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Traditional strategy and killer applications

8 九月, 2015 - 14:12

A leading influence on strategic thinking throughout the 1980s and 1990s has been Harvard Business School strategy professor, Michael Porter. Practitioners, academics and consultants alike have used his well-known “five forces” model to evaluate industry attractiveness as strategic positioning. Porters “5 Forces Model”2,3 is very orderly and structured – in fact, very applicable to the 1980s, which was a far less fragmented era than what the late 1990s, and especially the new millennium, have proven to be. It explains neatly why some industries are more attractive than others in a way that at least gave managers confidence in their judgment, even if it didn’t make them feel better about being in a dead-loss market. Similarly, at least the forces were all about business and management issues - customers and suppliers, barriers to entry and substitute products, and of course, good old firm-to-firm competition itself. Small wonder then that practitioners, consultants and academics loved the approach, for it gave reasonable predictability in a reasonably predictable world.

The traditional view of strategy in organizations has been that it is possible to understand fully the environment in which the organization functions, and therefore to plan for the firm's future accordingly. This view might be acceptable when the environment changes slowly, and the future is reasonably predictable. It might even be gratifying when trends are linear. However, in recent years some observers have noted that the environment is changing so swiftly that it is not possible to strategically plan for the future (see for example, Downes and Mui4). As we saw in the first chapter, trends nowadays are usually paradoxical and contradictory rather than linear. The new environments that emerge, especially as the result of phenomenal changes in technology, have profound effects on society, and not just on the firms that operate within it.

If one were to study the occurrence of inventions in history, one phenomenon is particularly prominent – the rate at which technological change occurs over time. During the Middle Ages, for example, significant innovations appeared at a very slow rate-sometimes as infrequently as 200 or 300 years apart. During the time of the Renaissance, new technologies begin to emerge slightly more rapidly-for example the invention of movable type by Gutenberg. In the era of the Industrial Revolution, inventions begin to surface far more frequently, now at the rate of one every five or 10 years. Entering the 21st century, we begin to see innovations break the surface once every two years, or indeed every year. The kinds of innovations that we are talking about are not simple improvements – rather, we are referring to what have become known as "killer applications".

A killer application or "killer app"4is not merely an innovation that improves the way something is done. It is not even something that merely changes a market or an industry - indeed, a killer application is one that changes the way society itself, works and functions. The automobile was a “killer app” because it didn’t just simply replace horse-drawn carriages, or alter the way people traveled – it transformed the way we live, shop, work, and spend our leisure time. It also changed the appearance of the physical environment in most countries. In the past 10 or 15 years we have seen killer applications arise at the rate of more than one a year, and this frequency is increasing in an exponential fashion at the moment due to “spreading” technologies such as the Internet. So strategy that attempts to plan five years ahead is befuddled by the fact that society and the way the world works may indeed change at the rate of one or two killer applications a year. The more traditional strategic planning models such as those of Michael Porter are less effective at dealing with the kind of strategic planning problems that killer applications and rapid technological changes cause.