Parallelism vs. Single mindedness Flashcards
Beinhocker
Businesses are complex systems meaning that they are subject to path dependence and punctuated equilibrium. This is difficult to predict and hence the problems formulated strategies.
Therefore companies must cultivate multiple populations of strategies constantly and simultaneously. This will allow them to identify the best opportunities for the business under changing conditions (evolutionary search and parallelism).
The company should also embark on ‘adaptive walks’ to gain insight into the market and peer through the fog. Occasionally, they should use a ‘pogo stick’ to leap into the distance. This allows optimal exploration.
E.g. Microsoft
Beinhocker quote (strategy)
In an uncertain world, strategy is really about creating options and opening up new choices, not shutting them down.
Beinhocker quote (portfolio)
‘searching the fitness landscape implies rather that a company should cultivate a portfolio of strategic experiments in a business it knows.
Although some of them may be risky and different from the current business, they leverage core skills and assets’
Some of Beinhocker’s principles
Invest in diversity
Value strategies as if they were options
Categorise the mix of strategies (small and long jumps in terms of payoff, risk and aim)
Example of parallelism
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Single-mindedness
Positional strategy
Look at where your capabilities lie. Find your unique value proposition and focus on it to achieve dominance.
What are the advantages of single-mindedness and market dominance?
economies of scale - decreased unit cost as output increases.
experience curve - higher levels of output accelerates learning, which lowers cost.
supplier power - bulk buying, and the best channels want to work with the leader.
customer perception - you must be number 1 for a reason
- market leaders have more loyal customers
- receive larger orders»_space; more profitable
