industry foresight is based on deep insights into the trends in technology, demographics, regulation, and lifestyles that can be harnessed to rewrite industry rules and create new competitive space.

Foresight is essential. Companies must develop a clear vision of future opportunities and challenges to compete effectively. This involves analyzing trends in technology, demographics, regulations, and lifestyles to identify potential shifts in industry dynamics.

Strategic architecture guides action. Once a company has developed foresight, it needs a plan to turn that vision into reality. This strategic architecture outlines:

• Core competencies to be developed
• New customer benefits to be offered
• Changes needed in the customer interface

Companies that excel at foresight and strategic architecture can shape their industries' future rather than merely reacting to changes. They become proactive creators of new competitive spaces rather than passive followers.

2. Core competencies are gateways to future opportunities

Core competencies are the gateways to future opportunities. Leadership in a core competence represents a potentiality that is released when imaginative new ways of exploiting that core competence are envisioned.

Identify and nurture core competencies. These are unique combinations of skills and technologies that allow a company to deliver distinctive value to customers. Examples include:

• Sony's miniaturization expertise
• Honda's engine design and manufacturing prowess
• 3M's innovation in adhesives and coatings

Leverage competencies across markets. Core competencies often have applications beyond current product lines. Companies should actively seek new ways to apply their core competencies to create value in diverse markets.

Invest in future-oriented competencies. Building world-class competencies takes time, often 5-10 years or more. Companies must invest in developing competencies that will be crucial for future opportunities, even if their immediate applications aren't clear.

3. Stretch goals and resource leverage drive innovation

Strategic intent implies a significant stretch for the organization. Current capabilities and resources are manifestly insufficient to the task.

Set ambitious goals. Strategic intent should create a substantial gap between a company's current resources and its aspirations. This "stretch" motivates creativity and innovation as the organization strives to close the gap.

Maximize resource leverage. To achieve stretch goals with limited resources, companies must find ways to do more with less. This involves:

• Concentrating resources on key strategic goals
• Accumulating resources more efficiently
• Complementing one resource with another
• Conserving resources wherever possible
• Rapidly recovering resources

Resource leverage allows companies to pursue ambitious goals without relying solely on having more resources than competitors. It's about using resources more creatively and efficiently to create competitive advantage.

4. Successful companies compete for influence and shape migration paths

Competition to shape migration paths is, like competition for intellectual leadership, premarket or extramarket competition in that there is little or no direct, product-to-product rivalry between firms.

Compete for influence. In emerging industries or during periods of significant change, companies should focus on shaping the industry's future structure. This involves:

• Building and managing coalitions
• Developing critical core competencies
• Accumulating market learning
• Establishing global brand presence

Manage migration paths. Companies need to actively shape the evolution of their industry from its current state to the envisioned future. This includes:

• Influencing technology standards
• Shaping customer expectations
• Developing necessary infrastructure
• Cultivating complementary products or services

By competing for influence and managing migration paths, companies can create favorable conditions for their future success, rather than simply reacting to a predetermined industry structure.

5. Expeditionary marketing accelerates learning and market penetration

To learn faster, a company must maximize its times at bat, rather than sit on the sidelines waiting for the perfect conditions for a home run attempt.

Embrace rapid market experimentation. Instead of waiting for perfect market conditions or fully developed products, companies should launch a series of low-cost, fast-paced market incursions. This approach:

• Accelerates learning about customer needs and preferences
• Allows quick adjustments to product offerings
• Helps identify the most promising market segments

Reduce iteration time and cost. To make expeditionary marketing effective, companies must:

• Minimize the time between product iterations
• Lower the cost of each market experiment
• Develop systems for quickly incorporating learnings

Balance risk and learning. While expeditionary marketing involves taking risks, it's about calculated risks that maximize learning. The goal is to fail fast, fail cheap, and learn quickly to find the right product-market fit.

6. Global preemption secures long-term competitive advantage

Although being first to market is important, the real returns go to companies that are first to global markets.

Develop global capabilities. To preempt competitors worldwide, companies need:

• Strong worldwide distribution presence
• Ability to quickly roll out products globally
• Capacity to adapt products to local markets

Secure critical markets early. Companies should prioritize establishing a presence in:

• Large markets that offer scale economies
• Fast-growing markets with future potential
• Markets that are competitors' home turf

Build global scale rapidly. The ability to quickly achieve global scale offers several advantages:

• Faster amortization of development costs
• Establishment of global standards
• Preemption of key distribution channels

Global preemption allows companies to capture a larger share of the total value created by their innovations and make it harder for competitors to catch up.

7. Banner brands create customer predisposition and enable global reach

A trusted brand is a "warrant" to customers that the new product or service will perform to a high standard.

Develop strong banner brands. These overarching brands span multiple product categories and create a predisposition among customers to try new offerings. Benefits include:

• Reduced marketing costs for new products
• Increased customer trust and loyalty
• Ability to enter new markets more easily

Leverage brand across categories. Banner brands allow companies to:

• Transfer goodwill from one product to another
• Enter new markets with instant credibility
• Amortize brand-building investments across multiple products

Balance global consistency and local relevance. Effective banner brands maintain a consistent core identity while adapting to local market needs and preferences.

8. Organizational transformation must align with industry transformation

Only when restructuring and reengineering fail to halt corporate decline do most companies consider the need to regenerate their strategy and reinvent their industry.

Proactively transform. Companies should not wait for a crisis to reinvent themselves. Instead, they should:

• Continuously reassess their industry's future
• Identify necessary competencies for future success
• Align organizational structure with future opportunities

Balance short-term and long-term focus. Transformation efforts should address:

• Immediate operational improvements (restructuring, reengineering)
• Medium-term capability building
• Long-term strategic repositioning

Foster a culture of continuous renewal. Successful companies embed the capacity for ongoing transformation into their organizational DNA, allowing them to stay ahead of industry changes rather than reacting to them.

Last updated: November 22, 2024