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Of all the metaphors used to describe business strategy, ‘war’ is the most pervasive. Business strategy is mostly visualised as war against competitors, ‘battles’ for market share, ‘invasion’ of virgin territories with advertising campaigns etc. Many companies have a sales ‘force’ team and market ‘intelligence’ personnel (spies). One of the most influential books, in business strategy circles, is actually an ancient 5th century Chinese military treatise ‘The Art of War’ by Sun Tzu.
Michael Porter at Harvard University 40 years ago launched the modern strategy revolution in business management. In 1979, as an associate professor at Harvard Business School, his landmark article ‘How Competitive Forces Shape Strategy’ was published in the Harvard Business Review. It is hard to overestimate the influence of Porter’s article on the teaching and research of business strategy and its influence on business practice. Porter’s article was about ‘forces’ to be overcome. His article begins with this sentence: “The essence of strategy formulation is coping with competition.” Porter’s article is about five forces governing competition in an industry: 1. Threat of new entrants; 2. Bargaining power of customers; 3. Threat of substitute products or services; 4. Bargaining power of suppliers; 5. Rivalry among competitors. Porter’s Five Forces Model, let’s call this paradigm the ‘Harvard School of Strategy’. It is interesting to see customers as one of the ‘forces’ to be overcome in this model.
At the Massachusetts Institute of technology (MIT), ArnoldoHax, a professor of management, established a different (and much lesser known) paradigm for business strategy formulation.ArnoldoHax believes that the customer should be at the centre of business strategy, not a competitor or a force to be overcome. This paradigm is called the Delta Model. The Delta Model represents change, it is an innovative approach to business strategy. Developed at … Read More...