Companies are being more frequently confronted by a faster and more dramatically changing market environment. The classic understanding of strategy, which is primarily based on the primary concept of absolute predictability, has become too static and inflexible. Our research shows, however, that many companies are still conforming to the paradigm of static strategy development. They are therefore not able to respond flexibly and decisively market changes.
Classic strategy development hinders sustainability
The classic understanding of strategy – as defined by Michael Porter – is based on the notion that the organization of an industry should determine the strategy of a company. According to this model, in order for companies to be successful they need to adapt as effectively as possible to the dominant forces in their given industry. This leads to a convergence of viewpoints for the existing market. People concentrate on analyzing the industry in which they are active. They focus their strategy work on market share and competitive positioning within that sector.
One fundamental problem of linking strategy with an industry is that the future is not limited by industry boundaries. When the visions of a certain industry become gridlocked they can blind people to the important developments occurring outside that sector. The competition for visions of the future – the true pre-tax levels of future market success – is cut out of the picture.
Apple, with its coherent, unique and sustainable business logic, illustrates perhaps most effectively how an industry-bound concept of strategy development can be problematic. Can an iPhone or an iPad really be assigned to one industry? Are they in the mobile telephone sector; or do they belong to the music and entertainment industry; or are they in the book and education segment of the market? Is it possible that Apple has created a new industry? Imagine Apple never launching the iPhone or the iPad just because they couldn't be classified within a certain industry!